Saga Share Chat (SAGA)

A good point Banbury and one which has reinforced my negative view. Why don’t the directors buy in here?

Bonds trading at 83p in the £. Not distressed but reflects rising interest rares and some company risk from the share price fall.
Would be nice to see some directors share buys. They must be well under water on their incentives plan with price at rights issue levels

Magic
The £250m was used £100m paying 2024 bond, £70m term loan and £80m corporate.
They had £200m plus in the bank in Jan 22 should be more now and next liability is £150m of bond in 2024. They were confident of paying this off. No need for a rights issue.

On a side note what is important for a company is cash flow. Saga has many streams presently with Leisure Sector picking up Magazine , Car Insurance. pet insurance etc. Upon zooming out and looking at the company from all angles the insurance arm has mainly been in profit over the years. Insurance premiums picking up in 2022 and technology in car reducing driver error and the Government looking at changing Insurance Guidelines. Overall the Insurance Sector like Phoenix ,Aviva and L/G etc are upping their forecasts on growth and profit guidance. This is a good sign for Saga as well.

There seems some worry over a share issue from the AGM coming July. Recently Saga did a Bond Issue up to £250,000 Million covered 2024/26. These funds are used on the Corporate side mainly for Business. In a Historical sense a company which has done a Bond never does a share issue because the Bond will plummet which undermines Institution Investors.

Agreed Horse there seems to be a feeling that insurance will be a stinker.
If that's true they might need to impair the £900m of goodwill on the balance sheet. Which is pain upon paid.
Retail makes £70m PBT key metric is margins which have been circa £74 a policy. TU normally have margin information.
Underwriting contributes £50m and reserve releases may be less than previous years.
None of that is catastrophic but the SP seems to be factoring it in. So it's either
1 - the doom mongers on here are bang on and something awful is round the corner.
2 - General market sentiment, very tiny volumes and a perception we are a travel company is driving an incredibly subdued SP.
I've been wrong before on this company but really think on all the evidence the TU will be steady and will boost the SP. A week Tuesday will reveal all

Definitely undervalued.
Cruise now over 80% sold for year - Insurance year after year gives consistently good returns - travel in general l won’t get excited about, still finding its way - streamlining of company will now start to reap rewards - don’t forget to add in travel insurance sales which will be significantly up.
There is a huge downturn, we all know that.
Travel is not fairing well and markets seem to lose sight of this mainly being an insurance company.
I firmly believe however that my two ‘travel’ stocks Jet2 and Saga - are about to provide very positive forward looking announcements and better times.

Most of the American cruise stocks are up between 12 and 15% today. Norwegian, Royal and Carnival.

Guys some intelligent and thoughtful posts on here today
Slightly drunk and down the allotment sheltering from the rain.
- We made £120m pbt on insurance last year if this fell to £80m it would be catastrophic. It would be so out of kilter to other insurance companies. I don't think its even possible.
- Cash wise we added cash last year as insurance is lucrative and covered £7-9m cash burn on travel . Granted ship payments were suspended and that's now £55m a year but that will be covered by 70% cruise occupancy. We know it far exceeds that. So we should add cash last guidance was enough to pay £150m subordinated debt in 2024.
Granted the TU might disappoint but talk of a rights issue based on fundamentals and what we know does not resonate with me

Boulvardier, His answer (that included an estimate of £10m underwriting PBT for 2023/24) was in relation to a question about a marked reduction in insurance profits over the next two years that specifically mentioned reduced reserve releases in 2022/23 and then even further reductions in reserve releases in 2023/24. He further stated that the underwriting PBT for 2022/23 would be somewhere between the underwriting PBT for 2021/22 (which was £54m) and the PBT of £10m for 2023/24. If he was referring to an underwriting profit excluding reserve releases for FY 2021/22 (ie, £12m) then the latter part of his answer was completely redundant.

If anyone subscribes to stockopedia, Paul Scott had a look at saga in response to a subscriber's comments. Seemed to think, on current information, that a rights issue is not on the cards. Interesting reading. Don't want to be that person that posts what he typed behind a paywall.

Lucre, unless we’re listening to answers to different questions, he doesn’t specifically mention prior year reserve releases. Combined Operating Ratio (COR) was 96.3% for FYE22 giving a pure year UW PBT of £12m, so it makes sense that if they’re targeting a COR of 97% going forward (which is slightly worse) then the pure year result would drop slightly to £10m.

Great post Magic.

In your opinion is it still a possibility we may see a rights issue?

Jun 01
Full year 2022 earnings: EPS and revenues miss analyst expectations
Full year 2022 results:
UK£0.20 loss per share (up from UK£0.67 loss in FY 2021). Improved
Revenue: UK£377.5m (up 11% from FY 2021).Improved
Net loss: UK£28.0m (loss narrowed 59% from FY 2021). Improved
Combined ratio: 40.3% (up from 26.1% in FY 2021).Improved
Revenue missed analyst estimates by 11%. Earnings per share (EPS) also missed analyst estimates by 151%.
Down put with the Leisure Sector is Lockdown Analyst form does not take into account of the Situation
Over the next year, revenue is forecast to grow 61%, compared to a 138% growth forecast for the insurance industry in the United Kingdom. This purely with the Insurance arm not taken the Leisure Sector into Consideration

Over the last 3 years on average, earnings per share has increased by 51% per year but the company’s share price has fallen by 30% per year, which means it is significantly lagging earnings. This means the share price is lagging behind the earnings to which the extra revenue is expected from Leisure Sector.

With so little activity on the share front with limited trading the past few weeks. People pushing the price down in the short term may be a play to make a killing. The market price is under whelming but the Book price and equity in th company does suggest its is underperforming alot share price wise.

My expectation is another rights issue, just hope it’s not worse...

This has all the hallmarks of a sinking ship. I am expecting terrible results.

Lucretius is absolutely right. And it looks like the actual results could be worse than guided by the CFO because "return to normal" is faster giving rising to higher claims frequency and costs due to inflation. Someone should check how close SAGA may be to the covenants on its debt such as Debt to EBITDA or Debt to FCF in case the insurance side was a break even

Totally agree, Pokerchips - a lot of cash has been taken out and many sitting, waiting, trying to guess the bottom. I wouldn't say the shorters are without risk, however, as this has dropped so far already. IMO, there is quite a large correction due, so it may adjust quite quickly when people sense the turn.
A pendulum has to stop before it swings the other way - has this just stopped? that's the question.

the shorters/CFD players play on the fact the market "fears" keeps buyers sitting on their hands ...so they have the perfect opportunity to take the price down without too much opposition ..and drag out some fearful sellers along the way even with lower volumes

The potential buyers are still there...sitting in the background...and possibly growing in numbers as the days go by...here and elsewhere too of course ....if you are in cash you are merely watching and trying to predict the market bottom which the macro sentiment is suggesting isn't here .....the shorters know the company guidance was cautious ..so they aren't expecting to be tripped up

Boulvardier: I think the CFO was very specific as he said the PBT would be £10m in FY24 and PBT would include reserve releases

I hope Saga cruises continue to take reasonable precautions against Covid, as it very clearly differentiates them from the mass tourist market, and is reassuring for their older client base.

As a 70+ couple we have been to Italy and Spain in the last two -three months. The Italian flight was first and was crewed by Italians who did their best to keep the almost entirely British passengers masked, despite, for example, one man who took the full 2hrs+ of flight time to consume a bag of crisps, one by one, taking ten minutes to chew and savour each one, to avoid mask wearing. About 50 - 60% mask coverage per passenger hour.
But three weeks ago we flew to Spain. Because of the complete lack of airline mandatory mask requirement, no one other than the Spanish crew were wearing masks in either direction. So, about three hours on the crowded plane, followed by an hour in a six hundred metre long queue at UK passport control, with virtually no masks or spacing in the queue, followed by an hour in an absolutely packed train which was supposed to have six carriages but three were missing - again no masks in sight.

My symptoms started two days after the journey and my partner 4 days, We've each had four vaccinations, partner. Can't imagine many of our fellow travellers on that day had any chance of avoiding covid. Saga, if they are still taking good precautions, should benefit from that difference.

Thanks Lucre, just listened to that. The CFO wasn’t specific, but one would assume he’s talking about the pure year insurance result, before prior year reserve releases. Obviously there will be some impact on this as people start driving (and crashing) again after the pandemic.

If anyone wants clarity about what the CFO said about the underwriting profits from FY24 listen to his answer to question 4 in the Saga presentation on 25 March 2022 on the Investor Meet Company platform.

Magic good summary the company is fine.
I do worry about being brought on the cheap.
RDH paid an average of £2.71 for his £100m stake so if there is value as many of us think we would expect a low ball offer of £3 plus.
I really don't think it would come to that but you never know

As of 19/6 compulsory mask wearing on board has stopped for customers, but still recommended. Staff who are customer facing are still wearing

No self isolation when a close contact only on positive test.

A start to normality?