Auckland International Airport Limited (AIA)

[Zaphod]

- The plans of the new govt ie. Light rail to the Airport which will affect parking revenues if implemented


Considering the recent investment Skybus have been subsequent to acquiring the airporter service, I'm sure they aren't happy either.

I understand that Skybus do pay AIA a fairly tidy fee for using the airport (as opposed to the urban 380 service for example), but I do not know the exact figure. Another potential loss of revenue for AIA, albeit relatively small.

[Benny1]

Considering the recent investment Skybus have been subsequent to acquiring the airporter service, I'm sure they aren't happy either.

I understand that Skybus do pay AIA a fairly tidy fee for using the airport (as opposed to the urban 380 service for example), but I do not know the exact figure. Another potential loss of revenue for AIA, albeit relatively small.
I don't think a potential rail link of any kind would impact too much on AIAL. They would demand a license fee for a train using AIAL just the same as Skybus do at the moment as well as the taxi companies e.t.c. ...this off course will be passed on to the rail patrons making the service too expensive especially for the thousands of Airport workers who commute to the Airport daily ..

[Jay]

I would imagine it would be similar to Sydney - Train fare to from Circular Quay to Airport about $4 - plus "airport fee" of $12 or similar.

[Zaphod]

I don't think a potential rail link of any kind would impact too much on AIAL. They would demand a license fee for a train using AIAL just the same as Skybus do at the moment as well as the taxi companies e.t.c. ...this off course will be passed on to the rail patrons making the service too expensive especially for the thousands of Airport workers who commute to the Airport daily ..

Maybe, but the AT 380 service apparently doesn't pay AIAL for access to the site, so I wonder what deal would be struck for train access? All conjecture at this point admittedly.

[Yoda]

Just to be clear though because my post above looks very negative. I still think the company has strong fundamentals and that the company is still well managed even with the headwinds. Its just overvalued and there is just better buying, when the prices stablise at hopefully in the mid to high fives.
Well it got down to nearly $6 and does seem to be on its way out of the down trend maybe? . Some have a value at 7.10 I think . So around 17% to be had possibly, although up 4% from the bottom now.

[peat]

still liking the possibility of a quick move to 7.00 now that we moved up 5% in two days of those lows - which had me beginning to reconsider.


I had a look at this the other night and found one pattern that I thought was interesting and indicative.
9192
It does however have the bearish fall from 7.75 to fight against so there could be a bit of interesting tension before/if the bullish pattern takes hold.
Fundamentally , who wouldnt love a monopoly

[kiora]

When will Auckland Councils shares be on the block?

[RTM]

When will Auckland Councils shares be on the block?

Yes...selling AIA and then all the foreshore land after the port is moved to Northland should provide plenty of money for the infrastructure that Auckland requires. And create room for the Americas cup !

[peat]

Nice recovery back to 6.76 following my identification of value in late Oct and again in Nov.

However at the moment the monkey throwing darts would likely do well as this month of Dec appears to be benefitting from a weight of money thats driving the market higher in general - not that many stocks missing out.

[value_investor]

Nice recovery back to 6.76 following my identification of value in late Oct and again in Nov.

However at the moment the monkey throwing darts would likely do well as this month of Dec appears to be benefitting from a weight of money thats driving the market higher in general - not that many stocks missing out.

With January around the corner and the relative optimism in the market, I'm not sure if the rise is very much warranted considering the guidance is very weak on this. However, in this bull market anything is possible because we don't really look at how well the company is doing anymore. The 'specu-vestors' keep striking..

[Marilyn Munroe]

AIA considering selling their stake in North Queensland Airports

https://www.nzx.com/announcements/312664

Boop boop de do
Marilyn

[peat]

AIA considering selling their stake in North Queensland Airports

https://www.nzx.com/announcements/312664

Boop boop de do
Marilyn

yeh i had a look at this yesterday. I read this page for the background
9383
Mackay looks to be a drag on passenger numbers
Cairns not growing sufficiently to compensate

They paid about $110 The asset is held at about $75m

I guess it makes sense to divest with the upcoming capital requirements for AIA but then when I think about it more, actually - money is cheap these days and they would appear to be getting a good return on their NQA investment.
Not sure what its worth is now -

[Marilyn Munroe]

The sale of AIA's stake in North Queensland Airports is announced.

It seems the proceeds will be used on facilities upgrades rather than lining shareholders pockets.

https://www.nzx.com/announcements/313062

Boop boop de do
Marilyn

[peat]

good profit though,
As per many stocks there has been a nasty downturn recently and I bought more at close yesterday based on the exact 61.8% retracement

[value_investor]

The sale of AIA's stake in North Queensland Airports is announced.

It seems the proceeds will be used on facilities upgrades rather than lining shareholders pockets.

https://www.nzx.com/announcements/313062

Boop boop de do
Marilyn

The opportunity cost would be to borrow the money instead and have interest charges through finance cost and additional liabilities show on the balance statement for a longer period of time. At the same time, keeping a less than ideal investment.

[macduffy]

Certain posters here will take this as a signal to sell AIA!

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11980547&ref=rss

;)

I hold.

[RGR367]

Certain posters here will take this as a signal to sell AIA!

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11980547&ref=rss

;)

I hold.

I might as well .................hold ;)

[value_investor]

I like the sale being used to fund the current investments. I'm just starting to wonder if the sale is being used to fund rising construction costs, or that the capital allocation that was previously forecast was well below the real cost. The FY17 presentation had total capital forecast at 410-460m.

[peat]

Here's some comparative PE's from other growth companies on the NZX, all growing considerably slower than ATM, all PE's off 4 Traders average of analysts FY19 forecasts
ATM 28
POT 36
AIA 29
FPH 35


AIA looking well priced based on this. (Apart from the fact that they're all expensive)

[Beagle]

You need to consider their relative growth rates peat. Analysts on average for AIA are expecting an EPS growth rate of just 5% in FY19 relative to FY18 and the same in the subsequent year. I would say looking at that comparative ATM is genuine value on a relative growth basis as its growing much, much faster than any of those companies.

[Sinvester]

How come no one's posted about AIA since January?

[waikare]

How come no one's posted about AIA since January?

It's all Ticky-boo

[Sinvester]

It's all Ticky-boo
Thanks waikare, usually something is said when annual report comes out, I'm looking at investing but seems a bit on the expensive side, might have to wait until next crash!

[steveb]

Thanks waikare, usually something is said when annual report comes out, I'm looking at investing but seems a bit on the expensive side, might have to wait until next crash!
Hope you don't mean crash as in airplane crash!

[Sinvester]

Hope you don't mean crash as in airplane crash!
Geez I'm not that evil!! I meant market crash.

[Joshuatree]

Market crash still coming.Meanwhile who could have imagined the recovery since your post Sinvester, not me for one. It gives me an even better opp to take more money out of the mkt.

Meanwhile a bit of stick has AIA reducing prices
"Auckland Airport has reduced its target return from 6.99% to 6.62%, compared to the Commission’s benchmark for airports of 6.41%."

1H19 Interim Results Presentation 34 pages 2.9MB (https://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=02078365)

s/p up a tad.

[value_investor]

Quite the average result relative to share price on this one. The thing that surprises me most is that the share price is holding up. Air NZ signaled a slowing in passenger numbers and this seems to be re-iterated here by AIA.

A lot more growth in other income sources than the aeronautical but passenger growth drives growth in parking, retail and hotel etc which is troubling going forward.

If they hit the top of that guidance range, that still puts them on a forward PE of 32 which is well outside my comfort zone. I sold my holdings not too long ago believing that PE would be re-rated to normal numbers but so far I've been proved wrong.

[Jim]

AIA's share price went up to all time high to $8 today, what is the rationale of its share price gone astronomical ?

[macduffy]

AIA's share price went up to all time high to $8 today, what is the rationale of its share price gone astronomical ?

I would think that it's just a reflection of the fact that NZX indices are at, or near, all time highs - plus the scarcity of quality stocks these days.

[Beagle]

AIA are absolutely rorting customers blind with their predatory pricing on casual parking rates at the airport. Uncovered parking for one day $50. Highway robbery in my opinion.

[couta1]

AIA are absolutely rorting customers blind with their predatory pricing on casual parking rates at the airport. Uncovered parking for one day $50. Highway robbery in my opinion. I thought $34 for a day at Wellington Airport was bad but $50 is extortion.

[Cricketfan]

AIA are absolutely rorting customers blind with their predatory pricing on casual parking rates at the airport. Uncovered parking for one day $50. Highway robbery in my opinion.

Yeah, though the used to be reasonable a few years ago. I used to park there for week-long trips, and I'm sure it was under $100. Now I use Aeroparks instead.

[Southern_Belle]

AIA's share price went up to all time high to $8 today, what is the rationale of its share price gone astronomical ?I guess all this talk of expansion & tourism growth blah blah blah .... the question is How did they get so far behind the infrastructure in the first place????

Continuous expansion, disruption and disgruntled customers. When a large event occurs they never seem to have the capacity to cope ..... queues at security, Koru members not allowed guests, congestion at gates with many people sitting on the floor & limited dining choices.

[Balance]

I guess all this talk of expansion & tourism growth blah blah blah .... the question is How did they get so far behind the infrastructure in the first place????

Continuous expansion, disruption and disgruntled customers. When a large event occurs they never seem to have the capacity to cope ..... queues at security, Koru members not allowed guests, congestion at gates with many people sitting on the floor & limited dining choices.

It's a monopoly - so get used to it.

And all the better to justify ever increasing charges to improve services.

[Balance]

AIA are absolutely rorting customers blind with their predatory pricing on casual parking rates at the airport. Uncovered parking for one day $50. Highway robbery in my opinion.

Own a few AIA shares and you will be rejoicing like those of us who own a few :t_up:

[Beagle]

I thought $34 for a day at Wellington Airport was bad but $50 is extortion.


That's exactly what it is. If I get time I will draft up a formal complaint to the Commerce Commission as this is so outrageous something needs to be done for the benefit of all consumers. For goodness sake, some air fares to parts of N.Z. are cheaper than a day's parking, so something is very seriously wrong.

[Balance]

That's exactly what it is. If I get time I will draft up a formal complaint to the Commerce Commission as this is so outrageous something needs to be done for the benefit of all consumers. For goodness sake, some air fares to parts of N.Z. are cheaper than a day's parking, so something is very seriously wrong.

Appreciate if you could complain about Auckland city centre carparks as well - some charge $36 for 2 hours! Now THAT is extortion - especially when it's all in fine print and deceptively advertised as $8 carpark (in bold)!

($8 per half an hour, that is and then it ratchets up to $24 per hour after the third hour!)

[Beagle]

Ouch maybe I am out of touch out here in the burbs ? Anyway it will be a waste of time complaining as AIA will simply point to all the wonderful new facilities they are building for passengers. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12218574 (Sorry there are no prizes, not even a chocolate fish), for guessing who is really paying for all these facilities. Seems bizarre that one can get a cheap flight from say Auckland to Nelson for as low as $39 sometimes and it costs more for parking than it does for the flight.

[Balance]

Ouch maybe I am out of touch out here in the burbs ? Anyway it will be a waste of time complaining as AIA will simply point to all the wonderful new facilities they are building for passengers. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12218574 (Sorry there are no prizes, not even a chocolate fish), for guessing who is really paying for all these facilities. Seems bizarre that one can get a cheap flight from say Auckland to Nelson for as low as $39 sometimes and it costs more for parking than it does for the flight.

A taxi ride from Auckland city to airport is $75 to $85. Now try figuring that one out as you can fly to Christchurch from Auckland (late last flight) for that kind of money!

I use Uber and it costs around $50 to $75 depending on time of day.

[Bjauck]

AIA are absolutely rorting customers blind with their predatory pricing on casual parking rates at the airport. Uncovered parking for one day $50. Highway robbery in my opinion.. That is hefty. Would make it more worthwhile getting a taxi or Uber. All part of the expense of travelling. Land is expensive in Auckland and consequently car parking is expensive. Time for Auckland to get serious about public transport links to the airport and reduce the demand for private car parking?

[Balance]

. That is hefty. Would make it more worthwhile getting a taxi or Uber. All part of the expense of travelling. Land is expensive in Auckland and consequently car parking is expensive. Time for Auckland to get serious about public transport links to the airport and reduce the demand for private car parking?

AIA parking is strictly for those who want the convenience of parking as close as possible to the terminal. All about demand and supply, and convenience.

There's actually plenty of parking around the area (e.g. Aeroparks charges $30 for first day, $33 for 2 days and $39 for 3 days etc, cheaper as it goes for more and more days.

A shuttle bus takes users to and fro the carpark to the terminal every 10 minutes - and the terminal is but 5 minutes away.

[Bjauck]

AIA parking is strictly for those who want the convenience of parking as close as possible to the terminal. All about demand and supply, and convenience.

There's actually plenty of parking around the area (e.g. Aeroparks charges $30 for first day, $33 for 2 days and $39 for 3 days etc, cheaper as it goes for more and more days.

A shuttle bus takes users to and fro the carpark to the terminal every 10 minutes - and the terminal is but 5 minutes away. Exactly. You pay for the convenience of parking close to the terminal and you pay for the opportunity cost of preventing others from parking close to the terminal. It is a valuable space that you choose to occupy. Just like you would expect to pay more for a section in Parnell compared to the same sized section in Papakura.

[macduffy]

Just another example of one man's shrewd investment being another man's "extortion". I'm with the former here.

:cool:

[Jim]

The closing price for this monopoly is all time high, I just wondering they may consider of having another share split.

[Blue Skies]

The closing price for this monopoly is all time high, I just wondering they may consider of having another share split.


Yes what's driving this price increase?
Happy holder.

[Ggcc]

Yes what's driving this price increase?
Happy holder.
The fact it is a monopoly. It would all change if another airport was in Auckland.

[macduffy]

The closing price for this monopoly is all time high, I just wondering they may consider of having another share split.

Why?

I can't see any point in a share split. Shouldn't we instead want to see a few big numbers on the NZX? Other bourses aren't shy about having $100 + equivalent stocks.

[GTM 3442]

Why?

I can't see any point in a share split. Shouldn't we instead want to see a few big numbers on the NZX? Other bourses aren't shy about having $100 + equivalent stocks.

One observation is that New Zealanders perceive anything over $5 per share as expensive, and to be avoided.

Another is that more on issue shares enhances liquidity - I think Infratil mentioned this a decade or so ago.

[Bluedog]

Yes what's driving this price increase?
Happy holder.
As a longtime holder of AIA and my perspective from the U.S., I offer the following observation. The uncertainty of China - U.S. trade (ie tariffs, the 5G confrontation, China's man made militarized islands, & Hong Kong takeover ambitions) favors an increase trade, air traffic, in both New Zealand and Australia (got milk?).
Secondly, Europe's loss of tourist appeal (safety concerns) by the U.S. and many others, enhances New Zealand safe destination appeal.
AIA's buildout is already pushing the share price.

[limmy]

Now that AIA has stayed above $9 for awhile, will they split the shares again ?
If I remember correctly, it was 5 for 1 before.

[Jim]

Now that AIA has stayed above $9 for awhile, will they split the shares again ?
If I remember correctly, it was 5 for 1 before.

Closed at $9.80. It is now the second biggest in the NZX behind Meridian energy

[Bjauck]

As a longtime holder of AIA and my perspective from the U.S., I offer the following observation. The uncertainty of China - U.S. trade (ie tariffs, the 5G confrontation, China's man made militarized islands, & Hong Kong takeover ambitions) favors an increase trade, air traffic, in both New Zealand and Australia (got milk?).
Secondly, Europe's loss of tourist appeal (safety concerns) by the U.S. and many others, enhances New Zealand safe destination appeal.
AIA's buildout is already pushing the share price.
Really..after ChCh is NZ still regarded as a safe haven? Considering our small population and the mass casualty event we suffered, I imagine many European countries would now have a safer record.

Do Americans consider that Europe is less safe than their own country? Taking into account mass shootings, gun crime, stabbings and risk of terrorism, I would think that the USA is more unsafe. Obviously it depends whereabouts in Europe and whereabouts in the USA you would intend to travel.

[limmy]

AIA is an excellent stock to own in an excellent country, NZ.

[Bjauck]

AIA is an excellent stock to own in an excellent country, NZ. Undoubtedly AIA has been an excellent share to own. Those Canadians may be kicking themselves that they could not grab it? I am certainly kicking myself for having sold down. At least AIA has been a good company that remained on the NZX.

Kudos too for NZ if it has been able to maintain a safe haven appeal despite events, both at the hand of man and not. NZ managed to foster a “100% pure image”. Marketing bluster? Image and reality for various people can diverge.

As far as being at risk from humans is concerned:
(approximately)
Europe has a homicide rate of 3/100,000 people.
USA has a rate of 5.3/100,000 and
NZ has a rate of 1/100,000

Within Europe many countries are safer than NZ. The following have lower murder rates than NZ: Italy, Greece, Spain, Portugal, Poland, Denmark, Norway, Netherlands, Switzerland.

So both NZ and Europe (especially some nations in Europe) would be safer havens for Americans. Of course within those countries the actual experience of various communities would differ from average as would the experience of those who were non-fatally injured at the hand of another person.

https://en.m.wikipedia.org/wiki/List_of_countries_by_intentional_homicide_rate

I think it is immigration that has and is providing a substantial stimulation for AIA. NZ (and especially Auckland) immigration has been and is at a level that would probably surprise many a Trumpist or Brexiter. New immigrants favour Auckland where there is a cosmopolitan community. New NZers are often wealthier and younger than the average NZer and will travel overseas more frequently. They also have family overseas who want to visit them in Auckland. This all is grist to the AIA mill.

[Balance]

Massive volume going through AIA - 7m shares so far.

Looks like heading back to $10.00

[bull....]

Massive volume going through AIA - 7m shares so far.

Looks like heading back to $10.00

good a the last lot i brought was at $6 there about

[Joshuatree]

Climate change immigrants will be the biggest sector in the future. Maybe AIA need to build an international airport in invercargill soon;)

[waikare]

Climate change immigrants will be the biggest sector in the future. Maybe AIA need to build an international airport in invercargill soon;)

You must be one of Sir Tim's mate's suggesting that Invercargill have international airport

[Joshuatree]

Nah ,saw him at a Nambassa or Sweetwaters festival entertaining the masses.I like to think about the future and outside the squares,Tim certainly used to do that.

[macduffy]

Today's result hasn't been well received by the market - SP down 17c.

May have been a bit of over-anticipation - or perhaps overlooking the fact that last year's profit was boosted by the sale of the shareholding in Nth Queensland Airports.

[moimoi]

Chartists,

Has a triple top been put in here @ $9.75-ish...?

[macduffy]

An unexpected, to me, pat on the back for AIA from Sam Stubbs of Kiwisaver fund Simplicity.

https://www.stuff.co.nz/business/118946661/airports-can-reveal-an-economy-on-the-rise-or-one-on-the-decline

Disc: Long time holder.

[bull....]

visitor numbers down

https://www.nzx.com/announcements/347632

helping confirm peak tourism has been

[Preston]

Chartists,

Has a triple top been put in here @ $9.75-ish...?

IMO I don't think there was enough time between those tops to be sure on that one. I see it more as trading in a large range right now and that we are getting to the bottom of that 'box'.

Just my view.

[BlackPeter]

Just happend to pass by this stock on my (sort of) monthly round - and from where I stand is AIA is now in a confirmed downtrend:

10971

Suspect as well the recent virus hype won't help either - emptier and lesser planes are not good for business if you run an airport.

[Preston]

Hey Pete,

I agree with you in part, (IMO) we have a short term down trend, or I would call it a pull back from a fairly good bull run.

Overall, AIA is in a long term up-trend, I'm no expert but it's got to be the easiest long term pick in the country for the next 30yrs and with the Moat and Monopoly, I don't see that changing.

In terms of charting ( I did say ranging earlier and will have to agree that wasn't quite right) this is how I see it below.

-Long term weekly we have an up-trend
-Drill down to the daily and I see a nice pull back (down-trend). MACD is showing a loss of momentum to the downside and you can see price rounding off, If that makes sense. Pull up the MACD and you can see price diverging from the MACD. (not a play in itself)
-We have also that long term TL below which is valid with multiple confirmations, but now we have spent a lot of time away from it. I suspect the experts will be at least having this in the back of their mind.
-the $8.40 zone is the one on my alerts, I think the $8.65 has been broken through and that large short selling on the back of the quick pop yesterday had us close below that area.

Confluence
- I think have solid divergence, approaching a TL with support at that $8.40 area. For any PA traders I would be looking for a significant Pinbar or Bullish outside bar here. If not then I would be watching what we get when we return to the top TL and break through. I'm not predicting anything here, but the signs are there that a squeeze is on into this area. The fact that it is a great business and makes a ton of money (and will continue to after the noses have stopped running) means to me that a bull case exists in favour of downside.

Just my 2 cents folks, constructive thoughts welcomed.


10974
10975
10976
10977

[mondograss]

Some welcome analysis, I'll have to keep a closer eye on AIA and think about reentering. I've been out of it nearly 2 years after a period where it seemed to not be doing very much but might want a home for some funds soon.

[BlackPeter]

Some welcome analysis, I'll have to keep a closer eye on AIA and think about reentering. I've been out of it nearly 2 years after a period where it seemed to not be doing very much but might want a home for some funds soon.

AIA is no doubt a good company but used to be for a long time too dear (inflated by international funds buying in who see it as a positive alternative to negative interest bonds).

Clearly can't hurt to keep it in the watchlist (well, it is on mine). Suspect however that there is at this stage no rush to enter, during a downtrend there never is.

I'd wait for the next handful of months and monitor the international visitors numbers coming in.

Anyway - just my 2 cents. From history I don't seem to be very good in predicting the short term market trend for super expensive companies, and this is one of them :);

DYOR;

[RGR367]

Already down 15 cents on the old outstanding order I got hit with that was placed weeks ago. Not worried much about it as it was hard getting some before on the price I was willing to pay then. Maybe the time has really come more. Just following gut feel as always.

[BlackPeter]

Already down 15 cents on the old outstanding order I got hit with that was placed weeks ago. Not worried much about it as it was hard getting some before on the price I was willing to pay then. Maybe the time has really come more. Just following gut feel as always.

Hmm - my spreadsheet shows fair value around $5.50 ... but - as indicated - there are some companies where Mr. Market disagrees strongly with me on fair value, and this is one of them. Don't let that influence your decisions :).

They say Mr. Market is always right until he is wrong and changing his views (as he frequently likes to do) - and then he is obviously right again.

[Preston]

I feel like the NZ market for the most part has had companies in the ball park of fair valuation up until the last year or so. Meanwhile in the US I just canÂ’t get my head around how people can justify value in most of the popular stocks. ItÂ’s all printed money ending up in the market right? Or am I wrong? ItÂ’s not Mum and dad taking their billions out from the walls.

Interesting fact from a Joe Rogan Podcast

In the last 30years the bottom 50% of Americans have seen their wealth decrease by $900bn. In the same time the top 1% has seen an increase of $21trillion.

We havenÂ’t experienced that until now where a large investor shift is occurring. The BB gen need yield, and yes smart property and low interest rates will still make that play valid, but I canÂ’t help but think people are over 1987 and are really getting back in the game now. They can get great yield from an inflation protected asset without worrying about tenants. ItÂ’s not gonna go vertical like the US but I really think that these BB will need somewhere to stick the 3million they made off their property sale. Heck buy bank shares and make money off whoever had to buy your house and mortgage it up! (Not complaining, just observing)

I just see this shift in ‘older’ people I know and am making generalizations with no fact to back it up, but it’s an opinion I’ll put out there.

[winner69]

Runway itself falling to bits

Is this what happens when profits / shareholders come first? Like neglecting your assets.

[LAC]

Runway itself falling to bits

Is this what happens when profits / shareholders come first? Like neglecting your assets.

Yet the SP went up today....

[winner69]

Yet the SP went up today....

Maybe a case of profits first share price goes up ;)

[BlackPeter]

Yet the SP went up today....

Is this what you call "Went up"? Well, yes, it returned (from below) into its long term downtrend channel ...

10998

[Preston]

Can't get my TL to look anything like yours there Pete.

There are still Chinese carriers coming and going from the airport and that was a fairly quick fix. They have Maintenance on the runway being done every Monday morning where they fix stuff so no big deal here. Just a shame it happened in the middle of the day where there wasn't a large gap in traffic. I'd probably start breaking up too if 200Tonnes of tin kept landing on me over and over and over!

Definitely some keen buyers, think it'll bounce here off the $8.70ish and with any luck fill the gap before heading higher again. Top TL is the one to watch.

2cents

10999

[winner69]

Commentators like Cameron Bagrie know the root cause of the why runway is breaking up:


It ’s called short-termism. It’s a plague. Short term profit focus as opposed to the long game. Companies paying dividends that are too high as opposed to retaining earnings and reinvesting. Fonterra (payout) another example. Firms and investors (and analysts) need to be more long term focused

I added the analyst bit ...analysts per se have too much influence over companies.

[Preston]

Just wondering though here with the Runway issues, who it will affect more. Airlines or AIA ?

Won't be good for AIA reputation and of course expenditure. But I'd say any airlines who use it for long haul flights could be facing some potential challenges ahead.

[peat]

tbh I thought runway had been debunked as an ongoing issue and was simply a oncer
AIA have a lot of development projects - indeed lets remind ourselves that their 2019 Annual report was entitled 'Delivering for the Future'
11033

[BlackPeter]

... Passing the Cross of Death as we speak. This would be the final indicator (if we would have needed one more) that AIA is now in a downtrend.

From a FA perspective - all these flight cancellations (e.g. Singapore Airlines, Air New Zealand) won't help. We probably need to wait for the virus hype to go away before green shoots might emerge.

[Preston]

... Passing the Cross of Death as we speak. This would be the final indicator (if we would have needed one more) that AIA is now in a downtrend.

From a FA perspective - all these flight cancellations (e.g. Singapore Airlines, Air New Zealand) won't help. We probably need to wait for the virus hype to go away before green shoots might emerge.

Cross of death sounds serious!

yep, if we break that swing low, $8 is gonna be in reach! Some solid support there however.

Is that gonna be a good enough deal for the biggest monopoly in the country?

[BlackPeter]

Cross of death sounds serious!

yep, if we break that swing low, $8 is gonna be in reach! Some solid support there however.

Is that gonna be a good enough deal for the biggest monopoly in the country?

Picking bottoms is difficult ... but in my books looks AIA still quite overvalued: forward P/E of 30 together with an forwards earnings CAGR of below 4 ... hmm. Add to that the current uncertainties about travel and tourism.

Just noticed - Analyst consensus on future revenue and earnings have been sightly tweeked downwards, not that anybody would have called AIA a growth company before ...

[Beagle]

Chart looks ugly. Could we see a decent retracement back to test long term support at $5.90 ?
Growth is gone.

[winner69]

... Passing the Cross of Death as we speak. This would be the final indicator (if we would have needed one more) that AIA is now in a downtrend.

From a FA perspective - all these flight cancellations (e.g. Singapore Airlines, Air New Zealand) won't help. We probably need to wait for the virus hype to go away before green shoots might emerge.

In these sensitive times BP no need to be talking death things

[BlackPeter]

In these sensitive times BP it nood to be talking death things

Fair enough ... I wanted to say the MA50 dived below the MA 200 ... which is commonly known as the "cross of d***h" and a quite reliable lagging indicator for "would have been a good idea to sell about 6 months ago" :);

[Sideshow Bob]

Growth is gone.

Tail is trying to wag the dog. Minority shareholder no doubt pushing hard to get Wanaka as an alternate for growth to Qtown where they are constrained. Plenty of locals firing up!

[value_investor]

Decrease in passenger numbers in December and keep in mind this is before the effects of the coronavirus. Real story will be told in the Jan passenger numbers and of course the result tomorrow. Its a big knock on effect to shopping, parking and the hotel business they are now in.

A lot of money being spent to improve something that will in the interim be under the capacity required. It might be good for them to get a breather, tired of explaining to people why our national airport always looks like a shambles going through it. Some parts of it to me still feel like I'm walking through a massive garden shed.

Sold my shares in this to take profits off the table and now looks like I made a good call (doesn't always happen) as the valuation is still 37 times earnings and only growing at low single digits. It would have to come down a lot more for me to jump back into it at this stage.

I like this one a lot for the long term play, its the stock that I would close my eyes and invest in for the next 10-15 years on the NZX.

[bull....]

slight reduction in forecast earnings due to virus , guess they downgrade them later when more info is apparent

[ratkin]

Spending Billions
Earning Millions

But at least the market seems to like it, although I suspect it would have gone up today anyway as most things are.
Headwind for the future, carbon footprint of long distance travel.
Tailwinds for the future, population growth, better transport links to the airport

[Bjauck]

Spending Billions
Earning Millions

But at least the market seems to like it, although I suspect it would have gone up today anyway as most things are.
Headwind for the future, carbon footprint of long distance travel.
Tailwinds for the future, population growth, better transport links to the airport True - carbon footprint is an issue in the absence of more efficient engines.

The related Food and produce miles is a big thing according to friends in the UK. How far does your food have to travel before reaching your plate? That would seem to work against NZ freight exports. However presumably it is not such a big thing for the current Conservative government as they have policies that will put up more barriers to trading with the EU, which is their largest and closest supplier of produce.

[ratkin]

True - carbon footprint is an issue in the absence of more efficient engines.

The related Food and produce miles is a big thing according to friends in the UK. How far does your food have to travel before reaching your plate? That would seem to work against NZ freight exports. However presumably it is not such a big thing for the current Conservative government as they have policies that will put up more barriers to trading with the EU, which is their largest and closest supplier of produce.

Yep it is becoming a big thing, wine, meat etc will eventually suffer.
In terms of tourists there already quite a few in the more enlightened countries (Scandinavia, Netherlands etc) that are swearing off air travel. Might just be a fad with all the GretaThunberg brigade, or it might become a proper thing.

[Corleone]

flight shaming' is definitely a thing and growing. I was at an event recently outside Ankor Wat and a few of the Scandinavians and Germans told me they were there on the sly as they would be flight shamed for taking a vacation half way around the world. I laughed initially but they assured me its becoming quite serious.

I won't buy AIA on principal, one of the worst airports in the world for systems, public relations, directions, amenities, prices, personnel etc.

[winner69]

flight shaming' is definitely a thing and growing. I was at an event recently outside Ankor Wat and a few of the Scandinavians and Germans told me they were there on the sly as they would be flight shamed for taking a vacation half way around the world. I laughed initially but they assured me its becoming quite serious.

I won't buy AIA on principal, one of the worst airports in the world for systems, public relations, directions, amenities, prices, personnel etc.

Worth a read

https://www.oag.com/how-green-is-your-airline?submissionGuid=964d6526-b5cd-4c34-8fc7-c94cd3379600

[winner69]

Pilots Association man says runway condition a big worry and needs fixing big time ..on radio this morning

[Bjauck]

flight shaming' is definitely a thing and growing. I was at an event recently outside Ankor Wat and a few of the Scandinavians and Germans told me they were there on the sly as they would be flight shamed for taking a vacation half wayaround the world. I laughed initially but they assured me its becoming quite serious.

I won't buy AIA on principal, one of the worst airports in the world for systems, public relations, directions, amenities, prices, personnel etc. It is quite ironic as Europeans established their far flung Empires creating massive overseas trade and population links. I wonder how long Northern Europeans will put up without enjoying their package holidays to the Mediterranean? The Cornish Riviera anyone? I guess the Germans could bail out Greece again, if it gets fewer Northern European tourist dollars as a result of the effect of flight shaming?

I have always had a good experience at AIA - I have had worse times at overseas airports. I think I remain critical as a customer despite being a share holder.

[ratkin]

The Cornish Riviera anyone?

Yes please, can't beat it.

[Beagle]

Pilots Association man says runway condition a big worry and needs fixing big time ..on radio this morning

Poor example of monopoly charging like a wounded bull and not even getting the basics right. Domestic terminal has deteriorated to a disgraceful standard and just like the runway the carpark is breaking apart all over the place and they have the nerve to charge over $50 a day just to park within a few minutes walk to the domestic terminal. No wonder the airlines are complaining about landing fees, I'm certainly not impressed with fees they charge me for my car !

[Bjauck]

Yes please, can't beat it. You must have had a different experience to mine! Nice villages but Jumpers in June!

[ratkin]

You must have had a different experience to mine! Nice villages but Jumpers in June!

I am from there, love the wild weather, very atmospheric place

[winner69]

I am from there, love the wild weather, very atmospheric place

Ratkin, You ever been to Percuil …. just down the road from Portscatho …. or across the river from St Mawes

[Bjauck]

You ever been to Percuil …. just down the road from Portscatho …. or across the river from St Mawes I travelled mainly along the North Coast - I met some crazy Scottish surfers at St Ives! "Doc Martin" characters were sane in comparison. Anyway I guess I am diverging from AIA.

[Marilyn Munroe]

The art of taxation(monopoly pricing) consists in so plucking the goose as to procure the largest quantity of feathers with the least possible amount of hissing.

Jean-Baptiste Colbert

AIA has been plucking too many feathers so the volume of hissing is louder.

Boop boop de do
Marilyn

[value_investor]

Key question for me with AIA is do you believe long term passenger numbers will double to 40 million as per AIA projections? I do believe this will happen long term, so will continue to hold despite short term downside from coronavirus. Has been very successful investment over long term. I would not be surprised if share price declines short term before returning to the long term upward trajectory.

I think they will be, its more of a when question. They reached the lucrative 10m mark in 2006 according to that annual report. Then the 20m mark in 2018. A slowdown in global travel will affect the rate of increase in the next year or so but I see it as a blip.

I think the real money earners are in the property investments long term for the business. My only take from that is, if AIA are becoming more of a property company, why pay 40x earnings. There is already stellar property companies such as KPG, GMT, PCT to name a few who aren't on as crazy of a valuation.

[winner69]

AIA Book Value $6 billion and market cap $10 billion seems reasonable

Strategic value of assets high?

[macduffy]

I agree, winner. AIA is more than a property company, although a very successful one. I don't see anyone developing an alternative airport for Auckland just yet!

[BlackPeter]

I agree, winner. AIA is more than a property company, although a very successful one. I don't see anyone developing an alternative airport for Auckland just yet!

No need to develop a second airport in Auckland, it - its already there: https://en.wikipedia.org/wiki/Whenuapai

[macduffy]

No need to develop a second airport in Auckland, it - its already there: https://en.wikipedia.org/wiki/Whenuapai

Yes, and AIA was developed because Whenuapai wasn't suitable for large jet aircraft. It's difficult to see how this could be accommodated these days, given Auckland's subsequent urban development in the area.

[Mr Slothbear]

AIA Book Value $6 billion and market cap $10 billion seems reasonable

Strategic value of assets high?


yes on that front it looks very reasonable but on the earnings / cashflow / the things that matter if you can’t liquidate the assets when they increase in valueside it is quite grim.


As a frequent consumer of air travel / member of the general public there is very good cause for a low cost 2nd airport in auckland. There are many cities especially in europe with populations smaller than aucklands that have 2 or 3 airports and competition does wonders.

flew hong kong to chch few days ago and Christchurch airport is a significantly better experience than auckland

[value_investor]

AIA Book Value $6 billion and market cap $10 billion seems reasonable

Strategic value of assets high?

Agree with you, its probably the only stock on the exchange I would hold with my eyes closed for the next 20 years. However, as a value investor its a steep valuation. This is in my too expensive pile with other great companies..

38 times underlying earnings, with single digit growth (likely to be negative for this year), low dividend yield..

[Joshuatree]

Trading Halt !!?

ZX Regulation (“NZXR”) advises that, at the request of the company, it has placed a trading halt on Auckland International Airport Limited (“AIA”) ordinary shares. The trading halt was placed at 3.59pm this afternoon.The trading halt has been put in place pending the release of an announcement by the company.
The halt will remain in place until the earlier of: • An announcement made by the issuer; or
• Market open on Monday, 16 March 2020.

[Balance]

Trading Halt !!?

ZX Regulation (“NZXR”) advises that, at the request of the company, it has placed a trading halt on Auckland International Airport Limited (“AIA”) ordinary shares. The trading halt was placed at 3.59pm this afternoon.The trading halt has been put in place pending the release of an announcement by the company.
The halt will remain in place until the earlier of: • An announcement made by the issuer; or
• Market open on Monday, 16 March 2020.




Trading Update?

[mondograss]

Presumably an earnings downgrade. Frustrating that the NZX doesn't publish the request for the trading halt as well as their response like the ASX does. Often you can tell from the request why they're going into a halt.

[Joshuatree]

Hasn't hit the ASX yet only a "pause" there.

[bull....]

nz govt travel bans coming

[Balance]

Presumably an earnings downgrade. Frustrating that the NZX doesn't publish the request for the trading halt as well as their response like the ASX does. Often you can tell from the request why they're going into a halt.

They should just get on with it - that's what other companies do.

[mondograss]

They should just get on with it - that's what other companies do.

To be fair it's a fairly fluid situation, they probably want the weekend to see what the fallout is from Trumps announcement and to crunch the numbers. But yes they should just come out and say that they're going to miss guidance and will update the market when they've figured out by how much.

[Joshuatree]

And try and slow the downward momentum on the s/p.

[Balance]

To be fair it's a fairly fluid situation, they probably want the weekend to see what the fallout is from Trumps announcement and to crunch the numbers. But yes they should just come out and say that they're going to miss guidance and will update the market when they've figured out by how much.

High multiple stock so any cut to EPS will be magnified many times in the sp.

Market has anticipated a lower profit already however so let's see what happens.

[JohnnyTheHorse]

Could well be a pending Government announcement banning travel from Europe and potentially the US too?

[Balance]

Could well be a pending Government announcement banning travel from Europe and potentially the US too?

There was no trading halt when government banned travel from China.

[dr_]

Profit Downgraded

On Friday morning, the airport said that developments in the outbreak of coronavirus and significant market uncertainty had caused it to revise its underlying earnings guidance for the year to June 30 from an original range of between $260m and $270m, down to between $210m and $235m.

[Brain]

It will be the 6 months to Dec 2020 that will be really interesting.

[Balance]

Profit Downgraded

On Friday morning, the airport said that developments in the outbreak of coronavirus and significant market uncertainty had caused it to revise its underlying earnings guidance for the year to June 30 from an original range of between $260m and $270m, down to between $210m and $235m.

First downgrade.

Would venture to say it's not big enough so watch for the next one in a couple of months' time.

[trader_jackson]

so a PE of about 45 (even after the share price has fallen nearly 40% since mid last year), and their is larger Time to go back into the $6's... maybe even $5 over time

[BlackPeter]

First downgrade.

Would venture to say it's not big enough so watch for the next one in a couple of months' time.

Won't take a couple of months for the next downgrade. Give it a couple of weeks. I really don't understand these guys ... how can anybody with a shred of credibility left make at this stage a profit forecast for a business which lives exclusively of tourism and of business travel?

Only honest announcement would have been: "We will do our best but we have no clue how business will go over the next 6 to 12 months".

[BlackPeter]

29. January 2020:

Just happend to pass by this stock on my (sort of) monthly round - and from where I stand is AIA is now in a confirmed downtrend:

10971

Suspect as well the recent virus hype won't help either - emptier and lesser planes are not good for business if you run an airport.

Interesting - markets confirmed already in December 2019 that things are turning to custard ...

AIA started to flirt with the MA200 mid of Dezember (SP around 8.75), but even waiting for the Cross of Death in mid February 2020 would have allowed investors for a $8.35 exit.

Ignore TA at your peril ...

[ratkin]

Quite surprising passenger numbers only down 9% was expecting it to be more

[winner69]

Won't take a couple of months for the next downgrade. Give it a couple of weeks. I really don't understand these guys ... how can anybody with a shred of credibility left make at this stage a profit forecast for a business which lives exclusively of tourism and of business travel?

Only honest announcement would have been: "We will do our best but we have no clue how business will go over the next 6 to 12 months".

Only a few months of financial year to go .....forecasting f21 will be harder eh

[ratkin]

Soon be time to let the Chinese back in, it those pesky Aussies, Americans and Euopeans that are the problem now

[mcdongle]

Airlines no longer have to use their slots to keep them....some have been flying empty planes to keep slots open this is obviously crazy

[ratkin]

Airlines no longer have to use their slots to keep them....some have been flying empty planes to keep slots open this is obviously crazy

I wonder if there any chance she throws the airport a bone, it is going to be deserted now for months

[Blue Skies]

I wonder if there any chance she throws the airport a bone, it is going to be deserted now for months


Going to be interesting for sure but domestic travel will increase. Already friends who were taking overseas holidays are talking about flying to NZ destinations instead. Lots of wonderful places to visit in the South Island for us North Islanders & vice versa.

[Southern_Belle]

I wonder if there any chance she throws the airport a bone, it is going to be deserted now for monthsset it up as an isolation unit

[bull....]

like air share price will take a massive hit. dividends will be axed etc . but they will survive long term

[Blue Skies]

like air share price will take a massive hit. dividends will be axed etc . but they will survive long term


Agreed, and on a positive note, when I think of 'long term' in investment context, I'm thinking 10 years plus.

But an effective medication possibly 4 to 6 months away & a vaccine 18 months which isn't that 'long' & may help support the SP.

[Lease]

AIA SP hasn’t dropped enough to let me get in. Waiting for under $4.

[Blue Skies]

Prof Michael Baker saying we can expect disruption for up to 2 years.

Most long term investors & conservative investment funds can live with that.

[bull....]

its still on a pe of 15. so with negative earnings to come and no dividends share price should fall a long way yet.

[Blue Skies]

its still on a pe of 15. so with negative earnings to come and no dividends share price should fall a long way yet.


Thing is, & I'm not necessarily disagreeing with you, as someone in this position, if I pull money out of AIA & put it into the bank, I'm not going to get hardly any income from it anyway, so might as well leave it where it is.
Don't want to have all eggs in 1 basket either (i.e. the banks)

[NZSilver]

I'd say this is going to get smashed Monday following Trump's latest and NZ travel bans/requirements. Then there will be a few more down days on the US markets and it will drop further. It's going to get a lot worse before it gets better for Auckland airport. I'd say airnz, serko and tourism holdings will also get knocked around.

[ratkin]

Thing is, & I'm not necessarily disagreeing with you, as someone in this position, if I pull money out of AIA & put it into the bank, I'm not going to get hardly any income from it anyway, so might as well leave it where it is.
Don't want to have all eggs in 1 basket either (i.e. the banks)

Yeah you may as well leave it in now, might have no dividends for a year or so but like you say there not many other places to put it. If you exited tomorrow it would likely be at quite a low price. Stick it in the bottom draw. By 2021 people will be desperate for a holiday

[Joshuatree]

$5.85 atm down11.4%.Low so far is $5.76.Will the buyers fade out.With their levels of debt , cap raise ahead?

[flyer]

Good time to spend a bit of maintenance on the runways

[mondograss]

Good time to spend a bit of maintenance on the runways

That had occurred to me as well actually, things will be quiet and interest rates will be low, might as well accelerate the work program and get cracking.

[Joshuatree]

Really! ive been informed that AIA had a Debt/EBITDA multiple of 4.67 before the s/p started dropping.Cashflow drying up. Big trouble ahead getting the balance sheet sorted.

[BlackPeter]

That had occurred to me as well actually, things will be quiet and interest rates will be low, might as well accelerate the work program and get cracking.

I am sure Cindy would be happy to spend some of our money on it as well .... I guess you need to help iconic NZ companies fighting for their survival ... and at the end Fletcher Building would benefit as well :). Win-win-win.

[Leemsip]

This needs to be down 30%.
wont have to wait long I reckon

[trader_jackson]

This needs to be down 30%.
wont have to wait long I reckon

Already 2/3rds of the way there, will drop down another 10% over the coming days hopefully.
I'll then be happy to look at an entry point in the $4's

[Leemsip]

Already 2/3rds of the way there, will drop down another 10% over the coming days hopefully.
I'll then be happy to look at an entry point in the $4's

Ive started to set up a spreadsheet for when to buy in and need multiple factors to align before a purchase. For AIA:
- ensure can make interest and other mandatory costs assuming revenue chopped by 60% for 2020.... (hmm not sure how to do this but will have a crack at it)
- price <$4
- wait for full travel restrictions to grind company. Oct/Nov earliest purchase

Trying to get some discipline....

[Leemsip]

easy to see another 20% reduction from here in the next couple of weeks. Bad news will keep comng for months though so no hurry to purch

[Blue Skies]

easy to see another 20% reduction from here in the next couple of weeks. Bad news will keep comng for months though so no hurry to purch


The news is all grim grim grim, anticipating worst case scenario & we're at max uncertainty now.

With each passing month we'll be moving forwards towards more clarity, probably some good news around successful medication & vaccine trials & an eventual return to some normalcy.

That's the way I see it anyway.

[winner69]

Divie cancelled

[Balance]

Divie cancelled

Right thing to do - before stock goes ex.

Saves the airport $132m - will pay the wages & keep the staff there for a few months before international flights resume.

But what if they never*? :eek2:

I am more worried about being stuck here in Jacindaland forever!

*Just joking.

[BlackPeter]

Right thing to do - before stock goes ex.

Saves the airport $132m - will pay the wages & keep the staff there for a few months before international flights resume.

But what if they never*? :eek2:

I am more worried about being stuck here in Jacindaland forever!

*Just joking.

If they never come back? Well, I guess in this case AIA can always lease out or sell the runway and allow the government to build some of the planned Kiwi build houses along it ...

But seriously - they do have a lot of real estate which could be marketed.

[Bjauck]

If they never come back? Well, I guess in this case AIA can always lease out or sell the runway and allow the government to build some of the planned Kiwi build houses along it ...

But seriously - they do have a lot of real estate which could be marketed. Quite a few years ago one of the bases on which my stockbroker recommended Auckland airport was that it was a big landowner and property developer.

I would be surprised if mass air travel did not bounce back as confidence returns. The general population would not be content for air travel to remain but only for an elite. Climate change concerns may see further efficiencies for engines and progress with pollution control..

[macduffy]

True, Bj, but the property won't be so valuable if the recession is prolonged and there is less activity in and around the airport. Okay, that's an extreme situation, but...…..

[Zaphod]

True, Bj, but the property won't be so valuable if the recession is prolonged and there is less activity in and around the airport. Okay, that's an extreme situation, but...…..

I agree, and we should remember that September 11 was viewed as a doomsday for the airline industry, and consequently airports. We recovered eventually, as we will from this. The length of time it will take is however very debatable.

[bull....]

Passenger numbers at Auckland International Airport down 44 per cent
https://www.tvnz.co.nz/one-news/new-zealand/passenger-numbers-auckland-international-airport-down-44-per-cent

[trackers]

Passenger numbers at Auckland International Airport down 44 per cent


https://www.tvnz.co.nz/one-news/new-zealand/passenger-numbers-auckland-international-airport-down-44-per-cent

I was there last night at 5pm...rush hour. Dead as a door nail, couldn't believe it.... Although nothing can stop that bloody temporary Koru from always being full :p

5pm rush hour flight from AKL to CHC was 70% empty

[BlackPeter]

According to the analysts is this share currently starting to look like a bargain: Consensus SP is $7.66 and Buy Recommendation is a strong "HOLD" (5.9/10). But before we get too excited - how good have the analysts been in the past in the art of predicting the future?

In February 2019 the AIA share price peaked at $7.77. At that stage the combined mental power of 9 share market analysts forecasted that over the 12 months to February 2020 the AIA share price will drop by 17% to $6.46 (consensus). Obviously - we could argue that these wise men predicted already the current market crash, and just got the drop a bit early, but in that case did they predict the market crash for AIA already for a long time.

AIA actually peaked in February 2020 at $8.75, i.e. the actual share price was 35% above the consensus and SP moved into the opposite direction from the forecast (rise instead of drop) - i.e. analyst forecast is a clear FAIL.

Looking into the consensus buy recommendation - it was in February 2019 "UNDERPERFORM" (3.9/10) - i.e. analysts said that the share will underperform the NZX. NZX 50 went up by 21% and AIA went up by 13%. That's 8 % lower than the NZX performance and in the contet of this exercise a PASS.

I am doing this exercise as well with other NZX listed stocks - the overview is here:
https://www.sharetrader.co.nz/showthread.php?11721-How-good-are-the-forecasts-of-stockmarket-analysts

20 stock forecasts checked so far (checking for each consensus and buy recommendation);
Consensus share price forecasts correct: 4/20; analysts hitrate: 20%
Consensus recommendation vs NZX50 correct: 7/20; analysts hitrate: 35%

Based on this performance it might be questionable whether we want to trust the 'experts' with the current Buy recommendation.

[iceman]

This is very sad to see https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12319973
I think now is exactly the right time to use some of the Government's money that they are pouring into the economy to get a move on and build the 2nd runway at AIA. When is there a better time than now when there are hardly any planes or other traffic there and the Government wants to ensure ongoing employment ? This is critical infrastructure that should be built right now

[Bjauck]

This is very sad to see https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12319973
I think now is exactly the right time to use some of the Government's money that they are pouring into the economy to get a move on and build the 2nd runway at AIA. When is there a better time than now when there are hardly any planes or other traffic there and the Government wants to ensure ongoing employment ? This is critical infrastructure that should be built right now Postponing the second runway and new hotel etc is the right thing to do. Repairing the main runway should be priority whilst movements are reduced.

There will be a recession, which would affect numbers travelling anyway. After a protracted period of travelling restrictions, consumer preferences may shift. Even after the epidemic subsides, There will likely be apprehension related to prolonged flights after so many diseased travellers were infected whilst travelling and then arrived back into NZ. The long-term effect on passenger air travel is unknown at this stage.

[iceman]

Postponing the second runway and new hotel etc is the right thing to do. Repairing the main runway should be priority whilst movements are reduced.

There will be a recession, which would affect numbers travelling anyway. After a protracted period of travelling restrictions, consumer preferences may shift. Even after the epidemic subsides, There will likely be apprehension related to prolonged flights after so many diseased travellers were infected whilst travelling and then arrived back into NZ. The long-term effect on passenger air travel is unknown at this stage.

The main runway obviously needs to be repaired, COVID or no COVID. That's a safety issue and it should have not gotten to this stage. Disagree about the 2nd runway. Time to lift much of NZ's pathetic infrastructure to a much higher level.

[macduffy]

The main runway obviously needs to be repaired, COVID or no COVID. That's a safety issue and it should have not gotten to this stage. Disagree about the 2nd runway. Time to lift much of NZ's pathetic infrastructure to a much higher level.

If only. Unfortunately, construction activity is incompatible with the intent of the lockdown, i.e. to reduce contact within the wider community for a period of time. Incidentally, completion of Transmission Gully highway has also been halted, again. And if ever infrastructure was needed, this piece is!

[Valiant]

Although not specifically mentioned, I've heard from my contacts this halt on capex projects will extend to the ZQN airport also.

[Bjauck]

The main runway obviously needs to be repaired, COVID or no COVID. That's a safety issue and it should have not gotten to this stage. Disagree about the 2nd runway. Time to lift much of NZ's pathetic infrastructure to a much higher level. They referred only to suspension not cancellation. Why build something to the same previous timetable if it may not be needed after all or if the need for may be delayed by some years.

Similarly for roads, a good thing to come out of the action taken to combat the epidemic may be that many more people work and are educated from home, resulting in less peak time demand on the road network. Let’s hope there will less need to bulldoze roads through town and country.

[kiwico]

Incidentally, completion of Transmission Gully highway has also been halted, again. And if ever infrastructure was needed, this piece is!

I thought it was a bit quiet at home, thanks, now I know why! And I agree, it was a very much needed road.

[ratkin]

Very positive news from AIA. The global travel industry is not going to ramp up to previous levels for a very long time so why commit billions at such a time on uncertainty.

People normally book flight well in advance and people will not even be thinking about travel until this is over. By then there may be far fewer travel agents and airlines, fewer tourist attractions the works. It will be well into 2021 maybe even later before we are back to normal levels.

[Sideshow Bob]

Although not specifically mentioned, I've heard from my contacts this halt on capex projects will extend to the ZQN airport also.

And hopefully Wanaka!! :t_up:

[Baddarcy]

Very positive news from AIA. The global travel industry is not going to ramp up to previous levels for a very long time so why commit billions at such a time on uncertainty.

People normally book flight well in advance and people will not even be thinking about travel until this is over. By then there may be far fewer travel agents and airlines, fewer tourist attractions the works. It will be well into 2021 maybe even later before we are back to normal levels.

I'm a bit surprised that the price has bounced back by as much as it has.

Do people really think that NZs borders are going to reopen in 4 weeks time? IMHO we will almost certainly drop from alert level 4 to 3 but the borders will remain closed weeks or months longer. It makes no sense to go into lockdown and get it under control (i.e. stop the community transmission) then to reopen the borders and invite another surge of cases.

How long can AIA last without additional funding or government support if the shutdown continues longer than 4 weeks is the question i am asking?

[blackcap]

How long can AIA last without additional funding or government support if the shutdown continues longer than 4 weeks is the question i am asking?

Have a look at their annual report and see how strong their balance sheet is. That will give you an indication. What are their fixed costs like? Can they lay off staff and survive on limited revenue? What kind of reserves do they have?

[limmy]

The council owns a lot of AIA, so they will want to make sure that it survives the hard times. Hence they'll support this strategic asset's application for central government assistance. If all else fails, the deferment of capital project should keep AIA solvent.

[Baddarcy]

Have a look at their annual report and see how strong their balance sheet is. That will give you an indication. What are their fixed costs like? Can they lay off staff and survive on limited revenue? What kind of reserves do they have?

Apologies @blackcap, i meant it as a rhetorical question, appreciate that wasn't that clear.

They have over $600m in current liabilities and $160m in current assets ($65m in cash). With no income coming in and a likeley much longer than 4 week shutdown, how long before they need more cash is the point i poorly attempted to make. A capital raising will be hard with the council as a major shareholder, a bond sale would be expensive given no income and they already have $2.8b in debt on their books.

I can't see any bonds due this year however which would be a positive for them. Plus i'm sure i wouldn't be the only one that would be in like a robbers dog if they had to do an emergency capital raising.

[blackcap]

Apologies @blackcap, i meant it as a rhetorical question, appreciate that wasn't that clear.

They have over $600m in current liabilities and $160m in current assets ($65m in cash). With no income coming in and a likeley much longer than 4 week shutdown, how long before they need more cash is the point i poorly attempted to make. A capital raising will be hard with the council as a major shareholder, a bond sale would be expensive given no income and they already have $2.8b in debt on their books.

I can't see any bonds due this year however which would be a positive for them. Plus i'm sure i wouldn't be the only one that would be in like a robbers dog if they had to do an emergency capital raising.

No need to apologise. I find that replying to posts gets you going through good thought processes which sharpens you up. The current liabilities to current assets you have listed looks a bit thin, however a call on capital would see many like you doing the robbers dog. Would that be the only way and would that be a sneaky way to dilute the council holding in AIA? For me I am not sure what the fixed costs are like, they would be the killer. But surely they would be less that those of the Airlines that service AIA? So possibly they can keep going on longer on almost nil revenue?

[macduffy]

Even minimal aircraft movements would require a significant number of staff I would think - security of the property alone must be considerable. I'd want to see a bit more than "almost nil" revenue coming through the business.

Disc: Holding, and lining up if there's a capital raising!

[Balance]

Even minimal aircraft movements would require a significant number of staff I would think - security of the property alone must be considerable. I'd want to see a bit more than "almost nil" revenue coming through the business.

Disc: Holding, and lining up if there's a capital raising!

See KMD going for a monster size capital raising - $207m vs market cap of $330m (pre-announcement cap).

Guess we will see a capital raising with AIA - and that will be the time to back up the truck and load up on AIA.

[ratkin]

See KMD going for a monster size capital raising - $207m vs market cap of $330m (pre-announcement cap).

Guess we will see a capital raising with AIA - and that will be the time to back up the truck and load up on AIA.

Have a feeling there will be some big infrastructure projects to help them out. Auckland Mayor doing some drum beating

[Balance]

Have a feeling there will be some big infrastructure projects to help them out. Auckland Mayor doing some drum beating

Second runway to be funded by a rights issue with Auckland Council contribution to the capital raise from the government?

[Arthur]

Is Auckland Council already at the top of it's debt limits?

[Marilyn Munroe]

Is Auckland Council already at the top of it's debt limits?

Don't worry Jaffa's Marilyn has your back.

My District Council was so keen to join LGFA (Local Government Funding Agency) they blissfully agreed to joint and several liability for other councils debt. I expect if Auckland's bonds go base over apex it will show up in my rates bill.

Boop boop de do
Marilyn

[Zaphod]

Second runway to be funded by a rights issue with Auckland Council contribution to the capital raise from the government?

Will it be required it any time in the near-term? I think we're more likely to see roads and rail prioritised, especially if re-election is a goal.

[Baddarcy]

Is Auckland Council already at the top of it's debt limits?

Auckland Councils debt is just under $9b about 2.5x revenue.

[kiwico]

My District Council was so keen to join LGFA (Local Government Funding Agency) they blissfully agreed to joint and several liability for other councils debt. I expect if Auckland's bonds go base over apex it will show up in my rates bill.

Has anyone pointed out to them how stupid such an agreement for others liability is? I guess we should be lucky you're in Hollywood. :)

Perhaps you can approach your local council for a personal guarantee on any loan you hold....

[macduffy]

Yes, very dangerous objects, guarantees. No guarantor ever expects to be called on to perform!

:ohmy:

[Bjauck]

Will it be required it any time in the near-term? I think we're more likely to see roads and rail prioritised, especially if re-election is a goal.
Second runway would be a white elephant. It should be postponed perhaps for quite a few years. International travel will likely have a long way to go before we get to last year's levels.

Likewise roads. Hopefully many businesses and universities will keep up with the moves to working and studying from home, thereby reducing the need to increase roading capacity for peak times.

[winner69]

Quick off mark .... $1.2 billion cap raise

Most going to insto’s as a placement ....mum and dads get a little bite of the cherry with a SPP but first impression a fair bit of dilution for them.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIA/351293/320374.pdf

[macduffy]

Quick off mark .... $1.2 billion cap raise

Most going to insto’s as a placement ....mum and dads get a little bite of the cherry with a SPP but first impression a fair bit of dilution for them.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIA/351293/320374.pdf

Yes, dilution of small shareholders, but that's seems to be the way that such things are done these days.

Disc: Holding - and expect to have a nibble at the SPP.

[blackcap]

Yes, dilution of small shareholders, but that's seems to be the way that such things are done these days.

Disc: Holding - and expect to have a nibble at the SPP.

I wonder where all this money is going to come from? Are the smart companies getting in early so that they can get the cash they need to remain solvent?

[BlackPeter]

Quick off mark .... $1.2 billion cap raise

Most going to insto’s as a placement ....mum and dads get a little bite of the cherry with a SPP but first impression a fair bit of dilution for them.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AIA/351293/320374.pdf

$4.50 floor price for the CR. That would be only 45% of the 12 month high of $9.90 - i.e. 55% down.

Just wondering whether this is setting a baseline for this bear market (for pristine key infrastructure companies, this is) - or is this still one of the cases of "first up, best dressed"?

[blackcap]

$4.50 floor price for the CR. That would be only 45% of the 12 month high of $9.90 - i.e. 55% down.

Just wondering whether this is setting a baseline for this bear market (for pristine key infrastructure companies, this is) - or is this still one of the cases of "first up, best dressed"?

Yeah interesting isn't it. I tend to think its a case of "first up, best dressed". Surely the money will run out at some stage or am I reading this all wrong. If I were a board looking at getting more liquidity on our books, I would rather go now than later.

[Balance]

Yes, dilution of small shareholders, but that's seems to be the way that such things are done these days.

Disc: Holding - and expect to have a nibble at the SPP.

Only for some shareholders - institutional placement these days are normally offered in the main to the existing institutional shareholders of the company in the first instance to participate. Up to them whether they participate or get diluted by the institutions/underwriters taking up the placement.

In the case of AIA, it appears that around 82.5% of shareholders are institutional shareholders (including Auckland Council with its 22%) so the numbers for Mum & Dad investors are about right - 17.5% of $1.2 billion = $210m via the SPP.

So do not feel too hard done by.

[ratkin]

Sounds good, 4.50 seems pretty reasonable considering. Not too big a discount to the current price.
Those comparing it to the 9.50 price are missing the point, those days are gone. This is a new reality.

[Balance]

Sounds good, 4.50 seems pretty reasonable considering. Not too big a discount to the current price.
Those comparing it to the 9.50 price are missing the point, those days are gone. This is a new reality.

With over $2 billion of debts, AIA does not have much of a choice but to do this capital raising.

We will not see $9.50 again in a long long time - the heady days of maxing out on debt to gain ROE leverage are gone.

[steveb]

At $5.04 current market before the halt you could say the dilution has already happened after all .50c a share is not really going to make much difference.

[peat]

Struggling to see the value in an airport right now. Yes I know things will change but its going to be quite a few years before things recover so I think I would want this asset even cheaper now.
Investing in this company has to be a super long term view now. It used to be one of the primary stocks but I just cant see it anymore.

Edit
Puts the AKL Council in an invidious position too, probably not keen to stump up at present and yet as a cornerstone stakeholder that is not going to look good.

[whatsup]

With over $2 billion of debts, AIA does not have much of a choice but to do this capital raising.

We will not see $9.50 again in a long long time - the heady days of maxing out on debt to gain ROE leverage are gone.

IMHO, AIA has been totally mismanaged, borrowing to pay divs is not a way to run a successful business, how long will their business model last before the fish heads change their ways ?

[ratkin]

Struggling to see the value in an airport right now. Yes I know things will change but its going to be quite a few years before things recover so I think I would want this asset even cheaper now.
Investing in this company has to be a super long term view now. It used to be one of the primary stocks but I just cant see it anymore.

Edit
Puts the AKL Council in an invidious position too, probably not keen to stump up at present and yet as a cornerstone stakeholder that is not going to look good.

Right now it seems like nothing will ever get back to normal, but it will. Already signs Europe may be getting past the peak, Australia too seem to be putting the brakes on it. In a month the US will have the worst of it behind them. China ramping up and clearing inventories etc.
Plus by September there should be effective therapies in place.

[Beagle]

I for one do not want my ratepayer money, (or future ratepayer money if the Auckland Council borrow to fund this rights issue) going into this sector. I agree Peat, it will be many years before AIA are earning an acceptable return on investment again.

[Arthur]

AIA was about $2 10 odd years ago, and $4.50 about 5 years ago when all was rosy and there was a "clear runway for growth ahead" . Good on them if they can get this capital raise away at these prices.

[Balance]

AIA was about $2 10 odd years ago, and $4.50 about 5 years ago when all was rosy and there was a "clear runway for growth ahead" . Good on them if they can get this capital raise away at these prices.

Underwritten so they will get the money.

[moimoi]

Great result for the Banks and Bond holders. They get made whole while equity holders get to carry what looks to be a very heavy can down a rather long road...

[blackcap]

Great result for the Banks and Bond holders. They get made whole while equity holders get to carry what looks to be a very heavy can down a rather long road...

Tend to agree with that. Might be time to go short AIA if the price is right.

[trader_jackson]

Underwritten so they will get the money.

I was somewhat surprised at the cap raise, and even more so the rather large size of it (and dilution it will create), and talk of impairment not idea either.. but I suppose at the end of the day, $4.50 is attractive for a monopolistic company with substantial exposure to freight and commercial property - areas which will only grow over time.
While it might not get back to nearly $10 anytime fast, I would think we'd be back into the $6's (a rise of 33% from $4.50...) fairly fast, hence as a holder, (who brought in at $4.50 fairly recently), I'll be more than happy to participate at or below my recent entry price.

[horus1]

I wanted it at $4.

[Aaron]

I for one do not want my ratepayer money, (or future ratepayer money if the Auckland Council borrow to fund this rights issue) going into this sector. I agree Peat, it will be many years before AIA are earning an acceptable return on investment again.

I would suggest Auckland Council can print up as much as they like if they want to participate in a capital raise. Probably at exceptionally low rates too.
https://www.msn.com/en-nz/money/news/rbnz-will-purchase-local-government-bonds/ar-BB12cvbz?ocid=spartanntp

[horus1]

I do not get this. 20% more equity , no real revenue for 2 or so years , and a price of 4.66. I have not seen any projections to go with the issue. I have shares , not certain if we will take up the SPP. Probably won't.

[ratkin]

I do not get this. 20% more equity , no real revenue for 2 or so years , and a price of 4.66. I have not seen any projections to go with the issue. I have shares , not certain if we will take up the SPP. Probably won't.

2 years? I think you way out there.

[Bjauck]

2 years? I think you way out there. How long do you think? I think that it may take perhaps 5 years to get back up the passenger volumes prior to the epidemic and the resulting recession. That is not to say that AIA will not remain a lynchpin of the NZ economy.

[trader_jackson]

2 years? I think you way out there.

Depends what you define as "real", but I certainly wouldn't say it is anything near 2 years of "no real revenue", probably not even half a year of "no real revenue".

Insto placement all done and dusted at $4.66 AFR reporting.

I would think SPP is going to be bigly oversubscribed.

[Balance]

Depends what you define as "real", but I certainly wouldn't say it is anything near 2 years of "no real revenue", probably not even half a year of "no real revenue".

Insto placement all done and dusted at $4.66 AFR reporting.

I would think SPP is going to be bigly oversubscribed.

And Auckland Council decided to pass - getting diluted to 18% and missing on any upside of the placement shares.

[BlackPeter]

And Auckland Council decided to pass - getting diluted to 18% and missing on any upside of the placement shares.

Who knows, they just might have been clever (or lucky?). I could well imagine scenarios over the next 12 months which will push the SP lower.

Discl: got an offer to participate in the bidding but decided not to. Pretty sure there will be better opportunities later on in the game.

[Cadalac123]

A think there are a lot of long term holders who just want to secure a position and not look at the stock for 3-4 years and they’ll net from it I’m sure

But during the current circumstances I imagine there’s further risk with horrible half year and full reports but I guess there’s a risk in waiting for and hoping those downramp the stock price too and whether they are “priced in”, and wil institutes just manipulate the price above this one OR will they intentionally buy now and sell later to net huge gains from the long term holders who panic at the next dip

Disc not a holder

[Balance]

And Auckland Council decided to pass - getting diluted to 18% and missing on any upside of the placement shares.

Sad.

Why Auckland Council should get out of the rest of its AIA shares.

Monkeys like them only know how to count peanuts and suck on bananas.

[Snoopy]

And Auckland Council decided to pass - getting diluted to 18% and missing on any upside of the placement shares.


I think Auckland Council had no choice. Uncle Phil is on record as saying they are right at the top of their debt limits.

SNOOPY

[Arthur]

My back of the envelope shows AIA on a PE of around 30 in three years time. I think I'll play in another sandpit.

[trader_jackson]

double post

[trader_jackson]

My back of the envelope shows AIA on a PE of around 30 in three years time. I think I'll play in another sandpit.
Cheap as chips for an infrastructure stock... for example, I think the sector average PE in the power sector for FY21 is 34, and I'd back AIA to grow earnings over the long run significantly more than any power company listed on the NZX.

[macduffy]

My back of the envelope shows AIA on a PE of around 30 in three years time. I think I'll play in another sandpit.

I'd like to borrow your envelope, Arthur. The one I use can't tell me where things will be in a month's time, let alone 3 years hence!

;)

[BlackPeter]

Cheap as chips for an infrastructure stock... for example, I think the sector average PE in the power sector for FY21 is 34, and I'd back AIA to grow earnings over the long run significantly more than any power company listed on the NZX.

Well, its quite risky infrastructure - isn't it? Power companies are expensive because they make reliably money come rain, snow or sunshine. And sure - for AIA it used to look like they could as well just grow into one direction.

However - we just learned that AIA might have a quite fickle earnings profile - i.e. it clearly deserves a lower PE than reliable money makers.

[BlackPeter]

... and there is another crisis which might bite AIA. From memory their only runway is quite close to the sea. Does anybody know how much above sea level this runway is? Allow a bit more global warming and it might be unusable. If it survives the next 3 decades (which is in my view not a given), than at a PE of 30 investors might just get their capital back - without any interest.

[steveb]

Air New Zealand are saying they are going to be 30% of their original size! Have these clowns actually done any homework,most of the Duty free stores and cafes are probably going to have to close,it's going to get real messy before it improves.I would not be putting any of my hard earned into this,I am sure they will be looking for more money in 12 months time.
Probably just as well that I am not holding

[Balance]

I think Auckland Council had no choice. Uncle Phil is on record as saying they are right at the top of their debt limits.

SNOOPY

Well, ACC had 22% of AIA so they could have obtained 22% of the $1 billion of the institutional book build = 47m shares

Sell out at market, say 50c gain = $23.5m

Could have come in handy to pay for some of Phil's PR expenses, eh?

What a bunch of monkeys.

[Balance]

Air New Zealand are saying they are going to be 30% of their original size! Have these clowns actually done any homework,most of the Duty free stores and cafes are probably going to have to close,it's going to get real messy before it improves.I would not be putting any of my hard earned into this,I am sure they will be looking for more money in 12 months time.
Probably just as well that I am not holding


AIA is a long term infrastructure asset & a monopoly - a year is nothing in the life of an asset like that.

A good farmer does not devalue or sell his farm in a drought year.

[Joshuatree]

Depends what you define as "real", but I certainly wouldn't say it is anything near 2 years of "no real revenue", probably not even half a year of "no real revenue".

Insto placement all done and dusted at $4.66 AFR reporting.

I would think SPP is going to be bigly oversubscribed.

Sure was i got zilch. Oh well maybe another opp in the next few weeks/ months.

[trackers]

Air New Zealand are saying they are going to be 30% of their original size! Have these clowns actually done any homework,most of the Duty free stores and cafes are probably going to have to close,it's going to get real messy before it improves.I would not be putting any of my hard earned into this,I am sure they will be looking for more money in 12 months time.
Probably just as well that I am not holding

Yeah I know a manager at the duty free set of stores (which encompasses a wide ranging set of stores in each airport) and they're in really bad shape...not even paying employees at all (take leave, or leave... essentially)

[Chinesekiwi]

Air New Zealand are saying they are going to be 30% of their original size! Have these clowns actually done any homework,most of the Duty free stores and cafes are probably going to have to close,it's going to get real messy before it improves.I would not be putting any of my hard earned into this,I am sure they will be looking for more money in 12 months time.
Probably just as well that I am not holding

Hey Steveb

Air NZ estimate they will reemerge possibly at 70% of their current size.

[Bjauck]

Air New Zealand are saying they are going to be 30% of their original size! Have these clowns actually done any homework,most of the Duty free stores and cafes are probably going to have to close,it's going to get real messy before it improves.I would not be putting any of my hard earned into this,I am sure they will be looking for more money in 12 months time.
Probably just as well that I am not holding I thought that The capital raising should take care of operational and cash flow obligations until the end of 2021. Why are you “sure that they will be looking for more money” before then? I presume you were referring to AIA. Add to the capital raising, the fact that they have suspended dividends and have received waivers and extensions of bank facilities, then they seem well positioned for even a fairly pessimistic forecast for a Covid scenario.

[voltage]

are retail investors getting an opportunity to take part of the capital raising?

[ratkin]

... and there is another crisis which might bite AIA. From memory their only runway is quite close to the sea. Does anybody know how much above sea level this runway is? Allow a bit more global warming and it might be unusable. If it survives the next 3 decades (which is in my view not a given), than at a PE of 30 investors might just get their capital back - without any interest.

You are sounding a bit too desperate in trying to sound negative

[macduffy]

are retail investors getting an opportunity to take part of the capital raising?

Yes, via a SPP.

[BlackPeter]

You are sounding a bit too desperate in trying to sound negative

Just stating the obvious & not tempted to buy at today's prices. They had today anyway retirement villages on special :);

Still curious - do you know how much above sea level the runway is?

Councils need now to plan for 1 in 200 year floods and 1 in 500 year floods (which both could happen tomorrow), but it will still take a couple of years until all this stuff is getting published. Just curious how much water they show above the runway for the next "one in two hundred years event".

[Bjauck]

... and there is another crisis which might bite AIA. From memory their only runway is quite close to the sea. Does anybody know how much above sea level this runway is? Allow a bit more global warming and it might be unusable. If it survives the next 3 decades (which is in my view not a given), than at a PE of 30 investors might just get their capital back - without any interest. Yes Indeed, although The Covid recession could give them an extra year or two. Sydney and JFK runways are even closer to sea level if my internet search yielded correct elevations. I did not check any other coastal city runway elevations.

Auckland 7m
Sydney 6m
JFK (New York) 4m
Schiphol (amsterdam) -3m (gurgle, gurgle)

Wellington 13m

Sydney and JFK have multiple runways so not sure to which the google answers relate.

[ratkin]

Councils need now to plan for 1 in 200 year floods and 1 in 500 year floods (which both could happen tomorrow), but it will still take a couple of years until all this stuff is getting published. Just curious how much water they show above the runway for the next "one in two hundred years event".

By the time all these lock downs finish the sea level will probably be falling, not looking forward to the cold winters, it was warming up nicely before.

[blackcap]

Sea level has been rising at a steady 3mm per year or thereabouts (depending on whose data and modelling you believe) quite consistently. At 7m AIA is in no danger in the next 300 years at least. That will cause a 900mm rise or about 90cm. Still 6.1m above sea level and should be plenty to weather the odd storm etc.

[BlackPeter]

OK - so if the runway is at 7 m, than lets take 2 m for a king tide and 1 m for the base (you neither want the base nor the electric cables along the runway under water), they have still 4 m headroom to cater for global warming and the odd tsunami.

Not amazing, but yes, should be enough for any reasonable write off period.

Lets see how long the Covid holidays are - and who knows, maybe I get in below $4 ... :p;

[Bjauck]

OK - so if the runway is at 7 m, than lets take 2 m for a king tide and 1 m for the base (you neither want the base nor the electric cables along the runway under water), they have still 4 m headroom to cater for global warming and the odd tsunami.

Not amazing, but yes, should be enough for any reasonable write off period.

Lets see how long the Covid holidays are - and who knows, maybe I get in below $4 ... :p; To get another couple of decades, Maybe a Seawall and Windmills could create an AIA Island with causeways to High Ground Auckland.....

[moimoi]

Is there an arbitrage here by selling some on market @ $5.48 to fund buying back in the SPP @ $4.66.? :sneaky2:

Notwithstanding the risk of scaling in the event the SPP is oversubscribed.

[blackcap]

Is there an arbitrage here by selling some on market @ $5.48 to fund buying back in the SPP @ $4.66.? :sneaky2:

Notwithstanding the risk of scaling in the event the SPP is oversubscribed.

The fact that the SP now is $5.48 and the SPP is at $4.66 means that it is inevitable that there will be huge scaling.

[tango]

The fact that the SP now is $5.48 and the SPP is at $4.66 means that it is inevitable that there will be huge scaling.

Do you think the scaling will be according to your shareholding, the amount you apply for or a combination?
Usually I have seen an allocation of shares based on your shareholding + the option to subscribe for extra but this just seems to be a free for all.

"You may apply for Auckland International Airport Limited (Auckland Airport) ordinary shares (Shares), up to a maximum value of NZ$50,000, in accordance with the terms and conditions in the accompanying Offer Document (Terms and Conditions). Please complete the value of the Shares for which you are applying, and complete the direct debit instruction."

[macduffy]

Assuming the issue is oversubscribed I would expect scaling to be based on shareholdings unless there is something contrary in the Term and Conditions of the Offer Document.

[Sir Ten]

Assuming the issue is oversubscribed I would expect scaling to be based on shareholdings unless there is something contrary in the Term and Conditions of the Offer Document.

"Auckland Airport is seeking to raise up to NZ$200 million under this SPP. AucklandAirport may accept applications for up to NZ$200 million of Shares in aggregate. IfAuckland Airport receives applications for Shares in excess of the total amount of theOffer, applications will be scaled down. Auckland Airport will scale back the number ofShares to be allotted under this SPP to each Applicant by reference to the shareholders’holding of Shares at the Record Date of the Offer (see clause 3 of the Terms andConditions for more information about scaling)."

[value_investor]

I sold my shares of AIA late last year and at this point, I wouldn't consider getting in unless it goes into the sub $4 category. Even then, other stocks may present it self.

The categorisation of it as a true monopoly I think is a bit false. I do believe it from a competitive point of view, because of the capital expenditure required to enter the market. However, monopolies are able to set their own prices with consumers unable to switch alternative. The second part is true but AIA doesn't set their own prices, the Commerce Commission was able to regulate it down on their pricing, which I thought was incredibly reasonable in the initial instance by AIA considering the CAPEX cost.

https://comcom.govt.nz/news-and-media/media-releases/2018/commission-concerned-auckland-airports-profits-may-be-too-high

Also on the high Capex costs, these are always going to be necessary to the business. Those who think, "They just need to get past this phase and they will be back" would be misled (considering they already pay 100% of underlying profit anyways). The return on invested capital is not desirable for me, and I'm sure building cost inflation is much higher than regular inflation.

I'm not saying its not a attractive company to invest in, I think AIA is a well run business but I would not personally pay such a high multiple for a complex business that won't make the satisfactory returns.

[Joshuatree]

Diversified Revenue and a large Landbank to develop properties and longterm passenger numbers projected to double at the gateway to NZ

FY20 Interim results

Aeronautical
$151.9m revenue (3.6%)
New direct routes to Seoul and Vancouver. Moderating PAX growth:
(0.1%) International (1.2%) Domestic 2.7% Transits


Retail
$113.6m revenue 2.5%
Solid, resilient income growth and diversification:
$20.42 income per passenger 4.6% uplift in international PSR 28% increase in off airport sales


Transport
$34.3m revenue 4.3%
Capacity led revenue growth reflecting strong demand:
8.1% increase in capacity1 (3.6%) ARPS decrease


Hotels
$20.9m revenue2 5.5%
Increasing demand: ~96% occupancy
2% uplift in average room rate


Queenstown
$29.1m revenue 15.0%
Strong passenger growth: 17.1% International 1.3% Domestic

Property
$45.9m revenue 6.0%
Accelerating momentum: $300m+ under construction $105m rent roll 99.4% occupancy


020

Diversified, resilient and growing revenues

I also read this elsewhere, havnt verified it

"AIA clips the ticket once on something like 95% of all the air freight that enters NZ, and it clips the ticket twice on about half that freight, and three times on about one-quarter of it."

[macduffy]

Diversified Revenue and a large Landbank to develop properties and longterm passenger numbers projected to double at the gateway to NZ

Yes, but the timing of this "projection" has now been disrupted by Covid-19. Nevertheless, I hold and expect to take up a few more in the SPP.

[horus1]

I read the article by the CEO about a bubble withAU soon. The guy is on another planet, no reality. Pursueded me to not put in for any shares in the issue even though I own a few.

[Crypto Crude]

The fact that the SP now is $5.48 and the SPP is at $4.66 means that it is inevitable that there will be huge scaling.

Over time the price trends closer to SPP value .. but sure, while there is margin there is profit...
The company is rhetorically saying look here the value of the company is $4.66 per share ...
:cool:cc

[voltage]

With the capital raising will the share price get diluted?

[percy]

With the capital raising will the share price get diluted?

Think of your glass of whiskey.
Pour whiskey into a glass................You can now drink it neat.
Add water to the glass....................You have now diluted it.
Same with shares..........................The more you add, the more diluted your shareholding becomes.

PS,
If you drink the whole bottle yourself,you have drunk 100% of the bottle.
Share the bottle with 5 friends you will only have drunk 20%.

[voltage]

So, does that mean if I take up the offer, i will not be making $1 a share on present price?

[macduffy]

Over time the price trends closer to SPP value .. but sure, while there is margin there is profit...
The company is rhetorically saying look here the value of the company is $4.66 per share ...
:cool:cc

No, I think the company is saying "That's the price to pitch this at to make sure it takes off!"

:cool: