Monday, May 19, 2014

Interesting insights from the Saga share offering

I have recently written about the floatation of the UK's (probably Europe's) largest company dedicated to addressing older consumers.

There is a lot in the press about the floatation but I have just read the most detailed equity research analysis from Collins Sarri Statham. Sorry but you need to register to receive this information. If you really are interested then I suggest you do.

The bottom line is that it broadly agrees with my analysis. The price might be driven in the short term by demand but the underlying financials cause concern for the future.

They highlight the big claims being made about the company's exposure to the ageing demographic but the clever bit is how you convert that into profits. Recently Saga has not been doing that with much success. The company's net profit in 2012 was £108 million and in 2014 it is £109 million. Not exactly stella growth. The sorts of valuation that are being talked about for the company assume a growth rate in profit more like 20%.

What the analysis  does point out - something I would never have thought about - is the threat from the dreaded data protection people.

Saga has "over 1 billion lines of data from 10.4 million contactable names'. However, there is a threat on how this data can be used in the future.

So there you go A short term punt and a long term sell. Dick Stroud

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