Fran O'Sullivan's article in todays Herald is worth a read - Time to list strategic assets
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Fran O'Sullivan's article in todays Herald is worth a read - Time to list strategic assets
A $12.5 million parcel went though this morning at $2.26 a share.
Would be interesting to know who are on each end of this transaction.
The problem with having a list is that it then proves too limiting and would need to be constantly maintained. Far better to have criteria that can be applied to each individual instance. Questions such as: "Is the asset a company in a monopoly position?" "What options exist to mitigate the effect of the monopoly?" etc. The OIO criteria would appear to be a bit subjective and would probably benefit from having guidelines about what constitutes a "substantial benefit to NZ".
The political party of the day is entirely relevant to this, as Labour and National have ideologically different views of how asset sales and foreign investment benefit the country. We lack big companies and big state assets for exactly this reason. Muldoon took apart Norman Kirks retirement savings scheme which would have built up capital locally. Then he blew the bank on "Think Big". Then the rogernomes of Labour started the fire sale of state assets which National cheerfully continued through to '98. All of this brings us back to today, starting from scratch with the retirement savings again etc.
I'm sure we are a laughing stock internationally, but not for the reasons that many here are suggesting. We have sold everything, failed to build up capital, opened our markets and industries to full competition without expecting the same of our competitors and now we are desperate to cling on to what little we have left.
I think it is entirely possible and appropriate to draw up a list of assets that the Government of the day deems to be strategic. You've already presented a list that could (with some additions) be used as criteria to evaluate all assets against, in order to derive a definitive list.
Kiwisaver has been billed the solution to the problem that does not exist, and I have to say that I agree with that statement. New Zealanders do not have a problem with saving per se, they have a problem with the vehicle in which they choose to save these funds, which for the majority of New Zealanders is property. New Zealanders have for one reason or another shied away from the stock market for both direct and indirect investment cases, in greater proportions than other western economies. But this is a whole other argument that is best discussed away from the AIA thread! ;)
Good points, Z.
As you say, subject best pursued on another thread, except that AIA experience is one of the reasons why Kiwis are disinterested in the sharemarket.
:(
With this distraction out of the way, where do people see 'fair-value' for the AIA shareprice?
Forecast earnings say 8-9 c/s with PE of market average 14 is $1.12-$1.26 (why should AIA have a PE in excess of 20? (ASB has maeket PE at 12 so at 12 is $0.96 - $1.08
Forecast dividend is 8 cents so a grossed up 10% yield gives about 1.20 Putting some reasonable sort of numbers in a DDM gave $0.96 stretched to $1.46 if some of the growth assumptions are changed.
Even using EBITDA multplies and the like hard to come up with anything like $2.00.
So using the numbers above say about $1.20 .... maybe another takeover in the wind somewhere so add a premium of say $0.40 and you end up with $1.60
Maybe there is another pension fund happy with 5% long term returns and as such happy to pay over the odds today ...... or maybe a Macquarie who with a fair degree of financial engineering would probably see $4.00 worth of value but then they wouldn't have to pay that much today would they.
Why worry what the fundamnetals might suggest what a fair value is .... isn't fair value what people are prepared to pay for it ..... a while ago some said $3.60 but today it is only a tad over $2.00
What do you think is 'fair value' Steve ........ and are you buying at todays price.
my fair value is about $1.80..$1.90....nothing more....
Now it could be time for a bit of activity behind the scenes...
Airport chairman in the hot seat amid Canada bid fallout
A big Auckland International Airport (AIA) shareholder has lost confidence in chairman Tony Frankham as the man to take the company forward after the failed partial takeover bid by a Canadian pension fund, the Sunday Star-Times understands.
It has also learnt significant institutional shareholders regard Frankham as a compromise chairman elected to try to keep disparate elements together in what they regard as a largely dysfunctional board.