Safestay (SSTY) operates a string of modern hostels split roughly equally between the UK and mainland Europe, but has yet to feel the full benefits of its recent investments and a drive for greater efficiency.
Six hostels in Europe have been bought in the past 12 months, with the full benefit of its 351-bed Barcelona de Gracia hostel acquired in March expected to come through in the second half. Further ahead, the 226-bed hostel being built in Paris is expected to be finished at the end of 2019.
In the UK, the hostels in York and in London’s Holland Park performed well, and helped to push UK occupancy rates up from 71.6 per cent to 76.2 per cent, while Holland Park itself achieved an 82 per cent occupancy rate, up from 67 per cent. UK revenue grew by 4 per cent, and would have been higher but for the extension works being carried out at the Elephant & Castle hostel, which blocked off 30 existing beds. The 80-bed addition is expected to be completed in December.
Safestay currently has 2,618 beds across 10 properties, and nights sold in the first six months of 2018 more than doubled from a year earlier to 284,000.
Analysts at Canaccord Genuity are forecasting cash profits in the year to December 2018 of £3.8m and EPS of 0.9p (from £3.2m and a 0.2p loss in 2017).
| SAFESTAY (SSTY) | ||||
| ORD PRICE: | 42.5p | MARKET VALUE: | £15m | |
| TOUCH: | 42-43p | 12-MONTH HIGH: | 52p | LOW: 43p |
| DIVIDEND YIELD: | nil | PE RATIO: | NA | |
| NET ASSET VALUE: | 53p* | NET DEBT: | 83% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 4.06 | -0.37 | -1.08 | nil |
| 2018 | 6.51 | -0.79 | -2.30 | nil |
| % change | +60 | - | - | - |
| Ex-div: | - | |||
| Payment: | - | |||
| *Includes intangible assets of £10.6m, or 31p a share | ||||
