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Hello Alnwick. Thanks for taking the time to reply. 100% uplift on today's price is not far away from my valuation of the Company at this time. I agree there's lot of potential here. Just don't think 7quid is likely for quite some time. Good luck. Thomson.
Hi Nicname , Thompson, I’m currently drinking Champagne at Wimbledon ! Keep the faith in SAGA. This company was saddled with a pile of debt and still has £500M net debt. The Pandemic , Supply Chain , Ukraine War , Interest rises and raging inflation have and are being managed. We’ve not had economic conditions like this since the 70’s! SAGA has a very profitable Insurance business which stand alone makes £100M+ Cruises are coming back strongly. New river Cruises are coming. SAGA have the Grey Top Clients and Equity Release will be very popular as the bank of Mum , Dad and Grand Parents help out their children. My only concern is SAGA get taken over and we only get 100% return on todays price ! Cheers ??
Hi BB, I totally agree with your Net Debt figure of £500m SAGA said yesterday it will make profits this year in the range of £35m - £50m Given that Cruise booking is already strong for next year , Insurance has 83% retention and equity release could be huge I think it’s a fair assumption that next year will see profits over £150M ( Providing Ukraine war doesn’t spread!!) The market cap of SAGA is currently £226M Let’s be very conservative ( Not Boris !!) and apply an after tax multiple of 10 to next years profits and we are looking at £1B MC in 2024. That’s £7 a share !!!!!
Sorry to say that under the current management Saga is going nowhere, we will be stuck sub 2.00 for a very long time. It needs a shake up desperately. I will not be adding at 1.50 or indeed any other figure. In fact I regret going back in at 1.60 and will sell into a rally to 1.80 should one appear. I am very disappointed because I really hoped we had a big winner here. Particularly when Sir Roger bought in, but all my optimism has gone. A sad day.
They have £200m of cash and cruise is now self funded repayments over 10 years. The TU says they will pay 2024 debt from available cash. If they have a problem it's 2026 when £250m is due. It would be a stretch to pay that from insurance profits so may need a role over. Definitely no scope for dividends As Magic says inflation is no bad thing for indebted companies as it erodes the value of the principle.
Cash Flow within the company is fluid, cash reserves positive for at least 18 months, Net Debt in a way is fixed with the bond with interest on the rise, inflation works 2 ways reduces consumer spending but with Saga it reduces the over all net debt over time. What stands out is the net value is becoming a problem compared to the share price because the company will be bought on the value basis . If the directors do not invest at this price you know a offering is in the wind before September.
The insurance as not as good as you think. Note sales volume is down, margins will be down to £60 per policy. An impairment of goodwill is now coming as stated below in the Trading Update.
The Retail Broking business is expected to return to motor and home policy growth in 2023/24, albeit with a lower average margin per policy, which we currently estimate to be around £60. Given this, the Group will evaluate the impact of lower future average margins on the carrying value of the £719m Insurance goodwill as part of our interim reporting. Our preliminary view is that we will need to impair Insurance goodwill, with such charges taken outside of Underlying Profit Before Tax.
The Reserve Releases will be in line or above with the long term rate which is lower than the last two years. They state long term combined ratio if 97% (Admiral 86%) but who knows where it goes in the short term. This is Management using WordSmith and its past record of not delivering should be a worry.
The new products they are introducing like multi-car cover have been done already by the likes of Admiral. Saga is behind the innovation curve.
As a poster on this BB noted, the management keeps selling hope in the future but does not deliver. The guidance of £35m to £50m underlying profit for 2022/3 is quite wide. Note consensus is at the bottom end of this range and has been coming down.
" I want the directors to really take accountability and demonstrate they understand what they’ve done to shareholders by not taking huge undeserved bonuses through the tough times and maybe having their remuneration linked to shareholder value moving forward "
A year ago the share price was 439p .... part of shareholders job is to monitor the conditions SAGA is working in to know when to buy and when to sell....the market is over bought and then becomes oversold during good and bad times....
I would rather they got a bonus after the hard times , instead of the good times....as managing the business in a recession etc can be a lot harder than when the Government is just printing QE money and business comes much easier
Despite the macro headwinds and strong competition in insurance... the brand is actually quite strong.....in terms of customer trust and confidence
I guess I just live in this utopian dream where I want the directors to really take accountability and demonstrate they understand what they’ve done to shareholders by not taking huge undeserved bonuses through the tough times and maybe having their remuneration linked to shareholder value moving forward. Saga have undergone some chunky restructures over the past few years but have spent the last year creating even more senior positions by decentralising group functions which is adding more cost into a business which needs to be focused competing on price as well as quality propositions. The whole thing is a complete mess and Euan should be gone already. I’m tired of hearing that the management team have a great new strategy every year, just focus on the core business, reduce costs and ensure that all management goals have shareholder value attached to them.
yes.... and Euan even says that in terms of people hearing it all before....I guess they should have been doing this earlier but of course COVID has had a strong impact and held things back... Maybe in 2-3-4 years time they might offload the insurance side...if margins stay under pressure
It’s always “the next 12 months”. Shareholder value has just been destroyed year after year. I only jumped back in to trade so completely my fault, I’ll now be stuck here for a bit. How many more senior appointments are needed to actually start delivering on the promises made every year? Sadly the management team are very good at spinning a positive future but clearly aren’t capable of delivering.
After watching the strategy video it all sounds very encouraging ( super brand !)..... if indeed they could achieve what they would like to....
12m out of the 16m UK over 60yo on the database - 7m of which are marketable
Data Manager starts in October - Sage Media sounds interesting development - expanding from the magazine ...affiliate income, syndicated content, advertising revenue all increasing .....all reducing cost of gaining customers ..Aaron starting in September
Going to take 12+ months to get the new guys making real inroads though, with any new products