Falling occupancy and the absence of a one-off insurance payment tipped the hostels operator into the red, sending its shares sharply lower.
Safestay (AIM: SSTY) shares slumped 32% to 8.5p after the hostels operator reported an 11% decline in continuing interim revenues to £8.4m, as weaker occupancy hit the top line and pushed the company into a loss.
The scale of the reversal was compounded by comparison with the prior period, which had only avoided a loss thanks to a Covid-related insurance payment; strip that out and the underlying picture would already have been loss-making a year earlier, making the latest fall in trading all the more stark to investors.
On a brighter note, Safestay has continued to pare back debt, with property disposals cutting net debt by a third to £16.2m, while net asset value stands at 20p a share, more than double Tuesday's closing price, underlining the market's concern over near-term trading rather than the balance sheet.
The update formed part of a broader session of AIM movers, in which payments group Bango reported a 3% rise in interim revenues to $25.9m and a jump in adjusted EBITDA to $9m, sending its shares up 13% to 69.5p, a contrast that highlighted how divergent trading conditions across the small-cap market have become.
Attention now turns to whether Safestay's cost discipline and reduced leverage can offset softer occupancy trends into the second half, with investors likely to watch closely for any signs of stabilisation in trading before reassessing the wide gap between the share price and stated net asset value.
This report is based on Safestay’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full markets calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Marcus Loke on Unsplash.
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