Initial thoughts on the result
Revenue items were 25m ahead of my estimates due to stronger services and other revenue growth - really pleasing to see other revenue pick up (credit cards etc). :)
Costs were 6 million lower than my estimates, and with $45 million of transitional labour (one-offs) vs my estimate of 17m, this is a big beat! My cost forecast for next year is going down! :)
Ownership costs (depreciation + leases) were 15m above my estimate - I need to increase my assumptions here :t_down: On the bright side depreciation is non cash.. :cool:
Finance costs (interest expense less interest income) was 9m lower than my conservative estimates. :)
As a result PBT, tax, NPAT and EPS were all slightly higher than my estimates. GREAT RESULT - UPGRADES TO NEXT YEAR WILL FOLLOW
As expected cash generation was outstanding - and with an under-leveraged balance sheet they have increased the div and added a 10c special. While I would have liked the full year normal to be 7.5c + a special I can't really complain can I? On my expectations of c.30c EPS next year, they will face the same problem of how much to increase the dividend, vs special next year (tho this big special buys them some time. Their concern must be that raising the normal so fast creates expectations, and a dividend level that would prove unsustainable in a downturn.
I still think they are under-rewarding shareholders given they are spending 2.2bn! on fleet - and to give context this large dividend is only 177m... about 20% of operating cash flow.. Heaps more to go!
To the guy who wants to go in the DRP there isn't one numpty, DRP is for co's that need more cash - AIR has the opposite problem!
I haven't reset my model - will increase my estimates in the next few weeks, but my current price target is $3.00 folks (10x 30c EPS). Lets hope VAH can be turned around soon, as even though I give 0 credit to valuation for the $100's of million poured in, if it detracts from earnings (through the new accounting method), how will the market judge that?
- looking forward to my divi check
-MOD!