AIR - Air NZ.

[777]

why does the chart look like this? odd buys and sells

Buyers

	Buy Quantity	Prices
2	24,544	$2.015
1	7,500	$1.965
1	50,000	$1.950
1	2,000	$1.935
4	63,000	$1.930
2	10,000	$1.920
6	25,670	$1.910
3	16,000	$1.905
13	116,930	$1.900
1	10,000	$1.880
34	325,644

Prices	Sell Quantity	Sellers
$1.795	5,000	1
$1.845	9,107	1
$1.865	10,116	1
$1.900	30,200	2
$1.925	10,000	1
$1.935	38,463	2
$1.940	218,535	3
$1.950	19,302	1
$1.960	4,247	1
$1.965	7,100	1
	352,070	14

All normal with every stock at opening and 1645 to 1700 everyday.

[workingdad]

75,000 shares traded after market at 1.96.... wonder what open will be in am.... US market might have a bounce as the big boys make their usual gains

[777]

75,000 shares traded after market at 1.96.... wonder what open will be in am.... US market might have a bounce as the big boys make their usual gains

Done at the weighted average for the day so the trade does not indicate much.

[skid]

75,000 shares traded after market at 1.96.... wonder what open will be in am.... US market might have a bounce as the big boys make their usual gains

So far everything is down including futures ...but we live in hope

[Hoop]

Gee, look at that market PE...... good table thanks Winner

Have a closer look...guess when the PE was this low in the last cycle...Hint: look to your left

[Raz]

Im with ya winner69. Dividend stripping has not been successful so far. Sigh

Yes it all depends..mixed bag for sure, sold a third just before ex dividend on the run up, 23 cents per share gain, sold a third post dividend at 2.08 and still holding a third..will have to consider my stop loss over night as we may well be heading there shortly at this rate. See this as market sentiment only and still believe in AIR as an investment..just like an airplanes inertia..AIR price adopts similar characteristics at times.....on the flip side that usually means you have plenty of time to buy in again.

I maintain capital first and foremost and take the gains when they are on the table. Away on an intense trip to Boston on Sunday and if I can't keep an eye on this share I feel better being out of it:-)

[Beagle]

Roger, I hear what you are saying about AIR doing to PE expansion and reverting to its long term average of 10.

However I point out that generally when AIR has an PE >10 is when profits are down the gurgler - like 2010/2012 period as per numbers below (from Morningstar)

Interesting their is a pretty strong correlation between AIR's EPS and the relativity of AIR's PE to the market (discount) - that correlation being >60%

In other words (historically) the more money AIR makes the more AIR's PE is 'discounted' by the market (and vice versa). Even the current 'discount' of 75% (AIR's PE relative to market's PE) isn't an outlier in the scheme of things

You are correct that as AIR's earnings fall the PE will probably increase - but unless they wipe out completely I would say that a reasonable PE will settle at between 6 and 8 (based on history) - a lot also depends on how well the NZX does or doesn't as well

We probably saying the same thing - you with some rnthusiasm but I am a bit more tempered in my expectations.

Main factor is that AIR is a real cyclical and to make matters worse a NZ cyclical so has that additional 'discount' to Aussie and global airlines. It really is a beast that defies logic

Thanks for the chart mate. Serves to illustrate my point. Looking through the timeline of the last GFC In 2008 AIR traded at 43% of average market PE, 2009 49%, 2010 87.5% and 2011 107%. Notice the PE expansion at the bottom of the cycle ? Presently on a historical basis AIR trades at just 22.5% of the average market PE which is unprecedented at any stage prior to or during the last GFC. Even bringing this right up to speed based on mid point of analyst and company forecast $500m for FY17 that's 32 cps after tax so a forward FY17 PE of 6.04 based on a closing price of $1.93.5 This represents approx. just 30% of the NZX50 market average forward PE of ~20. Remember this forecast is based on a year which includes all known new competition and highly competitive yield conditions, (very cheap airfares) and we're at just 30% of market PE, again unprecedented at any time during the lead up too, or during the last GFC.

I think this is supportive of my contention that on a relative basis compared to a very stretched market, AIR is very cheap. That's not to say there's no downside risk if there's some sort of GFC MK2 but the effects thereof are somewhat mitigated by its relative valuation to the market being at such an unprecedented low level both on a historical and forward PE view.

Not sure if anyone else noticed but during the last GFC a lot of blue chip stocks got a really savage beating, even the real blue chips like Ryman weren't immune, in fact far from it.
In a world where bonds are extremely expensive, (very low yield) real estate is exorbitant, other NZX shares are trading on an average forward PE of ~20 its seems a reasonable proposition to me that risks and rewards for holding AIR shares are relatively balanced at around this level and also reasonable to say in the event of another GFC a LOT of other stocks are going to get a serious beating.

In terms of AIR's resilience to a downturn, another factor I have been thinking about today, it was noted that they remained profitable throughout the GFC, arguably the worst downturn since the great depression of 1929. They didn't post a $2billion+ loss like QAN did and while we're on the subject of competition over the ditch its really quite sad that Virgin can't even make any money in FY16 when we've enjoyed the most favourable conditions for airlines in arguably the last 50 years. How would they cope with another GFC ?

[allfromacell]

Jeez a close at 193.5 .... and the low for the day

Won't want another bad day tomorrow will we?

$1.93 is $2.28 cum dividend so the way I see it, it could still fall plenty. I'm hoping to top up at around $1.80.

[winner69]

.....
Presently on a historical basis AIR trades at just 22.5% of the average market PE which is unprecedented at any stage prior to or during the last GFC.

Correct -- but not an outlier with the pretty strong correlation (65%) between EPS and this market relativity. The more AIR makes the greater the difference to the market PE and vice versa.

Incidently follows the same traits - higher the profits the bigger discount to the market PE. QAN current PE of 5.3 and 31% of Aussie market PE (Morningstar numbers)

Below is same table as before with QAN's PE shown. QAN's PE has historically been higher than AIR's PE - see my comment earlier about the NZ country discount. Interesting eh. Whether right or wrong that's what happens and nothing likely to change here

Exactly what you are saying about AIR applies to QAN - echo's of that Barron's article about QAN being the cheapest stock in the world. If they had realised that AIR actually exists in this world they might have concluded the equal cheapest stock in the world (with AIR)

But AIR is very much a cyclical and behaves like one. Maybe 4 times 50 cents/share is about the same as 8 times 25 cents/share and that's where it will be in a few years time.

But in the meantime as Raz says no doubt plenty of trading opportunities but a bugger dividend stripping was a bit disappointing this time around - still 8 cents up but that's bugger all eh. Hope it's not less than 8 cents this time tomorrow as winner hates losing.

[Baa_Baa]

Can't blame todays price drop on AIR or it's fundamentals, as has been pointed out it probably has one of the best ROI's on the market, albeit subject to volatility and where one bought in. The divi strip was looking just fine on Friday, one shouldn't beat oneself's up just because Janet decides to forecast a US rate rise after our market closes. Probably quite a few intrepid 'investors' sucking the kumara right now, especially the early buyers after the highs and the 'average down' folks, I feel for them. Crap timing for a local market rout but that's the breaks. Spend the divi buying the lows whenever that happens, it'll make one feel a lot better, though some patience and fortitude might be required. Jmho.