AIR - Air NZ.

[Beagle]

Finally this puppy is in full afterburner ascent
https://www.youtube.com/watch?v=pIz0-_aho6o

[JohnnyTheHorse]

well this is going well so far. In at 2:17 on Wednesday. Hoping we can get to 2:30 before it goes ex.

I was targeting a 227-229 exit next Tuesday, however after today's price action I think we may get to 235, especially if US markets play ball.

[Beagle]

http://www.stuff.co.nz/business/indu...day:dailybrief

[couta1]

I was targeting a 227-229 exit next Tuesday, however after today's price action I think we may get to 235, especially if US markets play ball.

I will be very tempted to flick of a good sized block of mine I got at $2 if the price exceeds $2.30 before going ex, that's double the divvy amount and it may drop more than 15c after the ex date hmmm decisions decisions.

[Beagle]

I will be very tempted to flick of a good sized block of mine I got at $2 if the price exceeds $2.30 before going ex, that's double the divvy amount and it may drop more than 15c after the ex date hmmm decisions decisions.

AIR has the lowest PE of any of your stocks mate....food for thought ?

[dingoNZ]

I really wouldn't recommend this to be perfectly honest. Given the strength of the stock, I'd be surprised if it didn't revert back to the pre-ex date SP level within a week or two. Why, then, give away a hearty divvy?

I concur with this. Based on their performance of late, I suspect you will see some offshore buying pushing it up after ex-div.

[Beagle]

I will be very tempted to flick of a good sized block of mine I got at $2 if the price exceeds $2.30 before going ex, that's double the divvy amount and it may drop more than 15c after the ex date hmmm decisions decisions.

Mate all the evidence suggests that most stocks recover most of their dividend within a few weeks and in this case we are talking about fully imputed dividends of 15.5 cps so its a whopper.
Each block of 7,000 shares is over $1,000 dividend in your hand...why give that away to someone else ?
Also have a good read through the annual shareholder review that's just arrived in the mail, (I am happy to e.mail you a link if your haven't got yours yet), things look very encouraging for AIR and as mentioned earlier the stock is very cheap on an earnings basis. PE is less than 10. Selling what I would argue is perhaps the best stock you own for medium term capital growth, just because you're ahead is not the way to mitigate losses on your other holdings.

In my opinion this sideways market we have now is about fundamentals, buying good quality companies on realistic price earnings multiples which pay good dividends and enjoy good growth prospects. I've had a really good look through the annual accounts now and there's no fish hooks I can see and the company has heaps of imputation credits in its account so is in a position to attach full imputation credits to dividends for many, many years to come. The new Dreamliner that I've posted heaps of info about is a real game-changer and they have 9 more on order, (2 of which are due before Xmas), with options for another 8 which I expect they will exercise. This new plane gives them a genuine marketing edge regarding the quality of their flight experience going forward. AIR is my #1 pick for market outperformance in the medium term.

[Beagle]

I'm having a conversation by PM with a gentleman who's quizzed why I think a PE of under 10 is very good buying for AIR and as part of that I've analysed the average PE AIR has traded at for the last 5 years which I thought seeing as I've done the analysis I would share for everyone's benefit.

Looking at the current financial statements, five year summary, (page 55 of the 2014 financial statements) we have
Basic EPS of 23.8 cps for 2014 which on a closing SP for the year of $2.08, (30 June 2014) = a PE of 8.7
Basic EPS of 16.5 cps for 2013 which on a closing SP for the year of $1.49 (30 June 2013) = a PE of 9.03
Basic EPS of 6.5 cps for 2012 which on a closing SP for the year of $0.86 (30 June 2012) = a PE of 13.2
Basic EPS of 7.5cps for 2011 which on a closing SP for the year of $1.12 (30 June 2011) = PE of 14.9
Basic EPS of 7.6 cps for 2010 which on a closing SP for the year of $1.07 (30 June 2010) = a PE of 14.07

Average PE over the last 5 years is thus 11.98, call it 12.

In my view under 10 is good buying in general and all the more so with exceptionally low international and local interest rates pushing the average market PE of the NZX to around 18. PE's have become somewhat stretched all around the world as a result of long term interest rates being at record all time lows.

In addition AIR is very cheap on a relative PE basis to all the major airline stocks I've looked at.

Hope that helps people come to their own conclusions regarding whether the current PE is cheap or not.

[winner69]

For what's it worth the Morningstar 1 pager has these PE numbers. June price and trailing earnings as I understand the words attached.

June 2006 through June 2014 and last number being Sept 2014

8.6 / 11.6 / 5.3 / 6.0 / 12.5 / 14.8 / 13.7 / 9.0 / 8.1 and currently 8.9

Average of 10.0 (not counting current figure, only June years)

Inflated PEs when earnings dipped post GFC in 2010 thru 2012

Seems in normal times a PE of 10 is what the market thinks AIR is worth

The exercise for you now Roger is what were say 1 or 2 year shareholder returns when PE was below average

Geek note: sometimes 5 years is only a half cycle and gives funny numbers. I prefer looking at such things over at least one full cycle

[Beagle]

Any way you slice and dice this thing AIR is cheap on an average PE basis at present, most especially so in a post GFC ultra low interest rate / generally higher prevailing PE environment.

We remain very focused on continuing to build on our earnings momentum of the last three years.
Nothing is taken for granted, and we will be relentless in pursuing opportunities to further improve this iconic company for our investors, our customers and our people.

We have a very exciting year ahead.

Concluding remarks from Christoper Luxon CEO in the annual shareholder review.
Does that sound like management have the right idea or what !!

Even at $2.24 the stock will be at a theoretical ex price of $2.085 this Wednesday. Notwithstanding the recent recovery in price on an ex divvy basis it still looks very cheap and I'm very happy to hold
I would buy more if I wasn't already pushing the boundaries of my self imposed 20% limit for any one stock.

P.S. W69 I haven't got info further back than five years but its interesting to note that in 2012 and 2013 when the PE was below average total shareholder return was 72.7% and 40.1% respectively, (source 5 year statistical review page 55 2014 financial statements).