Saga Share Chat (SAGA)

When I worked at Saga it was within the Travel division. Half of our annual bonus payment was based at company level and half was based at divisional level.

If I recall correctly, during the last 10 years that I was there, the Travel division qualified for its bonus on 7/8 years and missed out on 2/3 years (one of which was due to the eruption of the volcano in Iceland). So travel was making a positive contribution - and hitting the annually mandated profit targets - for the majority of the time.

Just an observation from my experience there and make of that what you will.

Having said that, in the later years, I had the feeling that Travel continued to exist partly for marketing the brand and partly due to its important part in the history of the company. As you rightly point out the margins are rather thin compared to the insurance operation. Staffing levels in travel were also very high in comparison to insurance.

Insurance was always seen as the senior partner - at least during this century. When I first worked there in the mid-1980s, it was still very much Saga Holidays plus other offerings such as the magazine and some insurance services.

If we can avoid volcanoes, pandemics and airlines failing whilst owing money, then travel can operate at a profit every year - the profits may not be as huge as from insurance but every little helps.

So the question may be - is the "every little helps" in the good years sufficient to outweigh the damage done in the bad years?

Horse - 2022 at 100%. See message below.

Hi ****, yeh working on 100% for 2022, we shouldn’t need isolation cabins by then but if it comes to it we will work through that nearer the time. As far as we’ve publicised it’s the first UK cruises that will be 80% but I would predict like you say the rest of possibly 2021 will be at the reduced capacity but nothing confirmed passed the UK cruises yet

I’ve asked the question Horse

Banbury what I don’t understand when it comes to Tour is why it is so loss making?

They are running a tour operator’Titan’ but don’t own planes, hotels, or other fixed assets.

Essentially all they do is have staff to take bookings, do the admin and general other operational stuff.

They book flights through 3rd parties just direct customer could do. They employ ‘Ground Handlers’ in each country, who look after everything abroad and the operation abroad. So effectively if everything stops like it has, where is the big outlay? If that makes sense?

Beach and horse I hope you are both right ?
Some eye watering numbers from the 2020 and 2019 accounts all pre pandemic

2020 – Insurance revenue £304m PBT £131m margin 43%
2020 – Travel revenue £464m PBT £1m ….. margin not a lot
Travel Revenue 80% tour only 20% cruise

2019 – Insurance revenue £350m PBT £192m margin 55%
2019 – Travel revenue £457m PBT £17m …. margin 3.5%
Travel Revenue 79% tour only 21% cruise.

Cruise has some potential to be earning accretive but its relatively small. Tour is 80% of travel and is a I think a dead dog or rather elephant

I must admit to smiling about Millionaire’s recent post copied below the investment potential is because of insurance and in spite of travel.

“Earnings as a result of the unlocking of travel turning losses into profits which will be transformational to the groups finances.

The investment case is quite simple here and no need to overthink it... we are essentially buying future travel earnings in perpetuity at a snip of the actual future value. Few realise this and are thinking far too short term.

I have many friends still working in the city who are starting to wake up to the investment potential here and some have started building v hefty positions now.”

Apologies if this is not what everyone wants to hear but it’s factual. Be good to understand the positive investment case for Tour. We know form there presentations Cruise has potential.
Banbury

Cheers Beachbum and thanks for the confirmation re bookings.
Have you any idea if they’re selling 80 or 100% for 2022?
I’ve emailed to ask but still awaiting a reply from them.

Thanks Beachbum.
... and cheers for the confirmation re sales.
Have you any idea if they’re selling 80 or 100% for 2022 sailings.
I emailed to ask but still awaiting a reply?

Welcome back Horse and congrats on kicking Covid ass! Excellent!

Totally agree. Sagas biggest bookings period is September and October, when the general market is January/February. That falls in very nicely as when more and more countries have caught up by then, confidence returns, and International Cruising especially is good to go.

I predict some caution still by the over 50’s till around July for absolute clarity but know knows, could be wrong in that because, there the most keen to get away. All Cruises will be fully booked come August IMO. GLA

Back to normal now Banbury, fully kicked covid’s ass. Thanks for asking.
Strangely my previous trader mentality has been replaced by the mindset of an investor.
Whereas l used to buy the dips and attempt to sell high (usually badly) I now check in periodically to see how my investments are doing. No worse off either but maybe that tells it’s own story.
Maybe scary moments in life can help focus the mind on what’s important ??
Re forward sales:
As someone who cruises occasionally, the take up for January next year is (in my opinion) very good.
I’m reliably informed (by a cruise specialist) that oldies tend to look at their winter break after they’ve had their summer one. Beach could maybe expand on that?
I’m only 51 but that’s what l tend to do too.
Do we know if it’s 80 or 100% capacity they are selling for 2022? I’d have thought 100% surely?
Don’t call me Shirley!
I further maintain that when Bojo announces lifting on EU travel and yon traffic light thingy, positivity will grow and sp will rise even before the increase in sales that will surely follow.
I believe Punters have gone mad for UK cruises because they feel safer in UK and are extremely confident they will happen, whereas they were and to some extent remain uncertain over other cruises. Once that uncertainty lifts and they realise how **** Greenock actually is, they’ll be booking a proper cruise!
I can just hear them now - “There’s nothing in Invergordon Harry, this was your idea, my ****tail umbrella has flown away and those hailstones are bloody horizontal, you’re an ******** Harry!!”

Love your honesty and the prudent mentality...it feels like a change is happening generally at saga..there is some good publicity and the addition of this marketing thingy mabobby for the travel side points in the right direction...I’m not sure if you or someone else said it but the biggest risk is this being taken private..I agree this is the biggest ‘risk’ if you want to multi bag and them stating ‘debt’ as the issue..still think £7-8 is realistic

Thanks Alnwick
I value you as a poster to.
Iv always been pretty consistent on standalone insurance valuation somewhere between £900m and the £1.6bn a similer sized organisation Hastings went for.
The goodwill in the accounts is £718m and the risk adjusted discount rate was 9.8%. The central scenario gave headroom on goodwill of £216m. Goodwill cannot be re-instated so the minimum value of the insurance business is £934m. £6.67 a share - that's why i'm here. My £8 is based on Insurance valued at £1.12bn and travel nil. Agree it might be conservative but its reasonable and everyone of us is a winner at £8.
I must admit i'm out between £7-8. I wish everyone looking for more every success but I think its too early for travel to make a positive contribution. All i'm really looking for is to stem the cash flow loss and for it to break even. Time will tell.

Hi Banburyboy,
I enjoy your posts and agree with most of what you write.
I may be wrong but I think I remember you agreeing the Insurance business was worth £1B+
The two new ships are worth at least as much as the debt !
Upscale vessels take years to design build and these
Ships are certainly upscale.
Check out what Regent Cruises are paying for similar sized new build.
Forget trading travel and sell it.
( I not advocating this just a value play)
The break up value of SAGA is then an insurance business making £140m with a customer base that’s over 55 and has 80% of the UK’s cash.
SAGA Financial !
Now tell me what the share price can be ?

Hi Horse good to see you back after the spell on the sidelines hope the recovery is going well.

Agree short term booking are looking very good but long term at the risk of being a pariah on my favorite board I was a bit underwhelmed particularly by January 22 both sales over the last month and overall capacity levels.

I have been tracking since 4th April
• The 6th Jan cruise had 249 cabins available on 4th April, 212 on 28th April and 205 today. So 48.7% occupancy on the 80% made available.
• The 21 Jan cruise 109 cabins on 4th April, spookily 109 on 28th and 93 tonight. 77% occupancy on the 80% made available
• The 5th Jan cruise at 83 nights is a deal breaker and represents one sixth of the total cruise income for the year. 4th April 210, 28th April 204 available and tonight 203 available. Occupancy on 80% maximum 49%.

Based on the full ship capacity of 998 passengers three cruises are at 39%, 61% and 39%. Is that good? I’m not convinced.

In addition, I had a conversation with Beachburn and he noticed like me the cabin availability can go up. The inference is they are drip feeding availability. If true, the analysis is rendered meaningless but the position most likely poorer that we believe.

On a more positive note nothing to say booking won’t fly when we have the definitive announcement on cruising and its safety.

Thanks Joe - I am inviting all manner of insults with that !! Cant even remember doing it.
Strange feeling posting slightly negative posts on my beloved Saga. My heart says £15 but my head says £8.
I would love for them to sell Titan and just have just the cruises my head would then say £10. Titan are here there and every where on destinations and I see sporadic covid / travel issues in those area's and to coin millionaire's (aka Wilkins Micawber the Dicken's eternal optimist)phrase) losses" in perpetuity"

Setanta will soon be gone.
CEO buying shares.
June, July and August almost completely sold out.
PPPN destroying targets and that’s before any extras.
Covid stats improving all over Europe.
....... and as for the future:
Go into Saga Cruises and check the availability for the three cruises in Jan 2022, especially the 83 night one.
Look at the prices they’re achieving....... and again that’s without selling extras.

As l said, all good ??

of not a :-)

Banbury.....Im a ?
Celebrity get me out a here :-).....sorry couldn't resist, however, your valued posts are always a joy to read.

Quite a chunky buy from Euan - bodes well maybe we are worth £15 :)

Broachrock IMO is right.
Alnwick a lift from my post when Millionaire posted similar.
Elliot wanted to break up the company. In part because the combination was not value enhancing in stock market terms. The risks from travel which is mainly tour are large and ongoing and it remains the elephant in the room
£15 is hugely rose tinted. I think £8 is possible with a fair wind.

Travel is valued as distressed and far below zero we all agree that. We all agree if cruise can get going and break even the price will rise.
Travel has lost this company a fortune and is the weak link and always will be. Here's some evidence :
-Deltiology brought for £20m loss making , £20m or so exceptional this year sold for a notional £1. Great move !!
-Titan - riddled with accounting issues, £100m had to be replaced as company using receipts in advance of travel - let to a cash call and the consolidation. Nearly buried the company
- Travel periodically hit my world events TC cost us £5m , Iceland volcano £3m the list is endless
- Cruise for the next twelve years not very cash flow position. So based on 80% occupancy and £234ppn the ANNUAL cash flow from Destiny is £7m and Adventure £2m. A whopping £9m each year. Wafer thin margins and a high risk operating model,
- From year 13 we don't have the repayments £45m and the financing £16m which makes the math’s a lot better
But will the ships be boutique in thirteen years who will want to sail on them ? Even the accounting valuation on the ship is lower than amount owed refer to the accounts impairment note .
This company will deliver my £8 per share BECAUSE of insurance and IN SPITE of travel.
Future earning's from travel will not be materially value enhancing to Saga in their own right but they will allow in time the market valuation to reflect the £7 that insurance is worth.

Whilst a big fan of Saga I can’t see more than £8, don't think travel is worth much , but believe its suppressing the share price.
Sorry if this appears negative but I think I’m objective. I really would love for you to be right

The guy is clearly an idiot FJ and fair enough we can’t stop them filtering through because “there is always one” but 3 recommends - really? So we have 4 idiots. mmmm time to introduce the filter me thinks.

Euan bunging in 250 grand seems not to have made any impression. Pay day tomorrow. Robbing the kitty again for me.

Im a

Lets not get carried away. I've been waiting for two months for it to break just £4.
With all the good news about travel I had expected it to break to the upside & everyday I am disappointed.
Here is hoping for tomorrow. GLA

Great retort FJG. I had assumed that you knew each other and it was a bit of leg pulling banter. Clearly not!

jackbogle,

Re your: "No you may not you boring old fart."

Great post.

Well done to you for your thorough research and to all of those that recommended your top quality post.

Your contributions to this BB always maintain a distinctive tone and calibre that is worthy of note.

You've pretty much summed up some of the main reason for my holding in SAGA there Alnwick. Our Price targets are v similar too.
GLA