AIR - Air NZ.

[winner69]

As someone who has worked fundamental analysis for a living in the US, an financial auditor before that, i should be heavy biased to fundamentals. In reality I actually think that behavioural considerations matter more in markets. Of late I have made more out of the noise than fundamentals, markets react to uncertainty and so many people can understand a sound bite and react to that simply. So media sound bites matter. Sure if you buy in a low base it may matter less as a consideration, dividends are nice however no point if you are losing capital at a greater rate IMHO. Focusing on the now, AIR will have a great result, good dividend, however I expect that will have a limited effect on the share price beyond the short term.

I simply now take forward indicators I see in my client base,network and react before they are translated into anything reported in the media. I do look at financials, as i have that skill, however my weighting on them is way less.

Good post raz.

I think much along the same lines as you do.

Financials/fundamentals are very important. It is worth the effort to assess an 'intrinsic value' of the company. (Medium/long timeframe)

But it's what the market wants to pay for those earnings that drives price at any point in time (short term/medium timeframe)

Big difference in price between say 8 times earnings and 20 times earnings. That's noise.

[winner69]

As someone who has worked fundamental analysis for a living in the US, an financial auditor before that, i should be heavy biased to fundamentals. In reality I actually think that behavioural considerations matter more in markets. Of late I have made more out of the noise than fundamentals, markets react to uncertainty and so many people can understand a sound bite and react to that simply. So media sound bites matter. Sure if you buy in a low base it may matter less as a consideration, dividends are nice however no point if you are losing capital at a greater rate IMHO. Focusing on the now, AIR will have a great result, good dividend, however I expect that will have a limited effect on the share price beyond the short term.

I simply now take forward indicators I see in my client base,network and react before they are translated into anything reported in the media. I do look at financials, as i have that skill, however my weighting on them is way less.

Good post raz.

I think much along the same lines as you do.

Financials/fundamentals are very important. It is worth the effort to assess an 'intrinsic value' of the company. (Medium/long timeframe)

But it's what the market wants to pay for those earnings that drives price at any point in time (short term/medium timeframe)

Big difference in price between say 8 times earnings and 20 times earnings. That's noise.

Market sentiment rules

[Zaphod]

Traditionally AIR's biggest profits have been made in NZ.Goes right back to the merger between NAC and Air NZ.
For someone to make big inroads into this profit base they would need a huge investment in infrastructure,equipment,people and the right aircraft.So old odd planes will not cut the mustard.

I agree. IMO, at some point in the not so distance future route and operator consolidation will occur again. Higher fuel prices will just hasten this process. NZ and to a lesser extent JQ will remain the major players in the domestic market.

[Beagle]

Total seat capacity into and exiting N.Z. is apparently scheduled to grow from 8.4 million seats in CY2015 to 9.4 million seats in CY2016, an increase of 1 million seats or 11.9%.
Some people obviously see all the new competition as the death knell for yields. OTPH others will know that tourism is currently growing at 10% per annum and outbound tourism at 6% per annum and with cheaper fares in real terms it seems quite easy to extrapolate the trend to logically analyse that seat capacity increases are probably going to be necessary to meet demand growth and there won't be the bloodbath of competition some are imagining might come.

Upon reflection I'm not so sure Mr Luxon did shareholders a great favour by saying what he did to journalists a couple of weeks ago but many seem to have ignored the context in which he made those remarks, (see further back in the thread if you're not sure what I'm referring too). At the risk of sounding like a broken record, in my opinion Mr Luxon is a master at being politically correct when he needs to be to keep the public / politicians on side.

Many were sceptical when AIR were growing capacity at 6% last year and never thought they'd fill the planes and they were wrong. Those same sceptics are presently in abundence now that AIR are growing seat capacity at 12% per annum and yet demand growth to 31 December 2015 has been 17%. The stat's all point to an extremely strong current operating environment and I am confident going forward that seat demand will be there for the capacity growth on offer.

The caveat to that is a GFC Mk2 situation, (did we ever really get through the first one properly ?) which many seem to be starting to figure is a very real possibility. As usual..only time will tell.

[Baa_Baa]

I hope there's not another GFC, last time AIR got pummelled.

Attachment 7892

Attachment 7893
AIR Monthly chart

[janner]

" Some people obviously see all the new competition as the death knell for yields. " ( Roger )

Have booked one way to Hong Kong @ 33% ( Approx ) cheaper than AIR NZ.
Or put another way.. AIR NZ is 50% ( Approx ) dearer..

I see no death knell... Just a very good saving..

Disc. Not a holder.

[Beagle]

I hope there's not another GFC, last time AIR got pummelled.

Attachment 7892

Attachment 7893
AIR Monthly chart

I think we can all agree we live in interesting times. Seen some big drops in cyclical's in the U.S. in the past month and a half. Delta, American Airlines, even Ford, all trading on forward PE's of less than 6 now. Market seems to be pricing in at least a 50% chance of a recession. I'm sticking with my estimate that AIR are going to make 68 cps this year incl of VAH contribution so by my calculations they're on a forward PE of just a little under 4 at $2.695. AIR treated too harshly by the market in recent days ?

[Valuegrowth]

This industry has more competition .Only strong competitors will survive in the future. Both AIR NIZ and Singapore Airlines are two of the reliable airlines in the world.

http://www.stuff.co.nz/travel/news/7...s-enter-market

Trans-Tasman competition heats up as foreign airlines enter market

[Beagle]

Bought more on the open this morning $2.73...too cheap...like a short and wide delivery in a 20/20 cricket match...smacked it to the boundary

[thestg]

It passed my stop-loss last week but instead of selling I increased my loan on Friday & also bought more this morning at $2.73. With breath held my stop loss has cleared & hopefully the upward thermal will continue.