This is a pretty big earnings guidance downgrade. Beagles favourite method using mid point it’s a 16% reduction (best case view down 20%) -
The company now expects earnings before taxation of $340 million to $400 million for the year ended 30 June 2019. This includes the impact of the global Rolls-Royce engine issues.
The previously announced guidance was for underlying earnings before taxation of $425 million to $525 million, which excluded an estimated $30 million to $40 million impact of schedule changes prompted by the global Rolls-Royce engine issues.
All the evidence you need that global growth is slowing and the domestic economy is very weak is right there in plain sight for all to see.
As you quite rightly state Winner this is a 16% downgrade at the mid point of the respective forecast so I would expect a ~ 10% SP correction given that this affects current year earnings and may have some roll on effect to FY20. Its not a permanent impairment on their earnings ability and I think the company is right to review its cost base and I am trusting the calibre of the management to do a comprehensive job in that regard.
The Rolls Royce issue will hopefully be mostly finalised in 2019 so again hopefully this is not a permanent impairment on their future earnings capability. I think talk of a massive correction in the SP is overdone. The fall this morning to around $2.82 a few minutes ago when I looked is probably already overdone in my opinion but sentiment will remain weak for some time so anyone looking to top up probably has time on their side.
Last edited by Beagle; 30-01-2019 at 10:17 AM.
Ecclesiastes 11:2: Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
I think talk of a massive correction in the SP is overdone. The fall this morning g to around $2.82 a few minutes ago when I looked is probably already overdone in my opinion but sentiment will remain weak for some time so anyone looking to top up probably has time on their side.
Maybe the signs for this ‘slowing growth in leisure travel in NZ’ were already out there
Net migration is falling and the government want it to fall faster.
This is an interesting insight from my mate Rodney -
“It probably isn't a coincidence that net tourism and net migration have started to fall at roughly the same time much as occurred after the previous booms in the first half of the 2000s. It seems that around the same time the permanent net flow of people turns up or down the temporary flow driven mainly by tourists does the same. As covered in our housing and building reports there are good reasons for expecting further sizeable downside in net migration. By implication that implies that net tourism will probably fall further ......”
Maybe the signs for this slowing growth in leisure travel in NZ were already out there
I have a lot of respect for Rodney... worked with him many years ago. straight up sort of dude who isnt afraid to stand out from the crowd. I must admit I was a bit lucky to have ditched my holding recently simply due to cutting down exposure in this bearish market.
I didn't expect to invest again in AIR after collecting a nice profit in June 2017 (Sold for $3.18). Couldn't resist the temptation of $2.85 so am now back in with a small parcel & watching for any further discount.
I have a lot of respect for Rodney... worked with him many years ago. straight up sort of dude who isnt afraid to stand out from the crowd. I must admit I was a bit lucky to have ditched my holding recently simply due to cutting down exposure in this bearish market.
Not luck mate - doing what you think is right is not luck
Yep, Rodney good joker. Had a bit to do with him over the years since he left ASB.
At the top of every bubble, everyone is convinced it's not yet a bubble.
Good Chris Luxon is taking the cost cutting seriously and leading the team doing that review...they need to be thorough. What would be helpful is if all unions were mindful that economic conditions are starting to slow and are cognisant of that with their more realistic expectations going forward.
Ecclesiastes 11:2: Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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Originally Posted by oldtech
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