AIR - Air NZ.

[workingdad]

One reason for the sellers might be that the result was (despite being rather spectacular) below analyst expectations. Analyst consensus for EPS was 54,4 cts / share, but they delivered only 41 cts. Big gap. Revenue was as well somewhat lower than expected by analysts ... and the dark clouds for the future are now clearly on the horizon. Obviously - nobody knows whether this will be just a rainy day, or a tornado. Management seems to point to option 1.

I assume that some of the sellers are concerned that the ex dividend in early September might trigger a larger (than the 35 cents) drop. Are they correct? We will see.

When it comes to AIR anything is possible.

Am I incorrect in saying though that with the rather surprising large special and beyond any realistic expectations that those factoring in ex divvy SP of 2.15 minus 35c is a bit harsh? My take is SP close price yesterday was factoring in 20 - 25c total divvy not 35c total so perhaps we should be adding 10-15c on the 2.23 bringing it to 2.35 range and potential ex divvy drop to that magic resistance of 2.02.....

Just thinking out loud here but it makes no sense to me that some are putting an ex divvy price of 1.80 down as a bit of a lowball estimate, had the divvy been say 20c using that same 'formula' it would be 2.15 minus 20c to 1.95, why would having a bigger special divvy make the SP worth so much less where it should be considered a positive

[BlackPeter]

When it comes to AIR anything is possible.

Am I incorrect in saying though that with the rather surprising large special and beyond any realistic expectations that those factoring in ex divvy SP of 2.15 minus 35c is a bit harsh? My take is SP close price yesterday was factoring in 20 - 25c total divvy not 35c total so perhaps we should be adding 10-15c on the 2.23 bringing it to 2.35 range and potential ex divvy drop to that magic resistance of 2.02.....

Just thinking out loud here but it makes no sense to me that some are putting an ex divvy price of 1.80 down as a bit of a lowball estimate, had the divvy been say 20c using that same 'formula' it would be 2.15 minus 20c to 1.95, why would having a bigger special divvy make the SP worth so much less where it should be considered a positive

Dividends are nice (well for share holders), but what really matters are earnings ...

[Balance]

But who is selling and why now?

If you are a local institution heavily weighted in the stock (partly via the Government sell down at $1.65), it is probably the right thing to reduce as AIR is definitely past its cyclical peak earnings and has just had its earnings officially downgraded by 33%!

[Beagle]

One reason for the sellers might be that the result was (despite being rather spectacular) below analyst expectations. Analyst consensus for EPS was 54,4 cts / share, but they delivered only 41 cts. Big gap. Revenue was as well somewhat lower than expected by analysts ... and the dark clouds for the future are now clearly on the horizon. Obviously - nobody knows whether this will be just a rainy day, or a tornado. Management seems to point to option 1.

I assume that some of the sellers are concerned that the ex dividend in early September might trigger a larger (than the 35 cents) drop. Are they correct? We will see.

Its not nearly as big a gap as you suggest. Analyst expectations were obviously pre extraordinary items, (every man and his dog, especially any analyst worth his salt knew there were extraordinary items in regard to the sale of VAH and the cargo settlement). Earnings after tax and excluding those extraordinary matters was 51.64 cps, slightly down on average analyst expectations but in accordance with guidance of $800m plus before tax and extraordinary items. Outlook is consistent with my expectations.

[Nasi Goreng]

When it comes to AIR anything is possible.

Am I incorrect in saying though that with the rather surprising large special and beyond any realistic expectations that those factoring in ex divvy SP of 2.15 minus 35c is a bit harsh? My take is SP close price yesterday was factoring in 20 - 25c total divvy not 35c total so perhaps we should be adding 10-15c on the 2.23 bringing it to 2.35 range and potential ex divvy drop to that magic resistance of 2.02.....

Just thinking out loud here but it makes no sense to me that some are putting an ex divvy price of 1.80 down as a bit of a lowball estimate, had the divvy been say 20c using that same 'formula' it would be 2.15 minus 20c to 1.95, why would having a bigger special divvy make the SP worth so much less where it should be considered a positive

I was having similar thoughts and share price needs to get over $2.35 so that ex divi price can hold above $2 which is a nice support level technically. The ex divi price should drop in theory by the amount of the dividend. The value of the company is 35c less the day the dividend is paid. All other things being equal, it should recover over time due to the fact more dividends will be paid in the future. Ironically, the higher it goes in the short term, the more comfortable I am being a holder. If the price stays around this level, I may sell before the record date.

[King1212]

I was having similar thoughts and share price needs to get over $2.35 so that ex divi price can hold above $2 which is a nice support level technically. The ex divi price should drop in theory by the amount of the dividend. The value of the company is 35c less the day the dividend is paid. All other things being equal, it should recover over time due to the fact more dividends will be paid in the future. Ironically, the higher it goes in the short term, the more comfortable I am being a holder. If the price stays around this level, I may sell before the record date.

really? With 35c per share..n u are selling out?

[777]

really? With 35c per share..n u are selling out?

Theoretically selling cum dividend is the same as selling ex . Personal choice. All depends on the share price action before and after.

[Beagle]

Selling out just before record date or immediately after ex date usually results in sub par short term performance all other factors being equal according to dividend stripping studies I have seen.

Generally those buying ahead of a dividend and holding for several weeks after ex, on average make short term outperformance gains.

Anyway for all fellow dividend hounds the beagle has crunched the numbers for you, (remember the 5% RWT comes off the dividend grossed up for imputation credits so for every share you own assuming you don't have an exemption certificate for RWT you'll get

35 cps / 0.72 = gross dividend 48.6111 cps
Imputation Credits @ 28% 13.6111 cps
Resident Withholding tax at 5% 2.4305 cps
Net Dividend 32.5695 cps

Anyone on a lower tax rate than 33%, (under $70K per annum) will be able to claim back a portion of the RWT and / or Imputation credit when they do their FY17 tax return.

e.g. A taxpayer on a marginal tax rate of 17.5%, (up to $48K per annum) would get a refund per share of (48.6111 x 17.5% = 8.5069 tax - tax deducted 16.04cps) = 7.5331 cps so their net dividend after calculating their tax refund would come to 32.5695 + 7.5331 = 40.1 cps. People on under $48,000 per annum must love N.Z.'s imputation system as they get 5 cents in extra dividend due to the tax credits, how good is that !

[simjp81]

Great result today, but still unsure about going forward. Does AIR still have a div reinvestment plan? If so anyone know when they announce the purchase price for that?

[freddagg]

I am a dividend hound and I am rejoicing.
Gross dividend for the year is 62.5 cents and forward guidance is for their second most profitable year ever. All for 2.25, unbelievable.