AIR - Air NZ.

[couta1]

Yep that and the N.Z. dollar has lost considerable ground in the last couple of weeks. Oil still provides a massive tailwind for AIR at the current $N.Z. price. Happy holder.

Yep I topped up today so are even more overweight at around 18% of portfolio. I reckon you'd have to be mad to sell now with expected good results only 3 weeks away ( Depends what price you paid of course) this small blip won't stop the company driving growth and profits over the next year or two IMO, anyways whatever the share price in a few weeks I will be receiving one mother of a divvy

[KiwiGekko]

I would say the NZ Dollar losing ground the past few days is the main cause. I am not sure how much impact the spot oil prices have had as most is still hedged.

Another event which I do not think has had any impact yet is the plane crash in Taiwan: http://www.nzherald.co.nz/world/news...ectid=11396650

[Marilyn Munroe]

Virgin(Underarm Bowlers Division) have announced a quarterly profit.

The directors of Cullen Airlines can now put their Aussie subsidiary nav system on autopilot rather than tightly gripping the control column and nervously scanning the guages.

http://www.asx.com.au/asxpdf/2015020...yp47smt0j8.pdf

Boop boop de do
Marilyn

[Beagle]

And before extraordinary items are in profit for the half year...looks like the analysts got this one wrong, surely I'm not the only one that can work out they'll make a profit in the 2015 financial year ?
Its hardly a subsidiary luv with 25.9% shareholding.

[iceman]

So according to Bloomberg and NBR, Branson companies have charged Virgin Australia A$ 103.1 million in licencing fees in the 10 years to 2013. Aggregated profits of Virgin Australia since IPO is A$90 million net of losses. The licencing agreement has been extended beyond the original term ending 2015 but details are confidential.
Not a bad business to be in this licencing game eh !

[Beagle]

Not bad at all. All you have to do is come up with a cute name and you're in the money. American's most loved dog is a beagle so I reckon Beagle Airways would be a huge hit in America
Actually speaking of one of the most adorable dog breeds in the world and airlines, here's an airline that's really got their act together when it comes to customer service, maybe a good idea for AIr N.Z.
http://www.azcentral.com/videos/news...9/24/16163883/

Bored on the long weekend ? Check out the amazing technology and engineering expertise that's gone into building the Rolls Royce Trent 1000 engines that power AIR's new Dreamliner.
https://www.youtube.com/watch?v=VfomloUg2Gw

[noodles]

Not bad at all. All you have to do is come up with a cute name and you're in the money. American's most loved dog is a beagle so I reckon Beagle Airways would be a huge hit in America
Actually speaking of one of the most adorable dog breeds in the world and airlines, here's an airline that's really got their act together when it comes to customer service, maybe a good idea for AIr N.Z.
http://www.azcentral.com/videos/news...9/24/16163883/

Bored on the long weekend ? Check out the amazing technology and engineering expertise that's gone into building the Rolls Royce Trent 1000 engines that power AIR's new Dreamliner.
https://www.youtube.com/watch?v=VfomloUg2Gw

I think you need to find some new stocks to follow Roger.

[Beagle]

That would be nice but easier said than done mate. Reasonable priced companies with a highly credible track record, sound growth prospects and excellent management are pretty thin on the ground on the NZX...vast majority of the market is very fully priced IMHO. Time to look further afield...probably.

[couta1]

That would be nice but easier said than done mate. Reasonable priced companies with a highly credible track record, sound growth prospects and excellent management are pretty thin on the ground on the NZX...vast majority of the market is very fully priced IMHO. Time to look further afield...probably.

Yep I reckon Air is great buying at current prices but not expecting that to last for that much longer, I mean why pay $3.50 ish for Spark or $2.85 for Chorus an example of 2 overpriced stocks IMO(CNU because previously when it was this price it was paying a 25.5c divvy but none currently plus all the ComCom involvement) when you can buy Air for around $2.60 with heaps more upside over the next couple of years.

[Beagle]

Here's the thing with AIR and PE multiple's. As long term interest rates have declined to historic lows most of the brokers have moved the risk free rate in their DCF models to lower and lower levels which has allowed considerable PE expansion. Well managed companies with excellent track records and sound growth prospects like AIA, FPH and RYM to name just three have ascended to very lofty multiples, (circa 30) on the back of such low interest rates.

Meanwhile over at AIR we have what appears to be an excellent management team, sound growth prospects and excellent track record yet despite historically low interest rates and significant PE expansion elsewhere in the market the market seems inclined towards holding AIR at its historic average PE of about 10 across the economic cycle ?
Why isn't it appropriate with such general market PE expansion on the back of ultra low interest rates that AIR who are about to put in place 5% capacity expansion for the next few years aren't accorded a higher across the economic cycle PE ratio ?...say 12-13 ?

Its simply not logical that they shouldn't be as PE ratio's are intrinsically inversely related to interest rates, (ultra low interest rates implies higher PE's are acceptable all other factors being equal).
Further I would argue travel is extremely cheap and getting cheaper every year in real terms and we have a younger generation who have all but given up the dream of home ownership so are more inclined to spend their disposable income and then there's the tsunami of baby boomers many of whom have high level's of disposable income and can travel regularly. Interest rates are very low and fuel prices also, adding fuel to customers disposable income So no problem on the demand side. On the supply side there's an approximate eight year wait list for new generation fuel efficient aircraft at Boeing and Airbus....so genuine issues around new supply.

AIR on a 2015 PE of about 8, (I'm at 32 cps EPS this year, 40+ next year if oil stays low) is a very very cheap stock on a fundamental basis...I would argue the cheapest out there which fits the other attributes I require. I'd rather laser focus on stocks I really think are going to go up....like this one and HNZ up 41% in the last 3 months

If the market is to take the position that AIR is theoretically only worth a PE of 10 across the economic cycle, then with interest rates where they are this implies the market is presently pricing the company like its a no growth company. In my view with supply / demand characteristics and stated capacity expansion over the next several years of circa 5% this stock is presently mispriced and has been for some time. Mispriced stocks intrigue me as the price inevitably heads towards fair intrinsic value over time. I see very good gains in AIR's SP in the next 12-24 months notwithstanding their excellent performance in the last 12 months.

Its clear the wild cards are the oil price and the exchange rate. My view is the market seems to be taking a view that oil prices won't be materially assistive for any meaningful length of time. Only time will tell.