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Hiya,
I am no accountant either. I agree with what you said, except the goodwill is a company issue. It may be sitting against insurance but all part of the piece. So an exceptional profit could be very enticing for them to reduce the goodwill on the balance sheet. Apart from that, yes agreed all good if it happens....
Hi Rogue,
I am not an accountant so I maybe wrong but the reason I say this is because:
Currently the cruise operation has no goodwill on the books.
So if they sell the cruise ships for more than the current debt associated with it it would create a profit. As this profit is a one off and not due to normal operations it would be an exceptional profit.
The lease or rental on the ships would be part of normal operations, and therefore affect the underlying profits. This would therefore reduce the EBITDA and underlying profit with respect to the cruise ship business. However note that the proceeds of the sale would be used to pay of the ship debt, so the normal debt payments which have been affecting the underlying profit in the cruise business would dissappear. So I think the basic equations, keeping all other factors constant, are:
exceptional profit = sale of cruise ships - ship debt - transaction costs of deal
new EBITDA = previous EBITDA - lease/rental costs
new underlying profit = previous underlying profit - lease/rental costs + ship debt repayments
overall this would be very good as we would no longer have an issue regarding £250 billion bond payment and perhaps also lease more cruise ships
Rupans, I'm not sure if a leaseback automatically will make an exceptional profit, as there will be also new costs associated with rental no? It would be a great move for sure but whatever positives there are there, we still have the 344m goodwill question mark to deal with. Could be loss making on paper for some time albeit not in cash terms...It would shift the sentiment and perceived risk hugely though.
So disagree again with TO as Roger will block it.
But sale and leaseback would change the dynamics of this company. It would take the risk of paying the 2026 £250 billion bond of the table and of course make an exceptional profit for the year instantly.
Would also settle for selling AICL as well which would now be much more than the £90 million offered earlier.
However Saga is not had a history of making deals so far, but that was useless Euan, maybe Mike can do it
'They're coming fast and furious. We believe there's going to be a scarcity of capacity worldwide. Some of these will go to China,' he said, 'but some of these will continue in the US operation.'
https://www.seatrade-cruise.com/shipbuilding-refurb-equipment/10-more-viking-ocean-ships-2030-tad-bigger-and-some-china
The main thing holding this back is the collossal debt. Have a look at the results presentation where they talk about how they plan to settle the £250m 2026 bond and the language they use.
Their ships have a market value of atleast £700m and the market for buildouts for such vessells are fully booked until 2028 and demand is off the charts since to there are not many dockyards which build such small vessels. These ships cost saga £600m and since 2021 the cost for buildouts has increased by 35%. A sale and leaseback would generate enough cash to be in a net cash position.
You won’t get that. You need to lower your average. We’d be lucky to get £2.
Yeah so so cheap atm, must be a target but I need £3.50 +
All these companies being acquired, Anglo yesterday and Darktrace today, when will it be our turn?
I can understand them having relatively high prices, but at the end of the day they are not making outsized profits. A profit of £35m from two ships might even be considered on the low side based on how risky the business is from world events.
HOMER1234
Interesting comparison FIAT to FERRARI !
I own a few FERRARI’s and they used to be part of FIAT
and the older ones look great but drive like a FIAT
only a little faster !!
Our go to Cruise lines are REGENT and SEABOURN and most of the British passengers we meet who have been on SAGA rate them as a 5 Star Cruise.
The only reason we don’t use SAGA is the fact that they only sail from the South Coast and we live in Northumberland. That’s a long drive in a FERRARI !!!!
£368 is the average per diem per passenger. The basic cabin is now about £700 a night for a couple, single cabins are about 80% of the double cabin price. The discounted suite prices are £1,200 to £1,400 per night. Undiscounted prices are considerably higher. The ocean cruise prices have been hiked quite considerably post pandemic. But I suppose the likes of Mr Motivator, has been TV ‘celeb’ guest speakers, and the onboard ‘Cruise Radio’ bods etc don’t come cheap.
I am only 42 pal, not their target market.
Lol comparing Saga to Silversea. Like comparing a Fiat to a Ferrari. Take it you have not been on Silversea.
At £368 a night they are far too cheap, should be £500+ like Silversea cruises.
The Times rate SAGA the best Cruise-line for over 50’s.
Why we rate it More than 20 per cent of cabins on Saga’s smart, modern ships are allocated to singles — and each one has a private balcony. Solo travellers are always made welcome on this over-50s line, with a singles’ mingle and a lunch for solos on each cruise. You can request to share a table in any of the restaurants with other guests, and can even ask to buddy-up with other singles on shore excursions. What’s more, there are gentleman dance hosts to dance with those, solo or otherwise, who enjoy a spin at the ship’s ballroom sessions. A chauffeur service between home and the port adds extra reassurance to single travellers concerned about getting luggage on and off public transport on their own.
What’s included Where to start? All dining, drinks, all entertainment, crew tips, wi-fi, chauffeur to and from the port, selected shore excursions and travel insurance.
They are very similarly priced. Their ships are also a very similar size.
I can’t help think that Saga’s ocean and river cruise division would be very tempting for Viking if it has the funding to expand.
I doubt they would in 2023. I wonder what price they will ipo at? Hopefully the saga bod will take notice and make sure we get a fair deal with doing whatever they are planning on doing with regards to the partnership.
I wonder what Vikings massive "one-off " costs were that created the huge loss? Maybe they also wrote down some goodwill? LOL.
This is a good point currently cruise and travel has no goodwill on the books. So we need some kind of deal/partnership here to propel the SP much higher
Tfe
I hope so in the long run, but this top up was a lot higher than that made on
3rd Oct 2022 (about 82p)
Has come down a lot since my over £4 sale on 12th May 2021.
Just a shame I didn't sell a lot more then. I also started buying back too soon from that sale. I need a decent rise from the current level to get back on track.
This is currently a laggard in my portfolio alongside Marstons.
Https://www.reuters.com/markets/deals/travel-firm-viking-holdings-seeks-raise-11-bln-us-ipo-2024-04-22/
IPO at 10x EBITDA.
Good top-up price last week Lti, I was tempted but resisted, happy with my current position here.
Thanks Alnwick. I hope your positivity bears fruit soon. Some large buys today might suggest some good news is near.