Safestay Share Discussion Threads

[n3tleylucas] 17/5/2014 16:06

Nice thread bb2 :)

Okay, the stock is nicely underpinned by the property. But surely we're not valuing this as a property company? So how much money can this make this year, next year and the year after? MV atm is suggesting around a clean £800,000 next year, so will that be about right?

[fundfemale] 17/5/2014 15:56

Hi yupaweise2010,

Elephant and castle is surprisingly central and within zone 1. It is very close to Westminster - hence target market of backpacker/flashpacker, young couples/youth groups/sme business travel.

Southwark Council plan to develop 3,000 new homes, 50 new shops, restaurants cafes and bars,Central London's largest new park in over 70 years,significant improvements to roads, public transport, pedestrian and cycle routes
Net zero carbon growth.

So as well as being an attractive area for the traget markets mentioned, the real estate potential is great.

Standard travel agency/meta search commission is circa 10%, but essentially this is extremely effective marketing through the hostel sites, also repeat bookings (which are on the increase) incur no commission costs.

Best wishes and hope you decide to invest, FF

[battlebus2] 16/5/2014 08:13

yupawiese2010, there is definitely a great possiblity that the property value will rise as is the case in most parts of London.
Not sure what commission they would pay but will try to find out.

[yupawiese2010] 14/5/2014 21:00

Hi to you both.

I'm not a holder at present, but its at the top of my radar list, just a couple of points, you might be able to assist me with.

What % commission would they pay to Hostelworld for online bookings.?

I believe it takes a hotel 3 years to become mature, so the management have done well to date with the occupancy levels, although naturally its a lot easier with a hostel against a four* hotel, naturally at present the p/l account is flattered because the hostel has only been operating since 2012, therefore their is no wear & tear refurbishments costs at present etc etc ,how many years will it be before that has to be factored in & at what cost. ?

My knowledge of "elephant & castle" where the hostel is located is non existent, as its proposed to have a regeneration programme in this region in the future, is it fair to say its a bit tatty at present,? if the whole region shall we say be " brought up a level ", is their a possibility of an uplift in the value of the property greater than the overall property index.

[fundfemale] 07/5/2014 13:51

Indeed Battlebus - maybe some press links for the header too and admissions document?

Set in a a gorgeous 18th Century House:
hxxp://www.visitbritain.com/en/Accommodation/Budget-accommodation/Britains-best-luxury-hostels.htm

Grazia:
hxxp://www.safestay.co.uk/files/7513/8010/0548/Grazia.pdf

Telegraph:
hxxp://www.safestay.co.uk/en/pr-media/what-the-press-are-saying/telegraph-four-of-the-best/

Travel market trends for 2014:

[battlebus2] 07/5/2014 13:34

Exactly fundfemale, that's my view here also the MV of 12.2 million like I pointed out in the header should equate to my initial 80p target. One we get another couple of these up and running we should see multiples of the current share price.

[fundfemale] 07/5/2014 13:22

I have viewed the property and I have subsequently invested. Believe the press coverage, it is undoubtedly welcoming and very well operated (front and back of house).

All the essential detail is in the admission document, but for me there are a number of very attractive key investment points here:

Firstly the investment is completely asset backed by the property itself Grade 11 Listed Building (former labour party headquarters) , bought for £3.8m in 2011 4.5 million spent on conversion to a 74 rooms/413 beds hostel (which range from 2 bed private rooms to 8 bed dormitories). Post conversion and 2nd year operating as a hostel the independent market valuation is 12 is £12,200,000.

See admissions document page 23:
hxxp://www.safestay.co.uk/files/4213/9885/6384/safestayplc-admission-document.pdf

This, on its own, makes a very compelling proposition vs the current market cap (calculation below):

Current in issue:
Shares issued from 4.8 million placing 9,600,000
Number of shares to be issued to Safeland shareholders 3,617,246
Total shares in issue 13,217,246

Market cap 13217246 x 0.61 (mid price today) 8,062,520 GBP

Prior to looking at this investment, I had not realised the key definition of a hostel vs a hotel- which essentially involves the sale of beds vs rooms. A few quick calculations would reveal that the income generated from 413 beds at low hostel rates is higher than a typical budget hotel selling 74 rooms.The positioning is dormitory style accommodation of better quality than that of traditional hostels and at more attractive rates than budget hotels.

In addition to traditional hotel clients, in recession recovery , travel budgets, even business ones, are likely to remain under pressure and the budget hotel space remains the highest projected growth sector for the near future.

The independent valuation also notes that the most likely aquirer would be another owner/operator. However, as I understand it, Safestay are ambitious and looking to roll out the brand to further locations in London and possibly key destinations overseas.

Year end to 31/12/2013
Turnover 1,933,813
Hostel Operating Profit 549,912
28.4%

A dividend would be possible from this kind of return, however, I understand the main objective is seeking to achieve capital growth for Shareholders.

There is very strong list of shareholders institutional and otherwise at IPO , so these are likely to be very tightly held. Future funding secured.

I am taking great interest here, value catalysts are multiple – most significantly roll out of a proven, market friendly, successful product (a quick google will show the press has been fabulous ), property appreciation, dividend potential...

[battlebus2] 06/5/2014 07:21

Looks like the Miton Group see great value with a holding over 29%.

[battlebus2] 02/5/2014 21:25

Dispatch of share certs on the 9th of May, not sure when nominee accounts will be credited.

[rj allen] 02/5/2014 21:19

Has anyone received their shares in Safestay yet? (1 for every 4.66 Safeland).

Nothing from TD Waterhouse

[battlebus2] 02/5/2014 19:31

Looking forward with the funds now available to more openings of "poshtels" with planned expansion for growth.

[battlebus2] 02/5/2014 19:21

Current trading and prospects.

Advance bookings and occupancy at the Safestay Hostel in the first three months of 2014 were ahead of the board's expectations and significantly ahead of the same period in 2013. As at the end of March 2014 the hostel had secured approximately 53% overall occupancy for 2014( based on actual visits during January, February and March 2014 and advanced bookings. The board believes that it is reasonable to expect that this will increase as further bookings are made throughout the year.

[battlebus2] 02/5/2014 19:21

1st day of dealings and off to a great start finishing 57/60p.

[battlebus2] 02/5/2014 19:21

www.safestay.co.uk
hxxp://safestayyork.co.uk/safestay-york/aboutus.html



The Safestay business operates a new brand of contemporary hostel, known as a "boutique hostel" within the travel industry, it is aimed at providing safe , stylish accommodation which offers a more attractive alternative to both traditional hostels and budget hotel accommodation.
Part of a demerger from Safeland and Moorfield funds who have agreed to sell their interests to Safestay for £6.2 million.
The company raised £4.8 million through a placing of 9,600,000 and 3,617,246 to be issued by the company leaving 13,217,247 total shares in issue.
Market cap at placing price of 50p is £6.6 million.
The hostel market value is 12.2 million.

As holders in Safeland we received 1 new Safestay share for every 4.66 shares held in Safeland.
My initial target price is 80p.