AIX

[skinny]

I've been putting a bit more into defensive stocks in Oz/NZ recently as I'm now comfortable with the forecast that interest rates will not increase much (if at all) this year either side of the Tasman.

This infastructure fund has taken the lions share. Main holding are Perth, Darwin and Melbourne Airports, along with Ports of Portland and Geelong. Traffic volume has been increasing in all, particularly in Melbourne with the low-cost carriers coming in and in the sea ports given the end of the drought.

P/e is 7.7, div yld is 6.7%, trades at sig. discount to NTA. This is dirt cheap compared to most of the NZ transport utilities (IFT, POA, POT, AIA) and offers a better yeild. Also looks pretty cheap compared to similar Oz funds (MAP, MIG, PIG). With the increased volumes I am expecting a re-rating of the share price and an increase in the div yld.

Good buying IMHO !!

[skinny]

Since the last post as predicted airport passenger growth has increased at double-digit rates for the March quarter, leading to double digit EBITDA growth.

http://www.accessbrokerage.co.nz/news-item?E=ASX&S=AIX&N=218682

Despite this the share price has continue to fall a bit, from 1.68 to 1.62. Historical p/e is 7.6 (or I estimate around 6.3 on a fwd-looking basis given the revenue figures). And the dividend yeild is 6.8% on historical revenues.

To me it looks like an even better bargain but the market has thought otherwise recently - any thoughts ? Am I missing something ???

[SEC]

Hi Skinny, I 've had a quick look at AIX and can only say that you are referring to a gross yield (approx 40% franked, making the net yield 5.6%) and that the increase in EBITDA was to market expectations (or slightly below). Compare to MAP where although there were also EBITDA increases but they must have exceeded market expectations (plus there's a positive currency hedge to boot with the AUD going down against the GBP and EUR).

SEC

[star]

Skinny, this is a yield stock. For NZ invstors, no tax advantage. Many high yield stocks in NZX can give above 6% net fully imputated dividend yield.

As for NTA $1.87 per share, the fund revalues the assets frequently. I guss large amount of asset gain is unrealised gain from financial instruments (shares, FX contracts, etc). They can go up, and also can go down.

[skinny]

Thanks for the comments ! I bought this one mainly as a way to get a superior return to Oz bank interest rates while the NZD was high so do not really mind that it isn't a growth stock or that the div. yld after tax isn't too flash (its still higher than Oz interest rates of around 5% before tax). That said I did expect the share price to rise a little rather than fall given the expected (and realised !) pick up in passenger volumes...

SEC - I checked MAP and in fact the 9 month EBITDA growth of 13% for it is lower than AIF full year growth, which I calculate to be around 17% given the assets weights in AIX's portfolio (don't have 9 month comparisons unfortunately.) Both MAP and AIX have come-off around the same % over the past 3 months so perhaps its an industry wide story - maybe concern over rising interest rates and/or terrorism fears ?

In any case call me optimistic but I still see value here as the low cost carriers continue to boost passenger turnover in the airports [:p]

[OldRider]

Another to look at in this area, I think,is Envestra,a pipeline stapled security,not exciting but a return in NZ currency of just over 11% for the last 12 months with another div due shortly which will increase this to over 12%.

With an annual offer of more shares at a discounted price,and with minimal tax due to a significant part of the dividends paid being a capital return from the loan portion of the security,this gives what I see as a high return,I haven't worked out a return on a tax paid basis,though probably over 10%, from a utility type security.Have a look and see what your think.
DISCL: Stapled securities owned.

[Benlamnz]

MAP has other virtues, such as Mac Bank's incentive to ramp it up above 2.00 and stay above that to get their management fees in cash, and the fact they have controlling stake in all their airports (Bristol and Birmingham are controlled by the soon to be merged sister private fund MAG), therefore they can consistently apply their formula of lowering aero expenses and milking the retailling. In fact they are not at all different to Westfield in that both are retail driven. Passenger numbers, ironically, is not that important. From what I read, AIX holds monrity stakes and the aussie airports, which means they can do **** all other than collecting dividends.

But its good that AIX has been brought up by the posters though, cos I love defensive utilities, especially ports roads and airports, and while AIZ is not attractive to me at the moment, I am glad to have another stock code within my radar.

[skinny]

quote:
In any case call me optimistic but I still see value here as the low cost carriers continue to boost passenger turnover in the airports [:p]


Well the optimism seems to have paid off :D
Fantastic June quarter numbers out yesterday given increased passenger growth at the airports (& increase port traffic at Portland) now sees me sitting on a respectable 10% capital gain + the juicy DRP puts the total gain around 20% since buying through this year.

I read the release as also hinting that Jetstar (or perhaps some other low cost carrier) will soon start at some of their other Airport interests (Perth, Darwin & Alice Springs). If this is the case this one should continue to be re-rated upwards...

[Benlamnz]

I blushed looking at my own comments 2 months ago. Luckily I had a change of mind sometime last month and got on the bandwagon just before the flagged div increase. I bought for yield, and the capital gains are way over my expectations to be honest.

Looking at the numbers, the airports are doing very well, on par with MAp's. One little concern is that AIX only owns 8% of Melbourne, the main cash cow. If they want to acquire more, preferably over 50%, my cheque book is open for rights issues.

The rail is the odd man out, chalking up negatives on EBITA growth, but otherwise solid yeild play, and keep suprising on the upside with capital growth. This one is a keeper over the forseeable future for sure.

[skinny]

The capital gain continues for the boring old yeild stock! AIX now at last at NTA at 1.92. I figure if the market is moving more to defensives and/or if MAP is a good yardstick still might be another 10-25% of cap gain in it yet. Ironically enough if this is realised my return for the year would be around 40% which would make it one of the best I've had on the ASX this year even though I chose it just as a safe place to park a bit of cash for, ah hem, the iminent crash in the kiwi-AUD cross [:I]

[Benlamnz]

Funny enough it seems only me and a guy residing in Belgium cares and owns about this little gem. only regret is not buying more at at the 1.70s level, as contemplated.

Btw skinny, Aspect Huntly has a intrinsic value of $2.09. what 's your thoughs about whether that can be realised on market?

[k1w1]

Nah, I'm in too - just a bit late unfortunately [:I]

[Benlamnz]

K1w1, matter of curiorsity, how much did your div cheque was taxed? I understand 50% of mine was tax defered, so no tax for that one. but the other 50%, as I am not an aussie, got the franking stripped and I paid close to 50% CGT for that.

[OldRider]

Benlamnz: Have a further look at your payment slip,I seem to have calculated a different answer to you, it must be the most confusing payment statement I have seen, in fact as I understand it you can't rely on the information on the half yearly statement but need to wait for the end of year statement which corrects what is only an assumption at this stage.
My calc was:
Total div---------------6 cps
Total tax---------1.5636 cps
Payment---------4.4363 cps

Div & tax both go onto NZ income. Let's know if you see things differently, I could easily be wrong,I think you can claim the amount for tax witheld as if it was tax paid,and this is where we see it differently. Checked for last year with accountants figures and this seems to be what he did.

[OldRider]

A further thought from the memory archives, I think I recall last year they messed up the div paid, my accountant E-mailed them pointing out error, got a snooty reply for his trouble, then shortly after a further cheque arrived rectifying the error, without apology.
So it's not only me thats confused.

[Benlamnz]

Old rider: old man put away the slip for the accountants, so no opportunity to check. but looking at the letter to holders re distribution and the announcements, it said 50% is tax deferred, and the other 50% is 40% franked. This is where all the confusion starts. As far as I know, tax deferred means you pay no tax now, but when you sell it will be deducted form the cost base...blah blah etc (bean counters welcome to correct me). Bottom line is no tax now, and that goes too for NZ investors. Because Prime Infrastructure uses the same method to pay divs, and assured me i won pay a cent.

That leaves the problematic 40% franked portion. I was under the impression that it was this part that attracted the attention of the taxman both across and this side of the Tasman. Yeah you are damn right its confusing though. Pity I only did law but not bean counting.

[skinny]

For AIX I just get shares added to holdings via the DRP; issued at a 2.5% disc. to the market rate its a no brainer for me as I don't need the divvy income. Though I guess I should at least check that its been done right! Benlamnz - sorry mate never looked at Aspect Huntly. I really am here in Europe so only have a few NZ & OZ stocks which I track. I'm all ears though.

[Benlamnz]

Good news Skinny and others:

I think AIX has residual interests in Epic, so now the cursed pipe is sold to DUET and Alinta Consort, if there's anything left after paying off the banks, there will be some left to paid epic holders, including AIX. May book a small exceptional item profit. $2 here we go.

Australia's DUET bid wins Dampier-to-Bunbury pipeline
ADVERTISEMENT


MELBOURNE, Aug 30 (Reuters) - A consortium led by Australia's newly listed Diversified Utilities and Energy Trust DUE.AX, energy supplier Alinta Ltd. ALN.AX and Alcoa of Australia Ltd. has won a bid for the Dampier-to-Bunbury gas pipeline, sources said on Monday.

"The Alinta, DUET, Alcoa consortium has been named the preferred bidder for the pipeline and will pay at least A$1.85 billion ($1.3 billion)," a source close to the deal said.

The 1,530 km (955 mile)-long pipeline in Western Australia state was controlled by America's largest natural gas pipeline operator, Houston-based El Paso Corp. EP.N, and U.S. utility giant Dominion Resources Inc. D.N of Richmond, Virginia before it went into receivership in April.

Receivers were appointed after a syndicate of 28 banks owed A$1.85 billion on the asset ended a debt standstill.

The completion of the sale, handled by investment bank UBS, comes almost a year after the asset was put on the market.

($1=A$1.43)

[skinny]

Good call benlamnz - $2 it is. Only had time to skim through the year to June financial results, but if I read it right it looks like epic has detracted a bit from the bottom line eps. They've booked around $8m in revenues from it (note 19), but at the same time revalued the assets to zero (note 2), which is some (9.23m). As any changes in the assessed market value of their investments are recorded in revenues from ordinary activities this ammounts to around $1m off the bottom line.

Anyways, its also interesting to see that the directors refused to comment on future developments as they said is would likely 'prejudice the interests of the company'. I've read that they're keen on expanding the fund so you can't rule out they have new transactions under negotiation and/or are considering another capital raising....

[Benlamnz]

NTA now at 1.91. from 1.87 3 months ago. Also notice the change of letterhead to a more professional format. The old handwriting-straight-from-a-fax was so bush league for a half billion dollar fund. All signs points to major new project/aquisition soon, probably with a capital raising around 1.80ish. Either a new toll road or a bigger share in Melbourne Airport, preferably over 50% before it IPO at some point 2007-08, otherwise Mac Bank may bully its way in.

[skinny]

Something up all right - all through last week there was a huge stack of sell orders at the $2 mark, now they appear to have dropped right off.

I read an interesting article in the Economist this week actually about infastructure funds - it seems bigger may well be better as there is lots of scope for increased instiutional ownership of these funds.

[Benlamnz]

Cash rolling in towards Perth...FINALLY someone figure out the most isolated city also happens to be closer to Singaore than Sydney!:D

As long as Indonesia keep its house and suicide bombers in order, the Perth Singapore/KL route have the potential t be fully exploited similar to whats been done by Easyjet and RyanAir in Europe.
---------------------------------------------------------------------------------------------------

Asian budget carrier starts Perth service
Sep 21
Bruce Cheesman


South-East Asia's cut-throat "no-frills" airline sector is about to fly into Australian airspace, with the launch of the first regular service from Singapore to Perth.

Singapore-based Valuair has beaten several other Asian no-frills carriers to the punch in launching a regular service to Australia, announcing daily flights from Singapore to Perth from December.

The Western Australian Tourism Commission, which is to announce the service today, believes it has pulled off a major coup in attracting the first Asian budget carrier to fly direct services to Perth.

No-frills budget carriers are considered to be the main growth sector of the Asian airline business.

Carriers such as AsiaAir, the Malaysian-based airline that pioneered no-frills services in the region, has changed the way many people in South-East Asia fly.


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Valuair, which began operations in May, believes it has stolen a march on Singapore rival Tiger Airways and Qantas offshoot Jetstar in flying to Perth.

"We have been considering coming to Perth for some time," Valuair spokesman Lim Chin Beng said in an interview with The Australian Financial Review.

"We chose Perth because it is the second most-visited destination for Singaporeans outside of the UK.

"About 14 per cent of all arrivals in Singapore are from Perth. There are so many Singaporeans with children studying in Perth.

"There are so many Singaporeans with homes in Perth.

"The destination fits the type of aircraft we operate, A320s, and is a very convenient flying time of around only four hours.

"We will closely monitor the flight and then decide whether to extend our services to the eastern states," he said.

The arrival of Valuair in Perth is expected to lead to a price war in an already intensely competitive sector.

Valuair is expected to launch its service with fares of about $S860 ($730) return.

The Australian market is a highly coveted sector. The likes of Singapore Airlines, Thai Airways and Malaysia Airlines will not take happily to the arrival of Valuair.

It is expected that other no-frills airlines will not take long to follow suit in offering services to Australia.

[skinny]

Hey good news Benlamnz! Hell I think I'll quote myself :D


quote:Originally posted by skinny


quote:
In any case call me optimistic but I still see value here as the low cost carriers continue to boost passenger turnover in the airports [:p]


Well the optimism seems to have paid off :D
Fantastic June quarter numbers out yesterday given increased passenger growth at the airports (& increase port traffic at Portland) now sees me sitting on a respectable 10% capital gain + the juicy DRP puts the total gain around 20% since buying through this year.

I read the release as also hinting that Jetstar (or perhaps some other low cost carrier) will soon start at some of their other Airport interests (Perth, Darwin & Alice Springs). If this is the case this one should continue to be re-rated upwards...

[GladiatorNZ]

Skinny, yes this is a quality stock. I've held it for a few months now, buying in it at $1.71.

It might be "boring" but airports are the biggest beneficiary of the low cost airlines setting up in Oz. Also, I love the Perth Airport holding - I mean, how else do you get to Perth but by going through that airport? Maybe a week long treck through the Outback [8D]. Perth is not big enough to support a second airport. So this is one of the best natural monopolies out there.

Also represents much better value than MAP. For one, AIX pays out its dividends from cashflow not capital as with MAP. Also, MAP seems to gets horrendous management fees for its "services". Happy to hold AIX for the long term :).

[Benlamnz]

http://www.asx.com.au/asxpdf/20040923/pdf/3my782r3npds4.pdf

Another double digit growth. Perth in particular show strong numbers. Man I didn't though i will live to see the day Perth becoming a Air Hub in Asia, but looks like its happening!

May top up more or wait for the looming rights issue.

[GladiatorNZ]

Maybe it can work if you're going from the Eastern Seaboard of Oz to Europe/Middle East?

[Benlamnz]

quote:I read the release as also hinting that Jetstar (or perhaps some other low cost carrier) will soon start at some of their other Airport interests (Perth, Darwin & Alice Springs). If this is the case this one should continue to be re-rated upwards...


quote:Another double digit growth. Perth in particular show strong numbers. Man I didn't though i will live to see the day Perth becoming a Air Hub in Asia, but looks like its happening!


Perth Airport Reports Passengers to Bali up 51%

http://www.asx.com.au/asxpdf/20040929/pdf/3n11ngzkldcpt.pdf

Man hate to brag but we earn the bragging right to on this one:D Was gonna top up at 1.90 few days ago, but too late as prices will shot thru the roof tommorrow no doubt. Well guess you can't have it all.


Btw the jokers at MAP is doing some buying in Belgium, which is your backyard skinny. Care to give us a brief on how well the airport is doing? and whether its worth $640 million?

[skinny]

Hi Benlamnz,

Geez I don't know the value of the airport but volumes are good with the Eurocrats buzzing backwards and forwards, and now more discriminating (re: cheap) travellers too since Ryanair has been shut out of Charleroi. And being European there is always room for efficiency gains, sigh.

Good news again for AIX airport volume growth, surprise, surpise ;)
One thing that has me a little concerned going through the Annual report through is how much the increase in EPS is due to asset revaluations rather than cashflows...any comments?

[Benlamnz]

Yeah about the revaluation, these days pretty much all infrastructure funds does it. They keep refinancing the airports to get maximum cash flow. I reckon the pointer is NTA vs share price. WIth the lastest figure at 1.91, I am confortable with the current price. When the price hit 1.90 two days ago I jumped because NTA at 1.91 selling at 1.90 is just plain too cheap. Last time I checked MAP has a NTA lower then AIX, and look at where they are trading now. I sold my MAP when the price exceeded NTA by 20%, having already made a 105% gain, and luckily managed to get in AIX at 1.62. In hindsight it might be better to keep both, but on a like for like basis I am happy I switched a winner for another winner.

[Benlamnz]

Media starting to pay attention:D

Perth airport posts 51pc rise in passengers to Bali
Sep 30
Martin Pretty


It had not taken long for Perth airport to shrug off concerns about the recent Jakarta bombing, recording a 51 per cent increase in passengers travelling to Bali from Perth for July and August, one of its shareholders, Australian Infrastructure Fund, said yesterday.

Total passengers to Bali rose from 13,903 in July and August 2003 to 21,003 in 2004.

"The main reason is that you've got a lot of additional capacity on the routes," said Australian Infrastructure Fund chief operating officer Mitch King.

Indonesian airline Garuda, Qantas Airways and Bali-based start-up Air Paradise have all announced increased capacity on the route due to the increased demand for Bali as a tourist destination.

Garuda now offers 10 flights a week, beginning October 2, and Air Paradise has five flights a week, with an increase to eight flights a week for the month of October to cope with demand. Qantas has also announced increased capacity to Bali with the introduction of its B767 all economy-class services with Australian Airlines.

"We are pleased to see the return of passengers from Perth to Bali," Mr King said. "It is an important market for Perth airport. The overall increase in passenger numbers reflects the general resilience of the sector."

Perth airport is also expecting tobenefit from the recent announcement by Singapore-based discount airline Valuair that it will introduce daily services on the Perth-Singapore route from December.

Perth airport's overall performance for August 2004 included a 14 per cent increase in international and an 18 per cent rise in domestic traffic.

Macquarie Airports' Sydney airport, by comparison, recorded a 7.4 per cent increase in international travel and a 14.8 per cent increase in domestic travel for August.

Australia Pacific Airports Corporation, the owner of Melbourne and Launceston airports, reported a 23 per cent increase in international and 15 per cent gain in domestic traffic.

The Northern Territory airports in Darwin and Alice Springs had a 53 per cent increase in international passenger numbers. Darwin's domestic travel improved by 11 per cent, while Alice Springs' domestic travel was up 4 per cent.

AIF owns 25 per cent of Perth airport, 8.1 per cent of APAC and 25 per cent of the Northern Territory airports.

[skinny]

And now really good news on Melbourne airport passenger growth too :D

http://stocknessmonster.com/news-item?S=AIX&E=ASX&N=226261

Benlamnz - I was actually sort of happy to see them miss out of the higway bid. Big capital costs and long lead times involved + if you look at ROE for highways it tends to be a bit lower (around 3-5%) than for airports, albeit the revenue stream is more stable. I'd much rather see AIX use funds to boost their ownership of their exisiting airport holdings...

[SEC]

Skinny's right, AIX should increase its airport holdings and sell off the rest. The real money is in airports at the moment - MAP is a pure airport play, AIX is only a partial one. It's reflected in the share price, AIX has done well with a 30% increase in 6 months, but MAP has been far superior at 60%. AIX is too diversified for its own good, I prefer to do the diversifying myself.

SEC

[Benlamnz]

I agree with you guys to a certain extent. For example I don't know why they are keeping Port of Geelong and considering buying overseas ones. But as far as airport goes, not all of them are smelling of roses. Australasian airports are fortunate that due to decades of poor infrastructure and the recent economic boom, any airports with spare capacity are raking in the volumes. But looking aboard, even Glasgow and Birmingham are turning to custards now. In Asia its absolutly cutthroat. Even the mean lean Changi Airport is under pressure from KLIA as the base of Airasia. Hong Kong Airport, voted second best in the world behind Changi, is feeling the squeeze in freight volume after THREE competing airports, less than an hour away, from mainland China, opened for business. The HK government is considering privatising it, issuing convertible bonds this yr. I am sure if MAP or AIX come up with a reasonable offer they will take it to cut the budget deficit.

As for comparison with MAP, there is a fundamental difference in investment philosohies. MAP set out to be cost squeezer and property developer, acquiring airports with inefficient management and retail potential. Thats why they don't mind paying over the odds for Rome and Sydney, since they know they will be able to cut the fat once they get control. In many ways MAP is like the Burns Philp in the aviation industry.

On the other hand, AIX is a passive yield fund. All the management do is identify good assets and buy in at good prices, then collect distributions. They don't add any value or involve in management. In fact the only reason to invest with them is because they own unlisted assets otherwise inaccessable to us retail investors. I am quite concern about Melbourne listing on 2007 because with AIX owning only 8%, MAP can easily barge in.

Therefore with dominiance nor prosperity in the airport sector by any means secure, I prefer them to be a bit diversified. Tollroads are very stable cash cows. I hope they do win the M4 East bid next year, it compliments the exisitng M4 from what I read, and will underpin cash flows for decades to come.

In the mean time I need to get an Aussie residency status because experience tells me the Melbourne Airport IPO will be an Aussie only affair.[}:)]

[SEC]

Interesting comments re Tullamarine. But the foreign airports are not turning to custard as you suggest. Birmingham's decrease on pcp is due to the Duo failure, it will again show increases after 2005. If you are referring to Infratil's 'Glasgow' Prestwick, it's not the main Glasgow airport and is actually about 50km from the main centre.

I don't think you need to worry about MAP procuring Tullamarine, they're co-favourites to buy Brussels Zaventum Airport, which should keep the balance sheet stretched for a while.

SEC

[GladiatorNZ]

Ben I don't see the relevance of the performance of overseas airports.

Airports can form natural monopolies - and in Australasia they generally are. Which makes them a great investment. Especially with the upstart of discount carriers.

And this idea that MAp "adds value" is a little falacious. Their marketing department has certainly pulled a fast one. Rather than adding value and "cutting the fat", MAP adds 100 pounds of pure lard. Their "performance based" management fees are crazy. MAP is very good for Macquarie Bank, but for shareholders the much lower cost structure of AIX should appeal.

DISC: Hold AIX

[Benlamnz]

quote:Rather than adding value and "cutting the fat", MAP adds 100 pounds of pure lard

Remember the mass layoff and ensuing strike in Sydney Kingsford Smith shortly after MAP took control? The same hasn't happen to Rome yet becuase a) MAP don't have control; b) The nutty Italian PM Belusconi might intervene.

Agree about the management fee though. But the upside is MacBank has every intention to jack up the share price, which can only be good to us (ex)holders. So long as your are not last on the foodchain the MacBank model works well.

[SEC]

quote:Originally posted by GladiatorNZ

but for shareholders the much lower cost structure of AIX should appeal.


No, what appeals to shareholders is a rising share price. And MAP emphatically wins over AIX on that account. AIX has too high a percentage of assets with poor returns.

SEC

[GladiatorNZ]

Past results are no guaruntee of future returns. SEC who is to say that AIX won't outperform MAP over the next couple of months? And how are you judging return on assets - is the return the share price or the profit of the company? Are the assets the market value of equity or the book value of assets?

I would expect AIX to catch up some of the difference in valuations as MAP (current or potential) holders switch into AIX over the next 6 months. MAP will probably always trade at a higher valuation due to size. But MAP also looks quite pricey at the moment, whereas AIX is not. MAP's yield is also coming from capital rather than cashflow, it's somewhat illusory.

Can't disagree with you Ben: so long as MAP holders sell to the "bigger fool" they might do very well,...except if they are the "bigger fool" themselves :)!

[SEC]

quote:Originally posted by GladiatorNZ

Past results are no guaruntee of future returns. SEC who is to say that AIX won't outperform MAP over the next couple of months? And how are you judging return on assets - is the return the share price or the profit of the company? Are the assets the market value of equity or the book value of assets?

I would expect AIX to catch up some of the difference in valuations as MAP (current or potential) holders switch into AIX over the next 6 months. MAP will probably always trade at a higher valuation due to size. But MAP also looks quite pricey at the moment, whereas AIX is not. MAP's yield is also coming from capital rather than cashflow, it's somewhat illusory.


Compare the MAP and AIX shareprices since MAP listed in 2002. There is an extremely high (relative) correlation between them, which is no coincidence because of their exposure to airports. For every 10% change in MAP's price there is a corresponding 4% change in AIX's price (both up and down).

So while airports remain a good investment MAP will continue to outperform AIX. The only way AIX will outperform MAP is if both are falling. But that'll probably be due to factors beyond their control and it'll be time to get out of the sector altogether.

SEC

[skinny]

Good discussion from everyone :) SEC - AIX's portfolio is now 75% odd in airports and passenger growth and revenues have been growing faster than MAPs airport portfolio this year. As such, if portfolio composition was the only factor of difference between these companies I would have expected to see a far tighter correlation in their share prices (say 0.75:1 rather than the 0.4:1 you site). IMO I think AIX's underperformance is in part a size thing, e.g. they have not had the internationally based institutional investors come on board anywhere near the extent to which MAP has. However, I really don't see this as a compelling reason for its share price difference relative to NTA, i.e., I do expect some convergence towards the differential MAP maintains relative to its NTA (hopefully from behind!!!) Perhaps not all the way though - as fairly passive investors in transport assets AIX's mgmt can't expected to be rewarded to the extent MAP's might be for actively managing and (presumably) improving revenue streams at the airports.

Anyways, like Benlamnz I think both are great companies with good growth prospect currently, and excellent long term defensive characteristics. The only large downside risk I can see is (God forbid) another large scale terrorist attack involving airplanes.

[SEC]

Skinny, I was surprised AIX's airport portfolio percentage was that high. But having a look through their AR, I note that their 76% airport portfolio contributes 96% of the profits. Thus I reiteriate my previous comment that AIX owns some lazy assets with poor returns.

Skinny, with AIX being a passive investor the market does not see a compelling case to pay a significant premium (or discount) to NTA. As for MAP's active management, the market has had fewer such qualms. So when the airport industry does well, MAP management is seen to be doing right, and vice versa (perception is fact:D).

These two reasons are probably why the tight 0.4:1 correlation has occurred since MAP's listing is likely to continue, unless AIX jettisons its other assets or increases its stake in an airport to a meaningful level (eg Melbourne).

SEC

[Benlamnz]

quote: 0.4:1

Gap narrowing on Monday morning:D Hope its gonna last.

[SEC]

Enjoy the temporary market imbalance in pricing, it won't last:D.

[GladiatorNZ]

SEC you make fair comments though I would suggest that since the market *already* perceives MAP to have "superior management" its share price potential is more limited than that of AIX which is seen as "dull".

Continued bumper results or ditching "non core assets" should see a re-rating towards MAP values in the medium term.

Also: much of MAP's "profit" comes from airport revaluations (and yield comes from the capital account). Sure, MAp is popular now, but does the Emperor have any clothes?

[SEC]

quote:Originally posted by GladiatorNZ

Also: much of MAP's "profit" comes from airport revaluations (and yield comes from the capital account). Sure, MAp is popular now, but does the Emperor have any clothes?


Read AIX's latest AR, most of their 'profits' come from airport revaluations too.

SEC

[skinny]

SEC is right. We just have to hope that the NPV calculations used to motivate the revaluations at both MAP and AIX have involved appropriately conservative inputs!

As far as AIX goes the irony is that some of their under performing assets on a revenue basis (I'm thinking about the ports) from memory actually had a higher return on a cash flow/asset value basis than the airports over the past year...go figure.

[Benlamnz]

Nice to see more posts on this thread. Beforehand we barely have enough posters to stage a chess game (me & skinny), at least now we have enough people to stage a card game.

Btw SEC I recall you hold MAP when it was around 2.1 ish. still holding on to those? or have you invested your hard earned british pounds on AIX recently? Just wondering. I sold MAP at around 2.06 [V](but can't compaint as I was on 106% capital gain excluding dividends) but luckily jumped onto AIX immediately afterwards at around 1.6 ish. Again, can't complaint.[8D]

[skinny]

Yes it is nice to have the debate - wonder if we could enter a 3rd player into the ring. What do the punters reckon about BAA.L?

[Benlamnz]

Skinny:

Had a look at the annual report. you being in europe probably know alot more about BAA than I do. But I must point out my discomfort with their crown jewel asset- Heathrow. Constant stream of strikes, very matured stage in the development cycle (read little growth), and most importantly - security threat. Outside of US its the highest ranking airport on terroist hit list, and with all the appalling execution of British hostages lately, I think some terrorist action, succesful or not, is due on Heathrow.

Personally I am more inclined to hunt for airports that have exposure to the SE Asia - Perth/Sydney route. KLIA of Malaysia springs to mind, and an IPO should be due within a few years. Hong Kong airport is also a star performer, but is under threat from competition from China. Still, will be kicking the tyre a little when it goes private at the right price.

[SEC]

Ben I've held MAP since May, bought in the 180s from memory. Since you guys posted on AIX I've looked at them but decided to stick to MAP. Ben you would have been more rewarded by sticking to MAP rather than switching to AIX[8D].

Re BAA.L, are you kidding Skinny? I cringe when knowing I have to fly via Heathrow (especially T1), I expect delays at all stages - check-in, security, travelators not working, buses delayed, flight delays by 90 minutes.... And the decor is appalling!!!

Who owns Manchester Airport? Now that's one to invest in. My local is Leeds/Bradford but it doesn't have the critical mass of airlines or scheduled flights.

SEC

[k1w1]

I'm going to Tonga soon. You guys want me to scout out the airports and report back ? Will that get me in the card game ?

Disc. Holding AIX

[Benlamnz]

hehe absolutly mate. have space for a barcarat game. since you are at it may as well look at Suva. IMHO its the only one in that region with commercial value and catchment area.

[k1w1]

Plus its handy to Nandi....

[Benlamnz]

Ouch!

[SEC]

quote:Originally posted by GladiatorNZ

AIX's operational cashflow approximates its profit. MAP's does not.


It is fortunate you make the disclaimer that no warranties are made as to accuracy because your statement is quite wrong. In 04 AIX's operational cashflow was $11M whereas NPAT was $37M. Cashflow doesn't even come close to NPAT! AIX revalues its assets annually just like MAP and adds it to the bottom line just like MAP.

SEC

[SEC]

Oh dear you need to download the latest AIX AR before you suffer more foot in mouth disease! AIX also paid more out in divs ($14M) than it recieved in operating cashflow ($11M) and financed the shortfall by issusing more scrip.

By way of comparison, the latest AR stated MAP made $340M NPAT, $96M operating cashflow and paid $108M in distributions, the shortfall being paid for by issuing more scrip.

The ratios of cashflow to NPAT is similar between MAP and AIX (28% and 30% respectively) and cashflow/distribution shortfall is actually worse for AIX (11% and 21% respectively).

Download the MAP and AIX ARs from stocknessmonster.com or from their respective websites.

SEC

[SEC]

The silence on this thread over the past 24 hours is deafening!

The numbers show AIX is trying to be mini-MAP!!!:D

And I note that certain posts making erroneous statements about AIX's financial performance have been pulled[B)]

SEC

[skinny]

Hey SEC I'm happy as Larry - I called 2.20 a while back and thats what I reckon 'fair value' to be. Hey you know I was just asking about BAA! Actually I held them earlier this year for a while figuring it was as a safe place to wait for the pound to appreciate against the Euro. Did Ok, but not holding any UK stocks now. Am thinking about placing some spare cash into London markets, what would you recommend as a super safe yield play?

Cheers

[Benlamnz]

Come on SEC just because we failed to post over the last day doesn't mean everyone is getting a black eye. Hardly any rampers here so no need to hype it up everyday. Besides this thread http://www.sharetrader.co.nz/topic.asp?TOPIC_ID=15490&SearchTerms=MAP had to be rescued all the way back from April, didn't stop MAP from hitting all time high today didn't it? (good on you mate by the way)

I acknowledge MAP is the superior vehicle now, and will be in the forseeable future. Be hey, its like a BHP holder doing a "haha" to a Rio Tinto punter- you got the last laugh all right but who cares as long as both are way in the money.

On another note, I read that Westpac is taking full control over Hastings on May, I wonder if it will signal a new push for growth for AIX with the financial backing of a trading bank. Westpac is a relative infrastructure virgin, but they did splash put the secure the Epic REST pipes awhile back, and is now floating it as the Hastings Diversified Utilities Fund. I heard about the chequered history of the Epic pipes, but hey Macquarie and AMP bought the riskiest one , Dampier to Bundbury for DUET not so long ago, so it looks like there is value in these cashcow pipes. The forecast yield of 10% is VERY attractive, given it is backed by Westpac. What do you guys think about it? I am really tempted to subscribe for some.

[SEC]

Skinny, I don't hold any UK stocks either, for two reasons:
1. The UK banks haven't heard of 'margin lending'[:O]
2. I couldn't get my patented stockscreener that works really well picking undervalued ASX shares to work on the FTSE, when backtested for 3 months the returns were only as good as the market. I gave up after that point and decided to concentrate on the ASX (but no night-trading).

From memory Lloyds Bank yielded 8%, and I reckoned at the time some of the insurance co's were undervalued yiels plays (Prudential and/or Royal Sun Alliance).

SEC

[CAM]

skinny....maybe lloyd's tsb, there was some talk awhile ago about a divi cut, not sure if this eventuated or not or if its still a possibility.

or maybe United Utilities...a water company I think

[SEC]

quote:Originally posted by Benlamnz

Come on SEC just because we failed to post over the last day doesn't mean everyone is getting a black eye.

You're right, only those who who sold MAP months ago to buy AIX deserve a black eye;)

However agree re both in the money, BHP vs RIO, coke vs pepsi etc and long may they continue upward.

SEC

[Benlamnz]

quote:You're right, only those who who sold MAP months ago to buy AIX deserve a black eye

I knew this one is coming;)

But I did a small calculation for your benefit this morning, and actually find out I made 33% ex div on AIX since my purchase. I also did the sum for what I would've made had I stick with MAP, and its a whopping 36%. If anyone needs to pull previous posts, it should be me, I take back my comment about MAP being the superior vehicle. Its equal to AIX, and guess which one has more headroom for SP upward movements[8D]

[Benlamnz]

up 6 to 2.17! The curse of correlation with MAP (down to 2.82) seems to have broken loose since last Friday. Won't be long till I win the bragging right of having made the right move.

[KD]

One to keep an eye on....



Airport set for takeoff

October 28, 2004
THE Beattmeister, raconteur and Premier of Queensland, is poised to plunk a few more dollars in the state coffers via the float of Brisbane Airport.

It's early days but ABN Amro has scored the mandate for a scoping study of the airport - a high-growth operation with a large land bank, probably worth up to $2 billion.

ABN, having snared roles with Unitab, Bank of Queensland and Dalrymple Port, has done well out of the Sunshine State. This latest gig is to advise the Port of Brisbane Corporation , which owns 38 per cent of the airport.

What the other shareholders will do vis-a-vis a prospective IPO is yet to be worked out. These are CBA (28.8 per cent), the Netherlands' Schiphol (15.8 per cent), National Asset Management (11.7 per cent) and a bunch of other funds managed by Citicorp Nominees and RACI. City of Brisbane Airport Corporation has some convertible notes, too.

This crew all come under the banner of Brisbane Airport Corporation (BAC) which has been seriously minting it for the past couple of years.

EBIT surged 22 per cent to $102 million for the year to June, international and domestic passenger numbers were up 17 per cent thanks to increasing business from Virgin and Qantas (new direct Brissie-LA services since May), not to mention new entrants Emirates, China Airlines and Pacific Blue. Jetstar only ramped up just prior to year's end and is expanding quickly.

The airport's costs were knocked around a bit by a lawsuit from Westfield, of all people, but that's behind it now. Costs are coming down, revenue and profit are rising and travellers have finally taken to the rail link into town.

This is one hell of an asset: the gateway to the residential corridor of southeast Queensland and best of all, a monopoly.

If the Sydney experience is any guide, you can fill your boots. Although Macquarie paid a high price for Sydney Airport, and copped a shellacking in the early days, its Macquarie Airports (MAp) float has since gone from strength to strength, as have fees and charges.

The latest whack is a $2 levy on cabbies, and a toilet tax from Max the Axe might be next. Where else do you go? Bankstown Airport?

[skinny]

Thanks for the heads up KD - didn't see Wetpach Bank mentioned in the article which perhaps would have given a bit of an inside running for AIX but you never know....AIX mgmt have signalled for a while that they want to dramatically expand the size of the fund & this must be a vehicle they would seriously look at.

[Benlamnz]

KD where did you get the news from?

Seems early days and I suspect whether Westpac is in the running at this point, being tied up with the float of the Epic REST pipes. If they do they have to offload it to AIX pretty quickly as they hate having huge unusal items sitting on their balance sheet.


But it will be a major coup if they do get Brisbane. Subject to getting control in Melbourne as well, AIX will be so dominant in Aussie they might be scrutinized by ACCC! The timing for local expansion now is astute because Goliath MAp is too busy scouring half the world away in Europe, which means lesser bidding competition.

[Benlamnz]

All the constellation are at the right place for "the other airport fund" at the moment.:D

----------------------------------------------------------------------

Singapore's Valuair starts Perth flights in December
Source: SINGAPORE, Oct 29 AFP
Published: Friday October 29 2004, 6:02 PM

Singapore-based budget carrier Valuair will start flying daily to Perth, a popular Australian destination for Southeast Asian visitors, on December 1, the airline said today.

Valuair, which positions itself as a "mid-frills" player between cut-rate airlines and big players like Singapore Airlines (SIA) and Qantas, will charge as little as $US211 ($A283.41) return, excluding taxes, for early bookings. This is about half the cost of an SIA or Qantas ticket.

"At long last, passengers can now have an alternative option to the two carriers which have dominated the Singapore-Perth route for many years," Valuair chief executive Sim Kay Wee said in a statement.

"By introducing very attractive fares together with even more legroom and in-flight entertainment, passengers will find us a really attractive option."
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Western Australia's capital city is Valuair's fourth destination after its daily flights to Jakarta, Bangkok and Hong Kong.

The Perth service will be unveiled in time for Singapore's school holidays. In addition to being a holiday destination, Perth also hosts a large Asian community, many of them students.

Valuair will introduce low student fares to enable Singaporean students studying in Perth to make more than the usual annual trip back home, it said.

Valuair will acquire two additional Airbus A320s with just 150 seats each, allowing for bigger legroom, plus drop-down inflight entertainment screens, a feature not found in other low-cost carriers.

[KD]

Benlamnz - sorry, above article was by Michael West in the Australian

http://www.theaustralian.news.com.au/common/story_page/0,5744,11207262%255E16942,00.html

[Benlamnz]

Trading Halt today. anyone know whats goiing on?

[Benlamnz]

answering myslef. bought Gold Coast airports. sounds good at this stage. Almost like a tit for tad to MAp's european forray. love the localy focused AIX strategy though. By the time the MAp execs tide up their loose ends in europe they will found every outbound flight from Sydeny is going into an "enemy" territory. Can't complaint.

[Benlamnz]

Bookbuilt closed today. Looks like it got bid up by instos all the way to 2.20, out of the upper range, judging by the depth. Would be disappointing if it don't rise another 10c or so, as MAp did post the Belgium deal. 54 million equates to 1/10 of MAp's deal, but it being immediately cashflow accreditive to the tone of 5mil (10% yield in effect) is music to the ears. While I believe MAp will do well on Belgium, I doubt it will be immediately accreditive given the depressed state it is in since the collapse of the Belgium national carrier. I reckon the returns gap between AIX and MAp wil close further. Though AIX is now much more exposed to domestic economy than MAp, it may not be a bad thing given the boyuant economic conditions experienced by aussie now. The fact that its a budget carrier airport means further upside with no less than 6 budget carriers currently in the market, and the Singaporeans nudging in. :D

[skinny]

Hi Benlamnz, thanks for keeping us informed, more airport assets for AIX is just what the punters here on sharetrader were hoping for + the whole budget airline industry probly has more legs in Oz than Europe, which is further down the curve and struggling with over capacity if anything. So all up think its a great move for AIX to concentrate its airport holdings downunder for now.

[Benlamnz]

Hey Skinny & all (yep including you SEC mate, we enjoyed your constructive criticism here, like you did with the recrnt MAp hybrid securities issue in the Mac thread;)) more good news- Instos like it!

AIF says airport was a bargain

Airports and port owner Australian Infrastructure Fund has bought Unisuper's 47.1 per cent stake in the Gold Coast Airport for $54 million, lifting the fund's investment in airports to about $390 million.

AIF's deal comes just days after Macquarie Airports announced its bidding consortium had agreed to buy 70 per cent of Belgium Airport for EUR1.6 billion ($2.7 billion) including debt.

Australian Infrastructure, which is managed by Hastings Funds Management, was last night seeking between $58 million and $60.9 million in cash by offering new shares to the market, via UBS, priced within a range of $2 a share to $2.10 a share.

Shares in AIF were halted from trading yesterday as the deal was unveiled to the market. It had last traded at $2.16.

Gold Coast Airport earned $18.6 million before interest, tax, depreciation and amortisation for the 2004 financial year.

On those earnings, AIF has made an enterprise value (EV) to EBITDA multiple of 9.5 times.

And AIF chief operating officer Mitch King said the investment would boost cash flow immediately, adding more than $5 million cash to the fund in 2005.

"It's a great acquisition, a great asset. It's a lot more favourable compared with Macquarie Airport's recent acquisition multiple," said Investors Mutual portfolio manager Andrew King, who controls an 8.2 per cent stake in AIF.

Macquarie Airport's Brussels deal was priced at an EV to EBITDA multiple of 12.3 times.

AIF bought a 1.9 per cent stake in Gold Coast Airport earlier this year without disclosing it to the market as the fund sought to leverage itself into a larger stake.

"We used our pre-emptive rights once we were on the register," said Mr King of the subsequent deal.

Gold Coast Airport, formerly the Coolangatta Airport, was privatised in 1998 when a consortium led by Macquarie Bank and including the Manchester Airport Authority paid $104.7 million for a 50-year lease.

According to Asic filings, Macquarie Bank managing director Allan Moss still holds a direct shareholding in the Gold Coast airport.

Gold Coast is Australia's sixth- largest city with nearly 1 million residents in its catchment area. Its airport hosted a total of 2.6 million passengers during 2004, of which more than 2.4 million were domestic passengers.

Gold Coast City has a population of about 440,000 and is growing at 3.5 per cent a year, compared with Australia's average population growth of 1.2 per cent.

"This acquisition gives AIF investors exposure to the booming Australian domestic aviation market and provides exposure to the fast growing low cost carrier market," Mr King said.

[skinny]

quote:Originally posted by Benlamnz

Hey Skinny & all (yep including you SEC mate, we enjoyed your constructive criticism here, like you did with the recrnt MAp hybrid securities issue in the Mac thread;)) more good news- Instos like it!





Like it - what an understatement - seems the instos positively lapped it up [:p]

Actually I'm sorta relieved at this one, my father in law put some money into it and NPX last month on my advice, at least one is now well in the money [:o)];)

[Benlamnz]

Its Official! AIX Outperforms MAp! Yey!
:D

Did a calculation- my AIX gains = 2.34(Friday close)-1.62(entry price) then divide by 1.62 and times by 100 = 44% ex dividends (6c).

I bailed out of MAp at 2.06, so hypothetical gains = 2.92(Friday Close)- 2.06 (my exit price) then divide by 2.06 and times by 100 =41.7%



Hi fives to all in the forum, especially Skinny, we all owe you a beer or two mate for unearthing this gem. Next time you stop by KL, where I am on an OE, let me know, the booze's on me[8D]

[Benlamnz]

Yet another potential opportunity, this time in sea ports.

----------------------------------------------------
New port for Victoria

Brett Foley

13 November 2004
Australian Financial Review


The Victorian government is planning a second international container port south-east of Melbourne, creating a possible competitor to the duopoly of Patrick Corp and P&O at the port at the mouth of the Yarra River.

Victorian Transport Minister Peter Batchelor identified Hastings, south-east of Melbourne on Western Port Bay, as the likely location for a shipping container port to ease a shortage of capacity that is expected by 2030.

The Port of Melbourne is Australia's busiest, handling 37 per cent of the country's container trade.

A $250 million project is under way to deepen the Yarra to take super-large container vessels, while expansions are planned for terminals at Swanson Dock, the Westgate and Webb Dock. But the port will not be able to handle the 8 million container movements expected by 2030.

P&O managing director Tim Blood said he did not fear fair competition, but it was still unclear whether a second container terminal would be needed. "It depends on a lot of things, such as the rate of growth and the progression of technology," Mr Blood said.

A Patrick Corp spokeswoman supported the government's plan to expand capacity at Swanson Dock in the Port of Melbourne, but would not comment on Hastings.

Patrick Corp's tight grip on bulk freight through its Pacific National rail venture's control of Victorian rail lines is already the subject of a government review.

Mr Batchelor told the Ports Agenda 2004 conference in Melbourne on Friday the new facility would be built in the coming 20 years.

The NSW government is also examining extra container ports at Port Kembla and Newcastle, while closing docklands in the suburbs close to the city of Sydney.

Mr Batchelor said Hastings which is already a port for companies such as BlueScope Steel and Esso/BHP had natural advantages such as deep water and large areas of back-up land, and was close to Melbourne's industrial south-east.

Planning studies would begin soon to preserve the necessary land and transport access.

The strategy also covers development of the ports of Melbourne, Hastings, Geelong and Portland.

[skinny]

quote:Originally posted by Benlamnz

Its Official! AIX Outperforms MAp! Yey!
:D

Did a calculation- my AIX gains = 2.34(Friday close)-1.62(entry price) then divide by 1.62 and times by 100 = 44% ex dividends (6c).

I bailed out of MAp at 2.06, so hypothetical gains = 2.92(Friday Close)- 2.06 (my exit price) then divide by 2.06 and times by 100 =41.7%



Hi fives to all in the forum, especially Skinny, we all owe you a beer or two mate for unearthing this gem. Next time you stop by KL, where I am on an OE, let me know, the booze's on me[8D]






Cheers Benlamnz and well done to all AIX holders :D
Looks like we've locked in the gains based on the SP action yesterday. Must admit I was having thoughts of selling a few when it got to $2.20 (incidentally Market Analyst's fair value level) but that was before the Brisbane purchase. Now I've changed my mind & looking forward to the next distribution - should be a goodie.

[skinny]

Some more positive news flow, couple of articles about Perth airport in weekend Oz papers.

http://www.theaustralian.news.com.au/common/story_page/0,5744,11458327%255E462,00.html

http://www.thewest.com.au/20041122/business/tw-business-home-sto129864.html

[Benlamnz]

With AIX owning 25% already there is always the potential for a move to above 50%. Although I personally would prefer the next buy be on Melbourne, taking it to at lease 50.01%, as a preemptive strike on any possible move by MAP.

[SEC]

quote:Originally posted by Benlamnz

Its Official! AIX Outperforms MAp! Yey!
:D


You were dying to get bragging rights eh Ben?;)

Pity it didn't last:D:D:D

I believe CSFB has revalued MAP up to 350!

SEC

[Benlamnz]

quote:Pity it didn't last

Time will tell mate[8D] But congrats for holding on all the way thru the $3.00 mark nonetheless. I am just as hell bend on AIX and no one will take mine for less than $3.00 either.

[Benlamnz]

New Intraday High at 2.43. Anyone know whats the news?

[skinny]

No but it has been drifiting down the past few weeks and I wonder whether it just hit a large order level? Bit annoying actually as it was just a few cents away from where I had a bid in to buy some more!!

[skinny]

Guys I'm out of AIX now - needed the cash for another property investment and this one already over my measure of 'fair value' of around 2.40 or 20% over NTA.

Good luck to all holders, could be a bit more in it yet with Perth numbers looking strong again and the distribution set to rise [8D]

[45south]

Me also Skinney
I suspect the tsunami will dint things a bit next month.

[Benlamnz]

adios Skinny. Thanks for raising our attention to this gem in the first place. whoever employing you in Belgium must be getting a good bang for their euros. I am still in, but not based on fundamentals anymore, but rather on the correlation theory with MAP which is at 3.20 now. Also because AIX has preemptive rights over Brisbane, and judging by their track record, I trust these guys with acquisitions. But nonetheless I have an exit strategy in place as well, and my stops are increasingly tight to prevent unnecessary lessening of a already huge profit. Would be hard pressed to find another vehicle of equal quality to park cash on respecable yield though. Currebtly doing advance due diligence on HDF, sister utility managed by Hastings bankrolled by Westpac. Would love to hear your economist prespective on that if you are interested. The 9% yield on a sleep easy co is certainly not to scoff at in a slowing economy. good luck with the plot of land.

[k1w1]

Acquires 49.1% of Townsville and Mt Isa Airports.

[Benlamnz]

good price too I note.

[OldRider]

Trading halt today. No notion what this might be due to.

[k1w1]

Going to buy a stake in ze airports held by ze German company and kick Macquarie's overpaid ass.

[OldRider]

Details of the purchase here,plus intention to raise further capital.
http://www.smh.com.au/news/Business/AIF-buys-stake-in-airport-fund/2005/03/01/1109546871952.html
I wonder what form this will take, I seem to recall that the last time this happened NZ shareholders were excluded,along with all other non Australians. Am I correct?

Any other holders of this stock around?

[Benlamnz]

Holders with a NZ address is eligible.

[SEC]

The market is not pleased with AIX's latest acquisition. It seems like AIX are buying airport stakes just for the hell of it.

MAP got punished for buying Copenhagen despite the reasonable price tag. AIX should have learnt from this gaffe, yet it paid a larger EBITDA multiple for the Hochtief stake.

As I said before, AIX is a Mini-MAP. And unfortunately, due to both companies being too greedy for fees of late, their share prices have suffered.

SEC

[Benlamnz]

In retrospect SEC's comment was wrong as the big drop conincide with a market wide correction between march to may. The record result from Melbourne Airport reinforce the view that AIX is a credible alternative to MAp, especially now that the two entity overlaps each other's business in Sydney Kingsford Smith, and that AIX's stake, albeit small, actually provides exposure at lower p/e. Another important factor is the yield, with AIX's div being 70% tax deferred, if offers better quality distribution than MAp's unfranked div.

After taking a hiatus with a very demanding new job and a few of other small cap plays (miraculously in black), my funds is now back with AIX and BBI in a grand scale.

P.S. Skinny hows wellington? I recently got some more info on the asian airports pending privatisiation, let me know if you are interested.

[SEC]

quote:Originally posted by Benlamnz

In retrospect SEC's comment was wrong as the big drop conincide with a market wide correction between march to may.


Ben, have you been living in a cave for the last few months? The drop in MAP and AIX started well before the general market slide just before Easter. The price falls were definitely related to their recent acquisitions. MAP actually rose significantly in April-May, in stark contrast to the market as a whole.

Re dividends, MAP deserves a premium due to their active management and board representation in most of their holdings.

SEC

[SEC]

PS I know you're causing mischief Ben but I couldn't let such a statement go unchallenged!

SEC

[Benlamnz]

Easy SEC, just a causal comment on a Sunday morning. While you are right with the exact timing of the movements, you seem to overlooked that sligtly after MAp's run in May, AIX also had a record run all the way to a new high of 2.87, tracking MAp all the way. I think the acquisition related fall you refer to are knee jerk reactions, as both Copenhagen and Hotchef's portfolio provide a platform for continental, and most importantly, eastern european expansion. If you look at the MAp/AIX portfolio you will note that the locations are almost identicial ex Britain. The chance of both Mac Bank and Hastings getting it wrong are pretty slim.

Re board representation, Hotchief has board representaion in most of the airports including Sydney, and Hastings are increasingly wielding their clout in conjunction with their other funds in the same investments. Besides, Perth and Melbourne demonstrated that when you are onto a good asset with reliable management, board representation is not crucial. The active management MAp are into are mostly a) refinancing the hell out of the assets and b) squeezing all largesse from exisitng structure, both of which were applied and completed at Sydney by the time AIX bought in, so thank you very much Mac Bank.

[SEC]

Pretty conclusive now which airport stock was the better pick. MAP has outperformed AIX in the short, medium and long term. Shows what active management and board representation can do to the share price.

Shame about their recent performance relative to the ASX200 though. I got a bit bored with the price going nowhere and sold out recently. One to watch again when interest rates start falling.

SEC

[skinny]

...or if oil prices start coming off.

Have picked up a few - with a p/e of 7, discount to NTA and a reasonable yeild it seems like a pretty safe place to park some of the skinny global hedge funds excess AUDs.

[SEC]

Skinny, I thought you knew better than valuing these sort of stocks on a PE basis?!??!?!

If you look at AIX or MAP v oil prices you will find a low correlation.

[skinny]

Yes lazy of me to say on a p/e basis - was short hand for saying 'cheap' but net operating cash flow per share is the more appropriate measure. For the year ended June 2006 this was 15.2c putting the p/cf multiple on a not too demanding figure of 14. Also distributions were fully funded out of cash flows rather than from any funky asset revaluations. The gross yld is ~8% on current prices. In comparison MAP's net operating cash flow per share is roughly 10c, the gross yeild is around 7% and it trades at a substantive premium to NTA, rather than a discount. AIX is clearly the better value proposition. Of course it remains to be seen whether the market agrees and narrows the gap - the recent trading volume and pick-up in AIX is perhaps a sign this is starting to happen but am not holding my breath.

Regarding oil prices, ok no obvious corr'n but would have thought their decline are at least a +ve to the extent it reduces ticket prices and encourages more bums on seats, plus leaves more money in the pocket for travellers to spend at the airports.

[skinny]

Another nice rise for AIX today - up roughly 50% since the last post in September excluding the dividend pmt in February. Along with MAP I reckon its value is pretty stretched now. That said have no intention of selling while the chart is as strong as it is, and with global appetities for stable income generating assets showing no sign of abating yet [:p] The trick will be to get out in time :(

[OldRider]

My first venture into this stock was in March 01, two poor years followed this, but with two later purchases and no sales,average cost is now $2.13NZ, since 31 March 2003 dividend return has been near to 5.5% and total annual return, 36.09%,36.57%,17.23%,21.41%, and 16.5% since 31 March this year. These figures are in NZ dollar terms, working with Aust currency I suspect the figures would look even better
Overall IRR since purchase 16.5%, not as good as MAP over much the same time frame, but rather better than MIG.
AIA for me has been rather better producing an IRR of 29.5%, but this has been enhanced by some sales at a high price and subsequent repurchase at a lower cost.

AIX though is not on my for sale list yet