Maybe this is a reason for the lacklustre last couple of days
http://www.smh.com.au/business/retai...22-gn04oi.html
Read down to the candidates.
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Maybe this is a reason for the lacklustre last couple of days
http://www.smh.com.au/business/retai...22-gn04oi.html
Read down to the candidates.
Really speculative article. I think he really enjoys his job at AIR. In my opinion one or two institutions have taken an overtly negative view of the global economic environment or the extra airline competition coming to N.Z. and there's been a glut of shares on the market. I'm going to ride it out. I expect analyst upgrades next week which other institutions will take note of, and then we'll have a better balance of buyers and sellers.
I'll be honest I don't understand the dichotomy between how the market has re-rated other airline stocks, American airline index is up circa 20% in recent weeks and how QAN with similar EPS numbers to AIR is somehow worth over $1 more ? All these others carriers are also facing their own set of challenges and competition and we live in the same global economic environment last time I checked, go figure ?
Maybe it's just one holder selling down their stake?
Yes that would appear to be the case Longhaul. Plenty of supply of shares have been flooding onto the market lately so some institution or other, (that obviously doesn't read these forum pages), has decided to significantly reduce or exit their position.
AIR is a cyclical (consensus). As such valued over the whole cycle - ie expect low PEs when earnings are good and vice versa
However cyclicals do 'uptrend' as well in that the cyclical highs (and lows) do get higher reflecting increased profits over time
The puzzle with AIR at the moment is that this $3 mark is a real barrier. Peaked about here in 2007
When AIRs es was less than 30 cents (Roger can give real figure) - now eps heading ver 60 cents in F16 and even more in F17.
But $3 remains as a major resistance.
Sanity needs to prevail sometime ....yes?
The stockmarket is a popularity contest in the short term but a weighing machine in the long term.
Investors have to decide whether they are in the market to participate in a popularity contest in the short term or not.
The airline industry is a glamorous one but history shows that the beauty is not long lasting.
Can remember investors paying 10 times peak earnings back in the old days before deregulation but these days, 5 times is considered reasonable value.
Bit like the IT industry really. Apple trades on a forward multiple of 9.7 times - that's not a very demanding multiple.
So will it be different this time?
You answered your question with your next post. The compelling value will eventually shine through but who can predict when... I guess people have to decide for themselves if the turbulence is too much or whether they trust management to stay on board for the long haul. I'm a long haul bloke on this one. Over 30 years of investing has taught me its a very rare thing to find companies this well managed and on these compelling metrics. By any rational comparison with other airlines AIR looks incredibly good value.
"companies this well managed and on these compelling metrics".
Always has been and always will be the recipe for success.
Affordable air travel means more people use planes more like buses.
My son-in-law works 17days on, four days off, near Hamilton. He flys home for his days off.
I went to Auckland for the day book buying a couple of weeks ago.
My retired mate and his wife fly to visit their daughters and their grand children in Auckland and Tauranga.
They fly down regularly to visit him and his wife.
My niece's husband flys down to work four days a week in Sydney.They live in Nimbin.
I meet a mining engineer in Pauanui who commutes to his job in Western Australia.
None of the above covers air travel for tourism.
well, I did manage to buy some more on Friday.
Axe joined the club of cool cats on ST that hold AIR. PS thanks to Roger for posting the link to the conference call. It was a worth while hour. :)
Attachment 7916
Notwithstanding all the good news and fine fundamentals, AIR was sell 3-4 weeks ago on the trusty weekly chart and the astute will be watching whether it holds the 'perfect touchdown' $2.74 close on the 200DMA Friday. Incredible how such a fine company can be a plaything for the alert traders focused on capital gains and capital retention. No offence intended to loyal shareholders, just a reminder that this has other forces in play than purely fundamental strengths.
All this talk of AIR facing headwinds reminded me of what Henry Ford once said -
“When everything seems to be going against you, remember that the airplane takes off against the wind, not with it”
Fridays action looked like one insto very keen to get out. The big Friday aftermarket transaction may have been the balance - or we will see them selling hard again today.
Very low and significantly lower than Qan and I note Qan didn't give guidance for FY16. It continues to baffle me why the analysts are so negative on AIR's medium term prospects.
Fact is several months ago after the 2015 annual meeting I made the bold call that analysts were FAR too pessimistic on FY17 EPS estimates, (consensus at that point was 32 cps). Sure enough over recent months we've seen this steadily rise to 54.8 cps a whopping 71% increase, which seems far more realistic.
I will leave you good folks to decide what level of credibility you want to ascribe to consensus analyst forecast for FY18 earnings for AIR of 42.3 cps...but its worth noting they're basing their consensus valuation on a big fall off in AIR's earnings for FY18 and yet Australian analysts think FY18 earnings for QAN will exceed FY16 earnings of 64.3 cps...Hmmm.
Must have old info off 4traders. Someone's upgraded from $3.40 to $3.45 but the consensus valuation has come down from $3.27 before the result to $3.18 afterwards despite a big increase in consensus FY17 EPS...go figure. Better to go off company guidance as I'm not sure any of the brokers has any more visibility on earnings than AIR management have.
US senator wants government to set airline seat-size rules
http://www.nzherald.co.nz/travel/new...ectid=11597134
Not sure this will ever take off (excuse the Pun), although, cannot go too much smaller no one will fit, or are we moving to stand up seats:)
Well, another action packed day with 7c swing after being as high as 2.80 settles down at 2.73 at close.
Along with Airbus which was mentioned more than once--Interesting article though ..I find the more you can create a ''cocoon like'' atmosphere ,the better--like they say, earplugs, eye covers..and I always bring a light beany as well to put on the head(all that air movement is aggravating) neck pillows help as well-I always put my stuff like that in the outside pocket where i can get to it easily(along with a small flashlight)--but nothing beats a roomy seat in a good spot.
That 'night time' experience on a Dreamliner is not pleasant .....eps when you know its day time outside
I have traveled a few long hauls on Dreamliners over the last couple of years. In my view it is a far superior experience with thebetter air quality (less dryness) and quietness of the planes a major plus. Not so sure about the lighting or the dimming system on the windows but size of windows great. I would chose Dreamliners for long haul each time over other planes if I had a competitive choice when and where I wanted to travel.
I think these will serve AIR well.
Thanks Iceman really appreciate your feedback. AIR will have nine in their fleet, (more than any other wide-body aircraft type), by Nov 2016. Apparently AIR have been getting widespread very positive customer feedback along similar lines from other customers too. Then there's the 24% cost savings and no deep cycle maintenance for the first 9 years. As they said on the call, there's tremendous potential for free cash flow later this decade as AIR will have a remarkably young average fleet age of 6 years by FY19. This suggests to me that AIR will be a high dividend yield share for the foreseeable future..unlike almost any other airline in the world.
New planes are better than older ones - we expect that improvement of course
But no doubt some have to put up with the old clangers (some refitted) that AIR still fly recent flight Singapore and Hong Kong) Still laugh how I pissed the man sitting next to me off several times by turning on my overhead light - slightly misdirected and straight into his sleeping eyes. I just smiled sweetly and said 'operational issue I think'
Had an interesting experience on my return flight yesterday:
After we were all seated a group of about 16 passengers, for reasons unknown, decided not to take the flight.
So firstly their luggage had to be found and removed from the hold.
Also, given that they had all been seated up front, there was some re-arrangement of the remaining passengers, presumably to improve the balance.
Finally, as an added bonus, the captain announced that due to exceptional head winds our 5 hour flight would be nearly 6.
Talking of exceptional:
So $432M + Virgin + The Engine Shop (which I had forgotten about !) NPBT for a NPAT of $338M.
That beat even my biggest estimate and yet the world appears not to happy it about judging by the SP since.
So Full Year?
Given what AIR are saying I would guestimate at the moment $850M + $30M from Virgin (HY tax benefit replaced by actual operation improvement) + $20M (real guess) from the Engines R'Us for $900M total
After tax that would be $650M upwards.
Best Wishes
Paper Tiger
PS First half of FY17 currently looking good.
Well today bucked the three day trend of opening high and then getting smashed throughout the day, indicating the bulls are starting to regain control short term. Lets see what happens tomorrow.
Vin -,post lunch actin kicking in
Positive this time eh
Fascinating story PT. Ever seen the opening scenes from the movie Final Destination ? 16 people getting off for no disclosed reason would have really freaked me out !
With you on the full year profit forecast but I'm a little more bullish which probably won't surprise anyone on here :)
P.S. Nice to see some sanity returning to the SP. Maybe the "hot money" that was disappointed for whatever reason(s) best known to others, has finally been flushed out of the system ?
Thats what we will be on to KL--I like the fact that there are only 2 seats by the windows (we,once again were lucky to be able to choose our seats (first 2 in a row near the front but just far enough from the bulkhead that crying kids and babies are not to close)
The AIR sale was not on so went with MAL but they have just started again ,(might of taken it if I had known) $1250(cheapest) compared to $1120 is still doable...but that choosing seats thing is the next best thing to an upgrade..its a big plus to know you are not in the middle of the middle....AIR to Vancouver..vs..MAL to KL---comparison coming up in late June...stay tuned
Goes ex the 10 cent divvy next week, (not sure if its Wednesday or Thursday under the new T +2 settlement system) so I expect it will temporarily drop by a commensurate amount.
Folks will be aware that official company dividend reinvestment scheme remains suspended but I suspect many loyal shareholders will be planning their own scheme :)
Osaka it is....
http://www.nzherald.co.nz/business/n...ectid=11599190
Well a restart anyway.
Good that they're wringing some more mileage out of those old 767 workhorses. While fuel is cheap it makes sense to keep them flying IMO.
Update from one broker - valuation of $3.20.
Forecasts show peak earnings this year and declining next two years after that.
Dividend however to grow year on year - 22.5cps in 2018. So gross yield of 10.9%.
Report accepts however that situation is very fluid out there and many factors, both positive and negative, will come into play in the next 3 years.
Who really knows is kinda the essence of the summary!
In other words they have no more visibility than AIR's management are providing them with which is basically what I have been asserting and really undermines their DCF valuation models. Obviously they are adjusting their forecast for more competition in Fy17 as is everyone else. In my opinion one is better to simply compare current year PE of AIR, (I use 64 cps after tax incl of VAH earnings) and base my forward earnings on the theoretical ex divvy price (2.86-.10) = 2.76) FY16 PE is thus 2.76/.64 = 4.3 by my calculations. Compare with other airlines and adjust for how they're growing and factors specific to each airline. $3.20 looks very conservative to me and the stock is currently seriously under-priced in my opinion and trading cum the 10 cps fully imputed dividend due very shortly.
I think a fully imputed special dividend this year of 10 cps in addition to a final of a similar amount is an absolute certainty in September so dividend hounds will be well fed.
AIR has announced huge profits and forecast to keep doing so for 2016, so why has Mr Market been so pessimistic?...Why is Mr Market ignoring the Fundamental reality?
Answer: Because it is a cyclical Stock and Mr Market sees signs pointing to the cycle reaching it's top level..
In the meantime before a cyclical reaches it's cyclic top it can go through bull market corrections...many cyclical sector indexes around the world are well off their highs at the moment due to the current global economy turning to show current weakness..AIR is not immune...Cyclical sectors are economically sensitive and therefore make good leading indicators to the varying state of the Global economy...
So how do we know whether the cyclical sector is going through another bull market correction or has in fact topped out of its cycle.... How can one invest in cyclical stocks without getting their buy/sell trigger fingers burnt off?
Cyclicals are known as notorious portfolio killers...they are volatile beasts and can make fast and huge (+300%) capital gains and equally they can do the opposite just as quick as well...
Cyclicals are hard to analyse because we investors do not know when the cycles tops or bottoms actually occur..
Long term TA and charting helps (sort of) as it outlines the frequency of the cycle oscillation but as Cyclicals are volatile, a sudden daily drop can be unforeseen..
Usually the usual FA methods don't help either, unfortunately the reason why Cyclicals are notorious portfolio killers are because the price quickly drops while the fundamentals are still great and the Fundee holds on dismissing Mr Markets actions as totally irrational..
There are some good Authors around which touch on the subject of valuing cyclical stocks...One is the University textbook Valuation Measuring and Managing the value of Companies published by McKinsey & Company. Their authors are their consultants in their respected fields...I have the older 5th Edition the 6th Edition is out...On page 755 Chapter 35 Valuing Cyclical Companies They research the data and behaviour of Management (CEO's) of Cyclical stocks...
One amazing find is the management is one major factor causing a company to be cyclical in nature...Quote: "......
Still, based on conversations with these executives, we believe that
the herding behavior is caused by three factors: First, it is easier to invest when
prices are high, because that is when cash is available. Second, it is easier to
get approval from boards of directors to invest when profits are high. Finally,
executives are concerned about their rivals growing faster than themselves
(investments are a way to maintain market share).
This behavior also sends confusing signals to the stock market. Expanding
when prices are high tells the financial market that the future looks great (often
just before the cycle turns down).
.....How could managers exploit their superior knowledge of the cycle? The
most obvious action would be to time capital spending better. Companies could
also pursue financial strategies, such as issuing shares at the peak of the cycle or
repurchasing shares at the cycle’s trough. The most aggressive managers could
take this one step further by adopting a trading approach, making acquisitions
at the bottom of the cycle and selling assets at the top. Exhibit 35.7 shows the
results of a simulation of optimal cycle timing. The typical company’s returns
on investment could increase substantially.
Can companies really behave this way and invest against the cycle? It is
actually very difficult for a company to take the contrarian view. The CEO must
convince the board and the company’s bankers to expand when the industry
outlook is gloomy and competitors are retrenching. In addition, the CEO has
to hold back while competitors build at the top of the cycle. Breaking out of
the cycle may be possible, but it is the rare CEO who can do it.
So Mr Market doesn't see AIR management doing the contrarian view (brown bold)..it seeing the continuing behavioural over and over again and history shows this behaviour causes that cyclical trend.
All valuating methods of Cyclicals have their flaws ...so the Simple way to value cyclicals in mho is just as good or bad as the more complicated rest....The easy concept is to draw one cycle oscillation and draw a the mean horizontal line through the oscilation...Often Investment commentators say use 10 years of data that is using the simplier of simple version rather than trying to estimate the length of the current cycle (Oscillation) which in reality often varies ..
They also say using ROIC can be better ..
Valuation: (see below)..To KISS I will use a rough back of the envelop valuation example using Full Year Basic EPS results over a 10 year period which as you can see contains two cyclical top periods and one and a bit (2006) cyclical low periods..therefore this 10year valuation will have some bias to the high side..
2006....9.6
2007...21.6
2008...20.7
2009....2.0
2010....7.6
2011....7.6
2012....6.5
2013...16.6
2014...23.8
2015...29.9
Average ......14.6 EPS
I not sure what the NZX50 PE Ratio is at the moment The CAPE is around 17.. So for analysis I will take the optimistic view because it's closer to Market sentiment as most market investors would view AIR results as excellent and using forward earnings would see even more rosier results (NOTE:...Fundees should never do Forward EPS with Cyclicals..but they always do:() therefore Market investors would view AIR as positive atm....Being more optimistic than pessimistic with the NZX market I will use PE Ratio at 20..using 20 could be wrong but it is also simpler for me to use mathematically for this example:D
So.....14.6 EPS X PE 20 = $2.92
Hmmm..very close to Mr Market optimistic value
Now if the Global economy continues to weaken Mr Market may value AIR back to sentiment neutral NZX50 PE Average at say 17 = $2.48
If a global recession evolves and the NZX50 enters into a bear market cycle at the depths of that bear market the PE Ratio will be <10 at say 8 with the current EPS average the valuation will be = $1.16 ........The sader news is that as AIR is cyclical the EPS is sensitive to recessions and therefore the 10 year Avage EPS will be lower so it could be less than the $1.16...
Ever wondered why Cyclicals can trail a sharemarket recovery back from Bear to Bull Market...All to do with Mathematics..
Cyclicals are scary..eh?
If we are to assume intrinsic growth in AIR and accrued earnings aren't in fact happening, (not a hypothesis I concur with), but I will humour you Hoop and tweak your earnings data to include the full earnings cycle, (trough to peak) which regardless of any text book theories you may have read seems to make more common sense to any other approach, surely... then I would make the following observations :-
The period you've covered includes the GFC, arguably the greatest recession since the great depression of 1929. But be that as it may, lets leave your data period to include the full GFC and only tweak it slightly.
If we're going to take an average EPS that includes the full cycle then I would have thought you'd at least include the current year's earnings since we're most of the way through FY16 and management are confident of profits in excess of $800m, consensus analyst estimate 57 cps. So clipping off FY2006 which I note was pre GFC and including FY16 consensus EPS analyst estimate we get average EPS across the cycle of 19.3 cps and on an current market PE of 17 this gives us fair value of $3.28.
But seeing as the market is always looking forward if we include consensus FY17 earnings as well (54 cps) and exclude earnings to 30 June 2007, (still pre GFC so the ten year average still includes the full GFC period and includes what is arguably the top of the cycle FY16 and FY17) then we get average EPS right across the business cycle including all of the GFC and all of the current projected earnings for the peak years of FY16 and FY17 of 22.6 cps. Applying an average market PE of 17 gives fair value of $3.84
My contention is if you're going to take a ten year average as being representative of the full market cycle, (and try and make the weak case that there's no underlying growth in AIR's earnings over time) then the very least one must do is to include the peak years of the business cycle, (irrespective of any theoretical approach that suggests only historical earnings data is valid). Clearly to not do so is to
mask the real value by skewed data and an unreasonable and unrepresentative choice of underlying data that doesn't truly represent the average of the full business cycle earnings.
My contention is that AIR is growing organically over time and a 10 year average PE is therefore an inappropriate measure to value AIR but for those that insist on this approach the value would appear to lie somewhere between $3.28 and $3.84. I think that the selection of the full peak cycle earnings to include FY17 earnings is a significantly more reasonable and representative approach to average earnings so fair value using this approach is $3.84. This assumes there is no underlying earnings growth in AIR shares and no benefit to AIR shareholders of accrued and undistributed earnings over the last decade which doesn't make common sense to me so the real value is north of $3.84.
To illustrate how invalid your historical earnings approach is I would warmly invite you to run the same analysis on QAN's last ten years historical earnings, (including their recent year loss of $2,800m) and report back on their valuation using your approach compared to the current SP. Go on, you know you want too...
Worth noting too that although management are articulating a plan of record growth along with fleet modernisation and simplification they're doing this contemporaneously with the payment of good level's of dividends which is in stark contrast to most of the other airlines in the world. Further, the attachment of full dividend imputation credits is unique to AIR making dividend payments ostensibly tax free in shareholders hands.
Regardless of the specifics of the future profits for Air NZ and how to calculate the appropriate average profit and PE over the entire cycle, it is pretty clear that with the reduced price of oil, competition and therefore risk have increased.
I will accept that the profit for FY 16 is likely to be around 57 cps as suggested by Roger, helped along by the 30cps HY16 result.
However I wouldn't be so sure about the FY17 result. 54cps is possible but not a certainty by any means.
It was really brought home to me how much competition AIR faces with the sight of four Emirates A380s sitting at Auckland Airport the other day. Good publicity shot for the TV news but also a great way of portraying the extent of the competition. Thee are a lot of seats on those planes.
If I were travelling to Europe, the non-stop flight Auckland-Dubai would look pretty appealing.
AIR may be well run and tourism may be growing, but AIR need to be performing exceptionally well to capitalise on that growth and keep their existing market share. Emirates and Chinese airlines are going to be working hard to fill seats into AKL, along with American(?) starting to fly here later in the year. Running empty planes is expensive!
I would also caution against expecting the good times to continue for too long. The profit margin of 57 cps is roughly 14%. This is exceptionally high for an airline and I would expect over the full cycle it would be about half of that, maybe less.
Airlines are risky. Airlines in a low oil climate are even riskier. Caution ahead. I'm hoping for the good returns to continue but I'm certainly wary.
Keeping it simple stupid, the KISS principle one of my personal favourites
Okay Hoop, enough theoretical's already... Time to see how AIR stacks up against some if its peers that I follow (all data off consensus analyst FY16 estimates per 4 Traders taken today).
AIR PE 4.90, Yield 11.28* (*grossed up for value of imputation credits)
QAN PE 6.07, Yield 1.64%
American Air PE 6.29, Yield 1.0%
Delta PE 7.29, Yield 1.15%
AIR undervalued on a comparative basis relative to its peers ?...you be the judge.
Mikeybycrikey - One of those A380's was a one off and they're using an older smaller plane on the direct Dubai route. AIR are expanding too last time I looked :)
Hoop and Roger,
Maybe if 10 years isn't enough, we could always go back 20 years. Should get a nice well-rounded picture of several business cycles, including the bankruptcy in 2001.
As a holder, I'd like to agree with Roger's rosy viewpoint, but I can't help reading many of his posts as saying "this time is different". That doesn't usually end well for an investor.
Oh why don't we go back to the Erebus disaster as well...(sarcasm intended). Here's an idea, why don't we look at the calibre of management now and current and reasonably foreseeable earnings.
AIR look cheap compared to their peers and last time I checked we all live in a similar global marketplace...
Your afternoon action starting to kick in Winner. 295 by the end of the day, maybe even 3 bucks by tomorrow eh
Tell you what Roger - if you want to relax read last years Singapore Airlines Report.
224 pages of information - including 2 devoted to their wines.
Best Wishes
Paper Tiger
Surely, if the dividend yield is around the 10-11%, it won't stay there, either the dividend will reduce or the share price will increase.
Just be careful guys --cyclicals are very susceptible to the ''Jinx Theory'' (which is very close to the ''short term pattern forming theory''
I personally think your giving far to much respect to the big $3 milestone---last time it passed it both ways without even waiving.
Thanks for the link PT. I will definitely have a good look when my head stops hurting. Current year PE 17.6 on EPS of 65 cps and a SPD of $11.50. Still one supposes the current year dividend yield provides some respite from the high PE - 3% and then there's the trading on more than 10 times NTA to admire compared to AIR on 1.6 times NTA Hmmm, I thought airlines were horribly cyclical...best we keep this from our friend Hoop eh... Apparently the world as we know it is ending and we're heading into the GFC Mk2 didn't you know :D
There are three primary themes that support a strong AIR currently
Rising demand (Popularity of NZ, global interconnection of people and trade) - SUPPORTIVE MACRO TREND
AIR has a big distribution advantage for the NZ market through its Brand, Airpoints progamme and domestic network - MOAT
Low price of oil but highly valued product = pricing power retained, despite cratering cost of sales - RAPIDLY EXPANDING MARGIN
disc - small long
Really appreciate the contrasting points of view from Messrs Robert and Hoop. Seems someone out there has pressed the big green BUY button the last two days.
NTA was around $10.50 at report time so that is a ratio nearer 1.1 (one point one) than 10.
When you look at it properly you will spot lots of interesting differences between them and your favourite airline.
Best Wishes
Paper Tiger
PS Airlines ARE 'horribly' cyclical - even Singapore Airlines
A good mate put it to me last week that he reckoned he'd seen saner people on the inside of the lock up dementia wards he manages than those selling AIR shares at $2.73 cum the 10 cent divvy.
At the time I thought that was quite a big calll but with the benefit of more analysis that looks like a pretty fair summation to me.
PT - must have been the sore head blurring my vision. PE's are straight off 4 traders consensus analysis so that parts spot on and not really conducive to a cyclical company is it ?...guess they're on a different part of the cycle then seeing as they exist in an apparently different global economic environment :) Strange beasts these cyclical's aren't they, no wonder so many people are scared of them !
Of course for those of us that are simple show me the money kind of guys, AKA dividend hounds looking for a regular decent feed, thankfully life is somewhat simpler.
Yes, absolutely I am looking forward to reading the Singapore annual report so thanks again.
Air does not have the scale to attract the big institutions, that is why its metrics are not reflected in the SP in comparison. Although good to see the SP step up prior to ex-dividend.
Saw this somewhere today but can't remember where - seems appropriate to this thread
"Investing is a funny thing. It is as much about sentiment and confidence as it is about fundamentals and value"
Prob means there is no right or wrong answer except today the market is right
http://www.nzherald.co.nz/air-new-ze...ectid=11599625
Air NZ and Air India the last ones left in this long and IMO unneccesarily drawn out law suit
Got both at the moment...the 2 rights, Winner
There's a feel good sentiment out there as well as good financial fundamentals..also the Market that AIR trades in (NZX) is one of the few markets that is still in it's Bull Market cycle..that suggests any rally is less likely be the sucker type..however in keeping with Rogers thoughts about me, there is the Global Airline market that influences AIR and that market has a negative primary tide so that bear market may override the AIR/NZX bull relationship..
But in the meantime TA indicators are starting to fire buy signals as AIR reaches its acid test (the 2.96 - 3.00 resistance zone).
As one can see from the chart AIR has been totally boring...flatlining....The share price is the same as this time last year and is trading within a "not worth the effort" small 10% trading range apart from a couple of unsustainable breakouts both ways...Meanwhile the NZXgross50 (Div not incl) has increased 8% since this time last year..making AIR an underperformer..and a years worth of wasted opportunity for holders of AIR to take advantage of the ongoing NZX50 Bull Market..
Why has AIR unperformed in 2015 with the well published news of future excellent/stella profit and cash flows?
One possible answer is seen on the long term charts...Looking further back on the AIR chart (not shown) is the meteoric rise of nearly +300% within 2 years up from ~mid 80c (July 2012) to ~$2.25 (June 2014)
After that huge rally a large (-20%) bull market correction (breather) took place dropping the price back to ~$1.80 (October 14th 2014 to test the trend line) before a very quick rally (~+50% in 6 months) increased the price from ~$1.90 to ~$2.97 on March 2nd 2015...Since then as seen on the chart AIR has been in a prolonged breather consolidating that market expectation...so it seems back between 2012 to 2014 the market was anticipating huge profits in the future and commenced the huge market 2 year revaluating process which followed..
Some present Positives and Negatives
1...TA indicators are unreliable when share prices flatline for an extend period of time..some TA indicators cope flatlines better than others..TAers turn to using the more sensitive Oscillators and the chart below I have included Twiggs Money flow and the well known and respected Chaiken Oscillator both are negative indicating AIR has bearish tendencies..TAers don't like unreliabilities and uncertainties so most would gravitate to better more TA friendly up trending stocks..
2...AIR is triggering some Buy signals (expected) as it is reaching towards the top of its trading range (~$2.96) The Bollinger Bands are squeezing (see purple arrows) indicating a change (which direction is not clear but the oscillators do suggest a a slightly greater chance its down rather than up).
3...AIR is still in its Bull Market cycle so investors "should" treat any trading range breakout rally as genuine and not the sucker type, even though the previous attempt failed (reached new high $3.26 (top))
4...NZX50 market which AIR is a part of is also in its bull market cycle...one of the very few indexes in the world to perform to a new high recently..this will attract more investors to buy rather than sell (+ve momentum) which after a month of negative values has just turned positive again (1st March) for AIR
Disc: Have small holding of AIR.
Attachment 7925
For those that asked me today at Lunch when AIR goes ex the 10 cent divvy I can confirm under the new T+2 settlement terms of the NZX it goes ex on Thursday 10th.
Its all on the NZX
DIVIDENDS
Upcoming Dividends
Thanks Hoop. Perennial disappointing stock of the year. Just glad with my margin of safety entry re $2.40. Imagine holding all that time @ the current price.. I see Craigs new T/P $2.89. Hope she holds up for the holders who bought around these prices; X div, which I'm very happy to take as a small consolation. Its hard to think that AIR will rise much more after these great results and good news stories. Will hold for now and hope points 3 and 4 guide AIR up a little more.
Ex Dividend Period Amount Supp. Imputation Payable Currency 10/03/2016 Interim 10.000c 1.765c 3.889c 18/03/2016 NZD
Not sure on your reference point Hoop but she's sitting in my balance sheet 31 March last year at $2.72 ex divvy, (average cost price well south of that), so by my calculations over the last 49 weeks its shown a capital return of 5.9% and a final dividend of 9.5 cps in Sept 2015 which is another 3.5%, 9.4% total shareholder return YTD and I expect it'll recover the forthcoming dividend fairly quickly.
Not a stellar year I would concur, (despite the stellar result) but AIR is extremely well placed going forward and trades on truly compelling metrics.
Certainly has a great yield for holders for the time being.
AND... Very low PE, if it breaks $3.00 which is long term resistance,could be a nice steady climb to $5.27 imop
Yes and by then the Era of the Electric Plane will have been ushered in and ;well $10 and rising; the sky is the limit:t_up:
You seem a bit sceptical JT, with continuing inflows matching the current year,I think it will be rerated.
Anybody want to help buy a new plane?
Best Wishes
Paper Tiger
Yes fair enough and its up from $2.00 in late 2014 at the time of the ASM. For those fortunate / wise enough to attend it was pretty obvious the company's profit growth was on a steep climb with or without the oil price tailwind.
The market world-wide is pricing in airline stocks like the oil price tailwind component of earnings isn't repeatable. I think from a competition and yield perspective AIR is better off with $70 oil anyway.
Much is made of AIR's high capex and they're paying out most of their cash flow to modernise and grow their fleet. Other companies on the NZX are rewarded for growth with or without, (usually without) contemporaneous EPS growth, often while incurring large losses, but those same people expect AIR to grow at its fastest rate in 75 year history without investing in new capex ?...go figure.
PE / cash flow are dirt cheap compared to other airlines and the growth in RPK is outstanding compared to other asia / pacific airlines, (double the industry rate) and yield compression with low oil prices has been modest.
Happy holder and unlike the vast majority of other airlines we're being paid well to enjoy future growth. I think patience will be rewarded.
Jetstar in the firing line I see.
This would never happen with a proper airline.
You read that Singapore Air Annual Report yet, Roger?
I think Airbus have confused me with either Tony Fernandes or Christoph Mueller.
Best Wishes
Paper Tiger
For years Emirates have wanted to be the first airline to fly around the world. The Aussies have blocked them to date. I wonder if this direct flight from Dubai to Auckland is intended to pressure Qantas, their code share partner into relaxing their position against a Syd - Lax service.
NZ has free skies policy and once the Dubai flights are here it won't be long before they operate Akl - Lax.
This might be why the share price took a significant hit after that announcement.
Thoughts???
Just as a side bar(although useless to the debate) we flew on a Pan Am ''round the world'' flight back in 1978---Well,maybe its not useless--look what happened to Pan Am.
It will be interesting to watch and see if that bollenger band breakout pans out--always happy to be in on a learning experience.
The TA vs FA always keeps this thread interesting
Jetstar's regional service is turning into a complete fiasco. No back-up planes when their ancient Q300's need unscheduled maintenance and no back-up staff when staff get sick, (something that inevitably happens from time to time).
Not yet on the Singapore report PT, been too busy having a great time socialising with other ST members :)
Anythings possible I suppose ...one day
http://www.economist.com/blogs/gulli...wl/n/n/n/email
No doubt AIR who competently whiteboard multifunctional architectures a lot are on the case.
They on the ball are AIR
Just like Air New Zealand really - sometimes things go wrong beyond an immediate fix.
12 years old =ancient.
So AIR must have some prehistoric airplanes then :p
I would have thought that you would be keen to understand those other airlines that you keep moaning about the relative valuations of compared to AIR. You might begin to understand the why then.
Go do your homework and no more drinkies till you have finished it :(.
Best Wishes
Paper Tiger
My head is still too sore for in depth reading but its not so sore as to forget the 29 brand new ATR72-600 turboprop aircraft joining the AIR N.Z. fleet by 2020 and the fact that their average aircraft age will be down to a remarkably young 6.2 years by FY19:p..but I will consider myself told off by the headmaster and try and refrain from any more drinking for a while :)
P.S. The average age of AIR's Q300's is only 8.4 years as at 30 June 2015, (source 2015 annual report) and last time I checked AIR had good contingency plans to handle sick pilots whereas Jetstar...oh dear :ohmy:
.
Very loose use of the term "new". :p Speaking of fiasco's and relic's I saw him on T.V. 3's breakfast programme talking to Paul Henry the other day with his begging bowl out. P.H. gave him plenty of stick and rightly so I felt.
Admitted they'd had 4 CAA audits since commencement of operations...wonder why so many audits ? and then there was the withdrawal from operations for unscheduled maintenance. Suppose its just as well at least the CAA are doing a thoroughly professional job then isn't it !!
I can't help but wonder if people really understand the risk ?...would you buy your partner a 30 year old car with no ABS brakes or dynamic stability control or any of the other current safety devices and protections and tell them to use that to take the kids to school and back every day ?
I am sure Emirates would love to fly on from the Shakey Isles or the Land of Underarm Bowlers to the city of the stars.
However American Carriers have a fox in the hen house reaction to encroachments by sand state airlines. Lots of squaking and fluttering of wings. Their brought and paid for hand maidens in the US Congress squak and flutter along in sympathy.
Boop boop de do
Marilyn
Ps an afterthought; Actually getting the Americans to agree to this would be a worthy task for the men from the Ministry of Transport instead of their usual drinking tea and confiscating passenger water bottles.