AIR - Air NZ.

[couta1]

Okay I'm coming out of the kennel to make a comment to balance some of the negative talk. Firstly this share is so cheap presently its almost ridiculous, it's trading at NTA level of $1.76 while the likes of Qantas trades at around 2.7xNTA. Now ask yourself why over the last 3 days the price has not dropped below $1.76 despite an absolute NZX trashing? Perhaps because even a schizophrenic market isn't dumb enough to go below that mark, that may also give those wondering about where the bottom is some clues. Heading back to the kennel for another long sleep.

[RupertBear]

Okay I'm coming out of the kennel to make a comment to balance some of the negative talk. Firstly this share is so cheap presently its almost ridiculous, it's trading at NTA level of $1.76 while the likes of Qantas trades at around 2.7xNTA. Now ask yourself why over the last 3 days the price has not dropped below $1.76 despite an absolute NZX trashing? Perhaps because even a schizophrenic market isn't dumb enough to go below that mark, that may also give those wondering about where the bottom is some clues. Heading back to the kennel for another long sleep.

Welcome back from the kennel, I have missed your take on the current turbulence

[BlackPeter]

I agree that they are two different things but at some point, a stock that you might consider oversold and a stock that is going to pay a +10% dividend is what some would call a great opportunity.

Is it really that difficult to understand that the markets don't seem to believe in this amazing dividend being paid in perpetuity? Ignore the markets judgement at your peril.

[winner69]

Is it really that difficult to understand that the markets don't seem to believe in this amazing dividend being paid in perpetuity? Ignore the markets judgement at your peril.

That Dividend Discount Model has stood test of time

Simplified version using 20 cent dividend and 0% growth rate in perpetuity and required return 11% constant cost of equity capital (high for these times?)

Answer is $1.81

Hmm - maybe not too difficult to understand at all

[blackcap]

Is it really that difficult to understand that the markets don't seem to believe in this amazing dividend being paid in perpetuity? Ignore the markets judgement at your peril.

I think a lot of posters here think that this 35 cent dividend is going to be there forever. The market is saying that it will not be and I think I tend to agree with the market on this one. From memory SPK when it was TEL payed a 44 cent annual dividend when the Sp was $9.50 plus. If you invested then (back in 2000 odd) you would still be in the red and waiting a long time if ever to get your money back. I think once they did hit problems soon after (TEL) cut the dividend drastically and even stopped for a bit.
AIR the same. They can pay the dividend this year, maybe next, but if competition heats up, and it looks like it already has, and if profits fall or disappear totally I can almost guarantee the dividend will be reduced and or cut out completely.
But what do I know, I am not an investor in AIR, do prefer companies that do pay sustainable growing dividends, just not convinced the AIR one is sustainable. THat said $1.75 odd may be an ok price.

[skid]

Okay I'm coming out of the kennel to make a comment to balance some of the negative talk. Firstly this share is so cheap presently its almost ridiculous, it's trading at NTA level of $1.76 while the likes of Qantas trades at around 2.7xNTA. Now ask yourself why over the last 3 days the price has not dropped below $1.76 despite an absolute NZX trashing? Perhaps because even a schizophrenic market isn't dumb enough to go below that mark, that may also give those wondering about where the bottom is some clues. Heading back to the kennel for another long sleep.

Thats exactly the same argument made for 1.80---Of course it could bounce,but lower lows and lower highs is not a good sign,even if some interpret it as horribly and ridiculously oversold----You of all people should know how ''dumb'' the market can get.
But the NTA facts are a refreshing change from unsubstantiated projections.
Of course some are going to get frustrated when responding to a dropping SP,including those who adopted a cavalier ,''winner takes all'' approach.
For every frustration there appears to be similar posts urging those to jump in ''boots and all'' so seems fair imo. I hope you haven't jinxed that 1.76 (Geez ,Im starting to be superstitious with this puppy)

[Snow Leopard]

Okay I'm coming out of the kennel to make a comment to balance some of the negative talk. Firstly this share is so cheap presently its almost ridiculous, it's trading at NTA level of $1.76 while the likes of Qantas trades at around 2.7xNTA. Now ask yourself why over the last 3 days the price has not dropped below $1.76 despite an absolute NZX trashing? Perhaps because even a schizophrenic market isn't dumb enough to go below that mark, that may also give those wondering about where the bottom is some clues. Heading back to the kennel for another long sleep.

NTA was $1.764 at end of year but since then they have very kindly given you $0.35 of it.
We will assume accumulated after tax profits of $0.087 to date for this year which would give a current NTA of

$1.501

Not that current NTA is that important, it is all about the future outlook and currently the market is not happy.
One day there will be a bottom:

this may be it

or

this may not be it.

Best Wishes
Paper Tiger

[mondograss]

I think a lot of posters here think that this 35 cent dividend is going to be there forever. The market is saying that it will not be and I think I tend to agree with the market on this one. From memory SPK when it was TEL payed a 44 cent annual dividend when the Sp was $9.50 plus. If you invested then (back in 2000 odd) you would still be in the red and waiting a long time if ever to get your money back. I think once they did hit problems soon after (TEL) cut the dividend drastically and even stopped for a bit.
AIR the same. They can pay the dividend this year, maybe next, but if competition heats up, and it looks like it already has, and if profits fall or disappear totally I can almost guarantee the dividend will be reduced and or cut out completely.
But what do I know, I am not an investor in AIR, do prefer companies that do pay sustainable growing dividends, just not convinced the AIR one is sustainable. THat said $1.75 odd may be an ok price.

AIR is forecasting a 20c ongoing dividend, not a 35c dividend. And didn't TEL tank on the back of the dotcom bubble followed by a new Telecommunications Act, followed by the full break up some years later? I'm not sure it's fair comparing apples with oranges.

AIR has positioned itself well, done a fleet renewal, opened some good new routes, is expecting some serious free cash-flow and all-in-all seems to be coping pretty well with unprecedented competition albeit in a period of very low fuel prices. That competition may well last long term, but I suspect it will eventually crowd itself out to a certain extent and as fuel prices rise and margins tighten it's the competitors that will drop away first, not the local player.

[Beagle]

I felt sorry for the orange stripy tabby so gave it some of my dogs spare food and it seems to have worked well. It has put on some weight but my dogs are still keen to bite it hard...anyway enough of my domestic pet situation, (my daughter did move out of our flat and left an orange stripy tabby)...believe it or not.

I have the ex divvy NTA at an estimated / projected NTA of $1.53 as at 31/10/16.

Of course NTA has very little to do with it, (QAN is $1.20), unless one is buying below NTA which time has proved to be a very worthwhile long term strategy so I have bucketful's ready to do a Couta1 if the SP ever trades at a meaningful discount to NTA. The negativity is well and truly overdone on here and I tire of it and know the institutions, (top 20 shareholders own 86% of the stock) are really the ones that control the price so endless debate on here matters for basically nothing.

I am happy to hold with seatbelt firmly fastened and I think management are FAR better placed to know what's a sustainable dividend than some of the critics on here.... especially those who hold a short position and a vested interest in talking it down.

[blackcap]

AIR is forecasting a 20c ongoing dividend, not a 35c dividend. And didn't TEL tank on the back of the dotcom bubble followed by a new Telecommunications Act, followed by the full break up some years later? I'm not sure it's fair comparing apples with oranges.

AIR has positioned itself well, done a fleet renewal, opened some good new routes, is expecting some serious free cash-flow and all-in-all seems to be coping pretty well with unprecedented competition albeit in a period of very low fuel prices. That competition may well last long term, but I suspect it will eventually crowd itself out to a certain extent and as fuel prices rise and margins tighten it's the competitors that will drop away first, not the local player.

Fair call on the 20 cent dividend. Yes TEL probably did have those problems you mention. My point is that things happen and what once seemed like a regular div paying stock suddenly becomes on that does not pay divs. Does not take long. Not saying AIR are going to do that, just that do not take this forward dividend as gospel. Thats all.