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Quote:
Originally Posted by
Schrodinger
Dont want to bring out the "Dont invest in airlines piece" but I think thats behind the 10 PE currently.
Roger been sort of nagging me to buy into AIR knowing I don't invest in airlines
I'm have that feeling that if I changed my mind (and Roger puts up a compelling case to do so) and bought into AIR the new Dreamliner would crash and hundreds of people would die (with a disasterous impact on the shareprice). I couldn't live with that so no AIR or any airlines for me.
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Quote:
Originally Posted by
Schrodinger
Dont want to bring out the "Dont invest in airlines piece" but I think thats behind the 10 PE currently.
But if they grow underlying after tax earnings by 30% again this year then the stock goes from a trailing underlying PE of 9.28 to a forward PE of 7.13, (203.5 / 28.52 cps)...or we could see a bit of PE expansion as the market becomes comfortable AIR can execute its significant medium term capacity expansion successfully and we could see $3.00 a share and still be on a modest PE of 10.5 :)
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Quote:
Originally Posted by
winner69
Roger been sort of nagging me to buy into AIR knowing I don't invest in airlines
I'm have that feeling that if I changed my mind (and Roger puts up a compelling case to do so) and bought into AIR the new Dreamliner would crash and hundreds of people would die (with a disasterous impact on the shareprice). I couldn't live with that so no AIR or any airlines for me.
LOL Your loss mate, you haven't got Wall Steer with Gordon Gekko 's airlines advice playing on a continuous loop have you :). I'll be enjoying a few drinks in CHCH after the AGM and spending some of my multi thousand dollar divvy payment and spare a thought for poor risk averse investors, your good self included or you could come along to the CHCH sharetrader meeting after the AGM and I'll buy you a beer :) Here's a thought for the day. ALL companies face serious commercial risk.
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Umm Roger you need to factor in a high risk premium for the industry they are in.... I would expect high returns when conditions are in their favour. Being a longer term investor I want to know this company will be around in the long run. What is in favour of AIR is the NZ govt (taxpayers) who will bail out this airline anytime it gets it wrong. Still this doesnt answer the capital gain piece and can AIR turn $330M into $500M+ compounding over the next ten years. Other considerations include the relativer closed domestic market which will limit growth and a resurgent Qantas (will happen). Looking at the recent numbers the international piece is underperforming and there is growth there but is growth capped at a certain capacity. I know this is not like retailing, but a new retail chain can add hundrerds of stores which multiplies scaling-AIR will need to rely on extra services to a limited domestic market. Thats the modelling you should be looking at if you are thinking of investing.
Where I think their industry is currently at a cross roads is the new planes and when the market turns do the new planes enable airlines to stop going out of business? This is very important for larger passenger markets and if the airlines move from being bankruptcy prone to weathering downturns like other industries then this sector could be viewed differently. Havent researched enough to run the numbers on these scenarios.
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Quote:
Originally Posted by
Roger
LOL Your loss mate, you haven't got Wall Steer with Gordon Gekko 's airlines advice playing on a continuous loop have you :). I'll be enjoying a few drinks in CHCH after the AGM and spending some of my multi thousand dollar divvy payment and spare a thought for poor risk averse investors, your good self included or you could come along to the CHCH sharetrader meeting after the AGM and I'll buy you a beer :) Here's a thought for the day. ALL companies face serious commercial risk.
I could manage and live with the risk losing cash....it's just the hundreds of dead I couldn't live with
Just don't want to tempt fate. My experience over many years when I have these premonitions it generally happens
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Risk is already factored into the low PE which is even lower than notoriously cyclical PGW. Very comfortable for the medium term :)
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Quote:
Originally Posted by
Roger
ALWAYS looking for a negative, never seems to be a balanced or objective comment... seriously why do you bother contributing ?
Is it so hard to have a positive word for the work the directors and staff have done...
OK here is something positive. I flew over the ditch recently with Cullen Airlines. Managed to score an emergency exit row which meant more leg room than is usual in thrombosis class and as a bonus the middle seat was empty.
The aircraft was was modern, the staff pleasant, and the seat back entertainment screen is a nice feature.
While I am handing out bouquets in tourism and travel I found the staff at Queensland Rail pleasant and helpful. Goodonya.
Boop boop de do
Marilyn
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Quote:
Originally Posted by
Marilyn Munroe
OK here is something positive. I flew over the ditch recently with Cullen Airlines. Managed to score an emergency exit row which meant more leg room than is usual in thrombosis class and as a bonus the middle seat was empty.
The aircraft was was modern, the staff pleasant, and the seat back entertainment screen is a nice feature.
While I am handing out bouquets in tourism and travel I found the staff at Queensland Rail pleasant and helpful. Goodonya.
Boop boop de do
Marilyn
Now you can take two Panadol, a glass of wine and go and have a lie down as I can tell that comment hurt you as it came out :)
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I'm very happy I bought shortly after the Govt sell down at $1.69. Have always been risk averse with airlines for the reasons Winner mentions. No airline is really immune from what has happened to Malaysian Airlines but with Air NZ they do have an almost monopoly domestic position and the economics of ordering new fuel efficient planes ahead of competitors is a virtuous circle from a competitive perspective.
Already had a 4.5c dividend and another 15.5c coming shortly. Agree with Roger the low PE factors in the risks more than adequately. If they deliver more growth in the next 12 months then $2.80-$3 is realistic. Do agree Qantas will be stronger again at some point in the next few years so I'd more likely be a seller near $3 than buying more.
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http://www.nzherald.co.nz/business/n...ectid=11315188
Air New Zealand Flying High
http://www.nzherald.co.nz/technology...ectid=11314650
747 - Is it's number up ? Well worth a look at this nostalgic reflection upon the queen of the skies.
FINALLY - a couple of articles from the herald that are actually worth reading although I would hasten to add that I don't agree with regional fare comments. According to AIR regional airfares have only moved 1% over the last five years and the company has faced substaintial increases in fuel, landing fees and other fees. If regional was so profitable how come Jetstar don't expand their network...
Worth noting that the N.Z. Govt have received just over $90m in tax payments in the last year and by the time the final divvy and special are paid by my calculations they will have received $117.9m in dividend payments from their 53% stake, that's more than $200m going into their coffers.
Also staff are all getting a $750 bonus, (notwithstanding that some senior pilots are exceptionally well paid already).
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Jetstar would have to buy a new fleet type for these routes. Origin tried to compete but air nz just lowered their fares until they went bust. There is a lot of disquiet about our regional fares. You can fly from chch to akl for around 200 some times and 300 from Nelson to wlg.
8500 staff got a 750 dollar bonus. We like CL now:-)
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You're not allowed to spend it on drinks if you're going on duty in Honolulu :) I like CL too :D
PS Nobody talks about increased costs AIR faces from the likes of Airways navigational charges http://www.airways.co.nz/about_Airwa...rt_Results.asp who are doing very well for themselves and that's before we even start talking about Infratil's approach with landing charges at for instance Wellington which some in the industry consider to be egregious and still have to be paid regardless of whether there's one person or a full load from a short flight from say Nelson.
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Crikey! Queer and Nasty Airlines has just reported a statutory loss of $A2.8 billion.
Boop boop de do
Marilyn
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Talking of 747s I always thought I was special with my frequent flyer number ending in 747
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Quote:
Originally Posted by
slimwin
Jetstar would have to buy a new fleet type for these routes. Origin tried to compete but air nz just lowered their fares until they went bust. There is a lot of disquiet about our regional fares. You can fly from chch to akl for around 200 some times and 300 from Nelson to wlg.
8500 staff got a 750 dollar bonus. We like CL now:-)
My understanding is that one of the largest factors in the collapse of Origin was the loss of the codeshare agreement with Qantas (or was it Jetconnect?) sometime in the early 2000's, resulting in quite a drop is PAX. When Qantas entered the domestic market alongside AirNZ and Origin, competitive pricing pressures (as you point out) were the final nail in the coffin.
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Excuse my newbieness, this could be a real dumb question but I've never had a divy before. Is there any minimum holding period or anything before one qualifies for a divy? Or does simply holding the shares automatically entitle you?
Also, I would assume there any many holders who will wait for the divy and before selling afterwards which will bring SP downwards?
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This is from the announcement
Details of Final and Special Dividends
* Record Date for Final and Special Dividends: 12 September 2014
* Payment Date for Final and Special Dividends: 22 September 2014
That means as long as you hold the shares on record date you are entitled to the dividend.
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So.. doesn't that mean people can buy in just prior, get the divy and then sell? Causing a quick spike & fall in SP?
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Quote:
Originally Posted by
tzbang
So.. doesn't that mean people can buy in just prior, get the divy and then sell? Causing a quick spike & fall in SP?
Yes, the share price usually drops by the amount of the dividend.
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Quote:
Originally Posted by
noodles
Yes, the share price usually drops by the amount of the dividend.
Google 'dividend stripping' and see why some punters think such strategies are profitable
Essentially quite often the shareprice quickly reverts to the price it was prior to the dividend date
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http://www.sharechat.co.nz/article/3...4-bln-losshtml
Jetstar loses ground in New Zealand.
I also had a quick look at the Qantas horror result and noticed contained therein a mention that there was to be no new routes for Jetstar for the forseeable future or words to that effect...
PS Three other things to know about dividend stripping. Based on a study I've seen approximately 80% of companies share prices regain the initial SP dividend drop within 3 weeks and secondly anyone on an income tax bracket below $48,000 (i.e. tax rate of 17.5%) will normally get a meaningful advantage conferred upon them with fully imputed dividends having imputation credits attached at the company tax rate of 28% and finally the bigger the dividend as a percentage of the stock price, (in this case a whopper at 7%), the more likelihood of dividend stripping being a successful trading strategy :)
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Weird.. according to Wikipedia, 'Dividend stripping is the purchase of shares just before a dividend is paid, and the sale of those shares after that payment'
Surely it makes more sense, to snap out shares the day AFTER a divy assuming the SP falls, and selling when it's returned to pre-div levels (assuming it's a quality company).
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Quote:
Originally Posted by
tzbang
So.. doesn't that mean people can buy in just prior, get the divy and then sell? Causing a quick spike & fall in SP?
If your'e thinking about Div stripping or just buying ahead of the dividend and leaving everything until the last moment ...remember buying shares takes 3 days to transact...the ex date (12th Sept) is the registry date
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yeah so, buy the day after the divy when it's fallen.. takes 3 days... by then it's probably returned to pre-div levels and sell? Seems too easy.
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Quote:
Originally Posted by
tzbang
Weird.. according to Wikipedia, 'Dividend stripping is the purchase of shares just before a dividend is paid, and the sale of those shares after that payment'
Surely it makes more sense, to snap out shares the day AFTER a divy assuming the SP falls, and selling when it's returned to pre-div levels (assuming it's a quality company).
Either practice can be equally effective. If the record date is the 12th, this should mean they trade ex divvy on the 10th Sept so those looking to play this game will need to ante-up soon if they haven't already :)
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Not all shares have the same behaviour. Then you have to remember that by regularly doing this you may become a trader which has tax implications. Another subject all together.
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Quote:
Originally Posted by
tzbang
yeah so, buy the day after the divy when it's fallen.. takes 3 days... by then it's probably returned to pre-div levels and sell? Seems too easy.
Takes 3-4 weeks on average to recover the divvy and yes, it is easy but with some caveats. Some for example would claim the SP is already starting to build the forthcoming divvy into itself, (dividend hounds chasing a strong divvy)...others, myself included would say it was a very strong result and furthermore the outlook for 2015 is also good so the increase in price yesterday and today has nothing to do with the forthcoming divvy and there's still a free lunch on the table :)
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Quote:
Originally Posted by
tzbang
yeah so, buy the day after the divy when it's fallen.. takes 3 days... by then it's probably returned to pre-div levels and sell? Seems too easy.
You can't guarantee that the share price will drop by the same amount as the dividend and if it does it may only remain that way for a short time, from memory the studies done show an average drop of 77% across a broad range of stocks immediately going ex divvy and given Air Nz strong result the rebound may occur in a shorter time frame than normal. As 777 said not all shares behave the same, one example was TEL last year when the price didn't drop at all going ex divvy and in fact started climbing soon after, some people believe buying ex divvy gives them a better return if they intend to hold as they save the tax they would have paid on the divvy assuming as mentioned above the share price sheds the full divvy,food for thought anyway.
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Quote:
Originally Posted by
couta1
one example was TEL last year when the price didn't drop at all going ex divvy and in fact started climbing soon after, some people believe buying ex divvy gives them a better return if they intend to hold as they save the tax they would have paid on the divvy assuming as mentioned above the share price sheds the full divvy,food for thought anyway.
I recall meridian behaving similarly earlier this year. Rising by the amount of the dividend following the ex date
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Quote:
Originally Posted by
couta1
some people believe buying ex divvy gives them a better return if they intend to hold as they save the tax they would have paid on the divvy assuming as mentioned above the share price sheds the full divvy,food for thought anyway.
The dividend is fully imputated so that argument does not apply here.
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Quote:
Originally Posted by
Roger
http://www.sharechat.co.nz/article/3...4-bln-losshtml
Jetstar loses ground in New Zealand.
I also had a quick look at the Qantas horror result and noticed contained therein a mention that there was to be no new routes for Jetstar for the forseeable future or words to that effect...
PS Three other things to know about dividend stripping. Based on a study I've seen approximately 80% of companies share prices regain the initial SP dividend drop within 3 weeks and secondly anyone on an income tax bracket below $48,000 (i.e. tax rate of 17.5%) will normally get a meaningful advantage conferred upon them with fully imputed dividends having imputation credits attached at the company tax rate of 28% and finally the bigger the dividend as a percentage of the stock price, (in this case a whopper at 7%), the more likelihood of dividend stripping being a successful trading strategy :)
I wish it were with PGW, but so far not the case.
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Quote:
Originally Posted by
tzbang
yeah so, buy the day after the divy when it's fallen.. takes 3 days... by then it's probably returned to pre-div levels and sell? Seems too easy.
Hi Tzbang....yep easy when there is a bull market running..this is when all us posters on ST are financial genius's...It's when the tide turns we find out who the real genius's are...
AIR's bull market cycless don't last as long as other stocks...AIR is a very cyclic stock...This +300% AIR bull is 2 years old now, a year longer than the 2006/2007 300% Bull.
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Quote:
Originally Posted by
noodles
The dividend is fully imputated so that argument does not apply here.
It does for all those on the top tax rate the imputation doesn't save you anything at the end of the day other than giving you more money in your pocket until you square up your end of year tax return at which time you still have to account for the difference between the RWT and the 33% you need to pay, claiming the imputations against the tax payable on your taxable income accounts for the difference.
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Quote:
Originally Posted by
couta1
It does for all those on the top tax rate the imputation doesn't save you anything at the end of the day other than giving you more money in your pocket until you square up your end of year tax return at which time you still have to account for the difference between the RWT and the 33% you need to pay.
Maybe we have a different understanding of how imputation credits work. Sure there is a difference between the 28%(company) and 33%(top personal). However, I'm sure you would agree that having imputation credits is better than not having them?
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Quote:
Originally Posted by
noodles
Maybe we have a different understanding of how imputation credits work. Sure there is a difference between the 28%(company) and 33%(top personal). However, I'm sure you would agree that haveingimputation credits is better than not having them?
Agreed it is better having them especially if they come with a PIE investment as those on the top tax rate don't have to include them in their tax return saving 5% tax however for those on the top rate buying ex divvy can be a good strategy.
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Quote:
Originally Posted by
noodles
Maybe we have a different understanding of how imputation credits work. Sure there is a difference between the 28%(company) and 33%(top personal). However, I'm sure you would agree that haveingimputation credits is better than not having them?
This man speaks the truth - its effectively them paying the tax burden on your behalf. By the means of passing already paid tax income tax from the company) onto the recipient. Just means the end recipient doesn't end up being 'double dipped' by the IRD
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Quote:
Originally Posted by
noodles
I wish it were with PGW, but so far not the case.
There's always an exception to general market behaviour. The jury is still out on this case and I hold. What we saw in that case was an annual result that was only very slightly ahead of recent guidance together with the announcement of a final and special divvy that appeared to surprise the market, (myself included). We then witnessed a near vertical move in the SP in a very short space of time by the amount of the dividend and a cent or two more, followed by a drop of the full dividend and a cent or so more immediately after it went ex divvy and still hasn't recovered. The SP behaviour suggests dividend hounds chased the stock up to strip it and the 28% imputation credits attached, suggesting a number of shareholders or dividend hounds are on a 17.5% tax rate perhaps ?
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Quote:
Originally Posted by
Roger
The SP behaviour suggests dividend hounds chased the stock up to strip it and the 28% imputation credits attached, suggesting a number of shareholders or dividend hounds are on a 17.5% tax rate perhaps ?
My theory is that there is a negative sentiment in the stock because of low diary prices. I won't talk any more because it has been thrashed out on the PGW thread.
But it is an interesting case study because the magnitude of the dividend of AIR and PGW are similar. We shall see with AIR.
I own both PGW and AIR. I don't plan to strip the dividend.
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It certainly is an interesting and in my view a very relevant case study as its rare that you get two cyclical companies to compare, both of whom are paying final and special divvy's that amount to circa 7-8% of their SP. Like you, I own both and see both as a good medium term hold.
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VAH have sold a 35% stake in their Velocity FFP to Affinity Equity Partners.
http://www.asx.com.au/asxpdf/2014082...fffwptmkvl.pdf
The consensus from previous discussions appears to be that AirNZ was unlikely to sell Airports to a private partner outright, especially given that they are already flush with cash, but perhaps a similar arrangement could benefit the AirNZ from a strategic perspective?
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Just as well AIR not equity accounting Virgins profit this year
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Quote:
Originally Posted by
Zaphod
VAH have sold a 35% stake in their Velocity FFP to Affinity Equity Partners.
Hmmm, that's interesting. I guess FlyBuys isn't owned by the companies that run use it so why should an airline FF program have to be?
Personally, I think that selling a FF program is a bad idea. It's a core part of the marketing of the airline and if the FF program does something that customers don't like, it's the high-value customers that it is going to annoy the most. Admittedly this is only a minority stake but it still strikes me getting a short-term gain in exchange for long-term pain.
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Quote:
Originally Posted by
winner69
Just as well AIR not equity accounting Virgins profit this year
Short term pain for 2015 for long term gain ?
AIR took restructuring costs of $45m related to redundancy and fleet transitional costs in the financial just released which is non-recurring so while I guess its fair to say there could be some pain next year from their 25.99% stake in VAH I think from a strategic route expansion perspective AIR's directors clearly see the value, especially in the long term. At a rough guess one matter might replace the other next year so no impact on 2015 normalised profit.. Have I mentioned shareholders are "well positioned" ? :)
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I would say Virgin better positioned than Qantas in Australia as well
Best one to choose as a partner
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Quote:
Originally Posted by
mikeybycrikey
Hmmm, that's interesting. I guess FlyBuys isn't owned by the companies that run use it so why should an airline FF program have to be?
Personally, I think that selling a FF program is a bad idea. It's a core part of the marketing of the airline and if the FF program does something that customers don't like, it's the high-value customers that it is going to annoy the most. Admittedly this is only a minority stake but it still strikes me getting a short-term gain in exchange for long-term pain.
AC floated around 15% of their Aeroplan FFP in the early 2000's and then later sold their final stake several years later. Floating and then later selling FFP did provide them with a financial windfall and the new company is completely focused on becoming a leading consumer loyalty programme, and has all of the traits (e.g. Points accumulation via Credit cards, Supermarkets, etc.) of AirNZ's FFP.
I personally don't see any justification for AirNZ selling theirs at the moment, but perhaps in the long term it could provide a cash windfall for shareholders while also ensuring that the FFP gets the laser focus on customer acquisition that it might other not have.
It would however be nice to see a more detailed breakdown in the financial reports of the impact that the loyalty programme is having on revenue.
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Makes a $300 or whatever air new zealand fare cheap ....unless flying to whangarei
http://www.nzherald.co.nz/nz/news/ar...ectid=11317261
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Thanks for the link. Reading that was like stepping back decades in time for me to an era when I had little money and no other option but to take the absolute cheapest transport possible. Now days you couldn't pay me $300 to endure an overnight bus trip Wellington to Auckland assuming it went according to plan. As for running out of fuel half way through the trip as mentioned later in that story, where do they find these people to drive these old buses ? Calcutta perhaps...who exactly are you entrusting your life too ???? The Herald's attempt to compare various modes of transport last week was another piece of pathetic journalism...what possible relevance has the cost of a trip on the cheapest cut price bus operator using Mickey Mouse drivers, (a service which takes many hours at best) got with the speed and efficiency of air travel ?
If they want to keep up their attack crusade against AIR you would have thought the least they could have done was to spend some time comparing regional airfares for similar distance trips at the same times in Australia. Don't these so called journalists have any idea of what is a relevant comparison for goodness sake. Another epic fail at any sort of intelligent journalism. Just as well the online edition is free because it sure isn't worth the paper its printed on for the print version LOL.
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Roger, Ever get that overnight train between akl and Wgtn in the good old days. It was called the Limited or something like that
Even had sleeping compartments and you could get off at Frankton and Taihape to get a pie and cuppa
Seems punters were better served in the old days
Only the very rich dudes flew those days
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Quote:
Originally Posted by
winner69
Roger, Ever get that overnight train between akl and Wgtn in the good old days. It was called the Limited or something like that
Even had sleeping compartments and you could get off at Frankton and Taihape to get a pie and cuppa
Seems punters were better served in the old days
Only the very rich dudes flew those days
Did the cups have handles?
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1 Attachment(s)
Quote:
Originally Posted by
percy
Did the cups have handles?
Of course Percy. The real McCoy they were
In the 60/70's the best way to get to Chch was the overnight ferry from wgtn. Fond memories of the Maori / Rangitira going down for Cup week. They woke you up with a cuppa when it sailed into Lyttelton forst thing in the morning.
Even back then AIR was price gouging as well ... ha ha
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Cups back then better than the poly ones you get on the planes now .... but then there were heaps of people employed to wash them.
Is the world a better place?
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You beat me to it with the image Quickdraw Mcgraw w69. I remember as a kid going overnight on the Limited, watching grown adults chuck them out the windows.......
used to do the ferry as well winner, on the Rangitira, the Maori, and the Wahine (but not the last voyage)
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Quote:
Originally Posted by
Xerof
You beat me to it with the image Quickdraw Mcgraw w69. I remember as a kid going overnight on the Limited, watching grown adults chuck them out the windows.......
used to do the ferry as well winner, on the Rangitira, the Maori, and the Wahine (but not the last voyage)
Just for you - the Maori
Those were the days .... hours in the bar ..... find your berth .... a few hours kip .... steward and a cuppa in the money ....off the boat and on to a train and in middle of Chch by 9am
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Quote:
Originally Posted by
moosie_900
Took the Overlander from Palmy to Auckland many years ago. Very relaxing and got to see more of the country than I ever would have driving/flying. I keep telling Kiwis to take it when they say the want to go to Canada see the mountains/forests. Ummmm, it's right in your own backyard guys!!!
But Vancouver to Jasper is something special though isn't it Moosie
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Quote:
Originally Posted by
moosie_900
No idea. I'm an East Coast boy!
I loved Halifax when I ended up there for a couple of days years ago.
Great spots around Nova Scotia
I take a guess and say you from Montreal
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W69 I remember the overnight train Akl to Wellington, as a family we could only afford regular seats and I remember how painful it was to try and get any sleep, any you managed to get was always accompanied by a very painful neck, then spending the day in Wellington and then overnight to Lyttleton on the ship.
It was quite the journey and I remember how sick I got on the boat.
This morning AIR had grabaseat specials to CHCH for $45 and you're there in 1 hour 20 minutes. Quite the contrast don't you think.
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Quote:
Originally Posted by
Roger
W69 I remember the overnight train Akl to Wellington, as a family we could only afford regular seats and I remember how painful it was to try and get any sleep, any you managed to get was always accompanied by a very painful neck, then spending the day in Wellington and then overnight to Lyttleton on the ship.
It was quite the journey and I remember how sick I got on the boat.
This morning AIR had grabaseat specials to CHCH for $45 and you're there in 1 hour 20 minutes. Quite the contrast don't you think.
Yes a different world but what an experience it was in those days
To get to the AIR meeting $89 down .... would have to stay for the sharetrader meeting as cant afford the expensive late afternoon Koru Hour flights home .... and stay the night either in the overseas terminal (open 24 hours I believe) or with percy ... and get a $69 mid morning home
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Quote:
Originally Posted by
winner69
Yes a different world but what an experience it was in those days
To get to the AIR meeting $89 down .... would have to stay for the sharetrader meeting as cant afford the expensive late afternoon Koru Hour flights home .... and stay the night either in the overseas terminal (open 24 hours I believe) or with percy ... and get a $69 mid morning home
Yes it certainly was quite "the" experience.
Sssshhh keep it between us but Forest and I are catching the last flight home on Jetstar at 20.50 because it gave us more drinking time after the AIR AGM. I couldn't possibly comment on which airline we're flying down on and absolutely refute that price had anything to do with it LOL. Be great if you can come along :)
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Hint
Quote:
Originally Posted by
Roger
Yes it certainly was quite "the" experience.
Sssshhh keep it between us but Forest and I are catching the last flight home on Jetstar at 20.50 because it gave us more drinking time after the AIR AGM. I couldn't possibly comment on which airline we're flying down on and absolutely refute that price had anything to do with it LOL. Be great if you can come along :)
it is not AIR
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$2.17 ($2.015 ex divvy) is great buying with management clearly confident of further growth in the years ahead. The latent hungry beagle hound that lurks within is very happy with the XXXXL forthcoming divvy feed hence I decided to buy more and order off the upsized dividend menu :D
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Your mate chris was on the radio this morning saying that these new jets coming soon can carry heaps more cargo as well.
Relatively small in the big picture but good eh
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Quote:
Originally Posted by
winner69
Your mate chris was on the radio this morning saying that these new jets coming soon can carry heaps more cargo as well.
Relatively small in the big picture but good eh
Sure is, another 10 tonnes I believe.
Quote:
Originally Posted by
NewGuy
Sorry, not following this thread, but when is the record date for this stock?
I believe they trade ex divvy on the 10th Sept.
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Quote:
Originally Posted by
Roger
Sure is, another 10 tonnes I believe.
I believe they trade ex divvy on the 10th Sept.
15 tonnes on a Dreamliner. That's a lot of salmon and roses and strawberrys
http://www.radionz.co.nz/national/pr...-cargo-results
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Quote:
Originally Posted by
Roger
$2.17 ($2.015 ex divvy) is great buying with management clearly confident of further growth in the years ahead. The latent hungry beagle hound that lurks within is very happy with the XXXXL forthcoming divvy feed hence I decided to buy more and order off the upsized dividend menu :D
It *does* seem to be good buying.. I'm a bit surprised not more people are snapping for shares prior to the divvy. Still a lot of nervousness in airline investments perhaps?
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Quote:
Originally Posted by
NewGuy
Sorry, not following this thread, but when is the record date for this stock?
NZX has this info as does the the company's website.
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Quote:
Originally Posted by
NewGuy
Are there any special conditions around being eligible for the special divvy??
No - all are welcome to participate.
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Quote:
Originally Posted by
winner69
Many thanks for that. Real game changers these new Dreamliner's :)
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Quote:
Originally Posted by
Roger
Thanks for the link. Reading that was like stepping back decades in time for me to an era when I had little money and no other option but to take the absolute cheapest transport possible. Now days you couldn't pay me $300 to endure an overnight bus trip Wellington to Auckland assuming it went according to plan. As for running out of fuel half way through the trip as mentioned later in that story, where do they find these people to drive these old buses ? Calcutta perhaps...who exactly are you entrusting your life too ???? The Herald's attempt to compare various modes of transport last week was another piece of pathetic journalism...what possible relevance has the cost of a trip on the cheapest cut price bus operator using Mickey Mouse drivers, (a service which takes many hours at best) got with the speed and efficiency of air travel ?
If they want to keep up their attack crusade against AIR you would have thought the least they could have done was to spend some time comparing regional airfares for similar distance trips at the same times in Australia. Don't these so called journalists have any idea of what is a relevant comparison for goodness sake. Another epic fail at any sort of intelligent journalism. Just as well the online edition is free because it sure isn't worth the paper its printed on for the print version LOL.
Roger-
That flight we took from Auckland -Vancouver with AIR was a bit like that overnight bus trip you mention--It was not a case of spending a bit more for comfort--Now that may all change with the dreamliners but I just flew with Thai and as I mentioned before -it was a different beast as far as comfort and service.(both flights were economy)
There is alot involved in investing in an airline--but if that was major factor -I would certainly think twice
Imo you cant cram that many seats in an aircraft and then get away with claiming you are a top class airline
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Hi Skid,
I understand where you're coming from, especially since I'm a big bloke but the vast majority of the world's airlines are moving to a pitch of about 32 inches in economy if they aren't there already. They're really caught between a rock and a hard place. As far back as I can remember, (I'm coming up 53), if you waited for a good special you could fly to London return for just on $2,000 plus taxes. Decades later the sale price is the same or very similar despite a massive increase in costs and this is what the general public wants. How many other products or services can you name that are the same nominal price as 25 or 30 years ago despite the effects of inflation over all those years ? I can't think of any !!!!!
Can't remember if you're experience was on a 777-300 or the older 200 series but I believe AIR are spending about $100m refurbishing the 777-200 fleet.
If you want luxury you need to ante-up for premium economy or business class. The other day AIR had a business class special on the new Dreamliner to Perth for $1,199 each way. It crossed my mind to have a ride just for the heck of it but time doesn't presently allow. You get what you pay for mate and the public generally want cheap prices.
I believe air travel on a relative basis to what it has been over the years is very very cheap and there's a tidal wave of baby boomers who are pleased their kids have finally left home and now have disposable income and want to stretch their horizons. ( I acknowledge my own circumstances might affect my perspective) :)
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I picked up a good amount today. I'm picking that either tomorrow or Friday it will start to move higher and then it will push towards its previous highs of 227-229 on Tuesday (just before going ex-div on Wednesday). I will sell at some point on Tuesday with the anticipation of a 10-15cps capital gain. I see worst case scenario here (bar a market collapse or plane crash!) as breaking even, so a low risk play.
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Or a volcano in Iceland perhaps JTH?
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Quote:
Originally Posted by
JohnnyTheHorse
I picked up a good amount today. I'm picking that either tomorrow or Friday it will start to move higher and then it will push towards its previous highs of 227-229 on Tuesday (just before going ex-div on Wednesday). I will sell at some point on Tuesday with the anticipation of a 10-15cps capital gain. I see worst case scenario here (bar a market collapse or plane crash!) as breaking even, so a low risk play.
Why wouldn't you collect the divvy and then hold until it picks up again in a few weeks?
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Quote:
Originally Posted by
tzbang
Why wouldn't you collect the divvy and then hold until it picks up again in a few weeks?
Because I'm guessing he's a hard core trader who prefers to work for his money rather than receiving handouts:cool:
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Quote:
Originally Posted by
tzbang
Why wouldn't you collect the divvy and then hold until it picks up again in a few weeks?
I will consider it if the NZ and US markets show a bit more strength over the next few days. I tend to prefer to have the capital free for other opportunities.
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Quote:
Originally Posted by
Roger
Hi Skid,
I understand where you're coming from, especially since I'm a big bloke but the vast majority of the world's airlines are moving to a pitch of about 32 inches in economy if they aren't there already. They're really caught between a rock and a hard place. As far back as I can remember, (I'm coming up 53), if you waited for a good special you could fly to London return for just on $2,000 plus taxes. Decades later the sale price is the same or very similar despite a massive increase in costs and this is what the general public wants. How many other products or services can you name that are the same nominal price as 25 or 30 years ago despite the effects of inflation over all those years ? I can't think of any !!!!!
Can't remember if you're experience was on a 777-300 or the older 200 series but I believe AIR are spending about $100m refurbishing the 777-200 fleet.
If you want luxury you need to ante-up for premium economy or business class. The other day AIR had a business class special on the new Dreamliner to Perth for $1,199 each way. It crossed my mind to have a ride just for the heck of it but time doesn't presently allow. You get what you pay for mate and the public generally want cheap prices.
I believe air travel on a relative basis to what it has been over the years is very very cheap and there's a tidal wave of baby boomers who are pleased their kids have finally left home and now have disposable income and want to stretch their horizons. ( I acknowledge my own circumstances might affect my perspective) :)
Im not sure which 777 it was-and Im not sure if Thai is a dieing breed with their roomier seating--but it was nicer--most seem to think that AIR is a good value so who am I to disagree--All Im saying is that if other airlines have roomier seating people are going to start to wonder why they are paying premium prices for budget type seating--Maybe its a SE Asia thing with Singapore up there as well (ok we wont mention MAL-but that was just bad luck-could of happened to any airline)
It would be interesting to compare the seating arrangement of all airlines-theres probably a website that does this.
Everyone needs to compete--you either cut costs (or increase seating -maybe skimp a bit on the meals) or you increase passenger numbers.
It cost us a fair amount to fly to Vancouver(and on to Montreal)(air Canada sucked ,by the way)
I also paid a bit more than normal for our THAI flight (used to always go for cheapest sales) That bit extra (it was still economy and a sort of sale )made a world of difference with Thai--With AIR.....well....
But like I said the plane was full so the dosh came in (at least in the short term) and of corse management is of key importance.
Airlines are not really my thing for investing--you can call them boring blue chip-but its a volatile industry as we have seen lately,but good luck to all who have invested--being a habitual traveler (just spent 3 weeks riding a motor bike around Northern Thailand with the basics strapped on)-I couldnt do without them.
wish I could have stayed longer but had to come back for several reasons,one of which was to apply for my pension.
One thing about riding around in a country like that (often in the middle of nowhere ) is the realization of how privileged but crazy our life here is.
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Quote:
Originally Posted by
skid
...It would be interesting to compare the seating arrangement of all airlines-theres probably a website that does this.
Try this one on for size Skid: http://www.seatguru.com - would be interesting to see the numbers on the difference in seating between Thai and AirNZ.
The motorbike safari sounded like a blast. Fingers crossed I have the health and resources for similar adventures when I'm ready to step out of the rat race.
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Heres one i found after just a quick check
http://www.airlinequality.com/Experi...lass_seats.htm
And yes in terms of the motorbike adventure--Im Hooked
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For aircraft aficionado's here's the goods on a the new super efficient 70,000 lb thrust Rolls Royce Trent 1000 engines AIR have chosen to power their Dreamliners
http://www.rolls-royce.com/civil/pro...ft/trent_1000/
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LOL $2.23 now, you owe me a beer :D Worked out what you're going to spend your $3K divvy on yet ?
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Finally this puppy is in full afterburner ascent :D
https://www.youtube.com/watch?v=pIz0-_aho6o
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Quote:
Originally Posted by
NewGuy
well this is going well so far. In at 2:17 on Wednesday. Hoping we can get to 2:30 before it goes ex.
I was targeting a 227-229 exit next Tuesday, however after today's price action I think we may get to 235, especially if US markets play ball.
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New Zealand Set For Tourism BOOM !!
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Quote:
Originally Posted by
JohnnyTheHorse
I was targeting a 227-229 exit next Tuesday, however after today's price action I think we may get to 235, especially if US markets play ball.
I will be very tempted to flick of a good sized block of mine I got at $2 if the price exceeds $2.30 before going ex, that's double the divvy amount and it may drop more than 15c after the ex date hmmm decisions decisions.
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Quote:
Originally Posted by
couta1
I will be very tempted to flick of a good sized block of mine I got at $2 if the price exceeds $2.30 before going ex, that's double the divvy amount and it may drop more than 15c after the ex date hmmm decisions decisions.
AIR has the lowest PE of any of your stocks mate....food for thought ?
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Quote:
Originally Posted by
NewGuy
I really wouldn't recommend this to be perfectly honest. Given the strength of the stock, I'd be surprised if it didn't revert back to the pre-ex date SP level within a week or two. Why, then, give away a hearty divvy?
I concur with this. Based on their performance of late, I suspect you will see some offshore buying pushing it up after ex-div.
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Quote:
Originally Posted by
couta1
I will be very tempted to flick of a good sized block of mine I got at $2 if the price exceeds $2.30 before going ex, that's double the divvy amount and it may drop more than 15c after the ex date hmmm decisions decisions.
Mate all the evidence suggests that most stocks recover most of their dividend within a few weeks and in this case we are talking about fully imputed dividends of 15.5 cps so its a whopper.
Each block of 7,000 shares is over $1,000 dividend in your hand...why give that away to someone else ?
Also have a good read through the annual shareholder review that's just arrived in the mail, (I am happy to e.mail you a link if your haven't got yours yet), things look very encouraging for AIR and as mentioned earlier the stock is very cheap on an earnings basis. PE is less than 10. Selling what I would argue is perhaps the best stock you own for medium term capital growth, just because you're ahead is not the way to mitigate losses on your other holdings.
In my opinion this sideways market we have now is about fundamentals, buying good quality companies on realistic price earnings multiples which pay good dividends and enjoy good growth prospects. I've had a really good look through the annual accounts now and there's no fish hooks I can see and the company has heaps of imputation credits in its account so is in a position to attach full imputation credits to dividends for many, many years to come. The new Dreamliner that I've posted heaps of info about is a real game-changer and they have 9 more on order, (2 of which are due before Xmas), with options for another 8 which I expect they will exercise. This new plane gives them a genuine marketing edge regarding the quality of their flight experience going forward. AIR is my #1 pick for market outperformance in the medium term.
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I'm having a conversation by PM with a gentleman who's quizzed why I think a PE of under 10 is very good buying for AIR and as part of that I've analysed the average PE AIR has traded at for the last 5 years which I thought seeing as I've done the analysis I would share for everyone's benefit.
Looking at the current financial statements, five year summary, (page 55 of the 2014 financial statements) we have
Basic EPS of 23.8 cps for 2014 which on a closing SP for the year of $2.08, (30 June 2014) = a PE of 8.7
Basic EPS of 16.5 cps for 2013 which on a closing SP for the year of $1.49 (30 June 2013) = a PE of 9.03
Basic EPS of 6.5 cps for 2012 which on a closing SP for the year of $0.86 (30 June 2012) = a PE of 13.2
Basic EPS of 7.5cps for 2011 which on a closing SP for the year of $1.12 (30 June 2011) = PE of 14.9
Basic EPS of 7.6 cps for 2010 which on a closing SP for the year of $1.07 (30 June 2010) = a PE of 14.07
Average PE over the last 5 years is thus 11.98, call it 12.
In my view under 10 is good buying in general and all the more so with exceptionally low international and local interest rates pushing the average market PE of the NZX to around 18. PE's have become somewhat stretched all around the world as a result of long term interest rates being at record all time lows.
In addition AIR is very cheap on a relative PE basis to all the major airline stocks I've looked at.
Hope that helps people come to their own conclusions regarding whether the current PE is cheap or not.
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For what's it worth the Morningstar 1 pager has these PE numbers. June price and trailing earnings as I understand the words attached.
June 2006 through June 2014 and last number being Sept 2014
8.6 / 11.6 / 5.3 / 6.0 / 12.5 / 14.8 / 13.7 / 9.0 / 8.1 and currently 8.9
Average of 10.0 (not counting current figure, only June years)
Inflated PEs when earnings dipped post GFC in 2010 thru 2012
Seems in normal times a PE of 10 is what the market thinks AIR is worth
The exercise for you now Roger is what were say 1 or 2 year shareholder returns when PE was below average
Geek note: sometimes 5 years is only a half cycle and gives funny numbers. I prefer looking at such things over at least one full cycle
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Any way you slice and dice this thing AIR is cheap on an average PE basis at present, most especially so in a post GFC ultra low interest rate / generally higher prevailing PE environment.
Quote:
We remain very focused on continuing to build on our earnings momentum of the last three years.
Nothing is taken for granted, and we will be relentless in pursuing opportunities to further improve this iconic company for our investors, our customers and our people.
We have a very exciting year ahead.
Concluding remarks from Christoper Luxon CEO in the annual shareholder review.
Does that sound like management have the right idea or what !!
Even at $2.24 the stock will be at a theoretical ex price of $2.085 this Wednesday. Notwithstanding the recent recovery in price on an ex divvy basis it still looks very cheap and I'm very happy to hold :)
I would buy more if I wasn't already pushing the boundaries of my self imposed 20% limit for any one stock.
P.S. W69 I haven't got info further back than five years but its interesting to note that in 2012 and 2013 when the PE was below average total shareholder return was 72.7% and 40.1% respectively, (source 5 year statistical review page 55 2014 financial statements).
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Quote:
Originally Posted by
Roger
Any way you slice and dice this thing AIR is cheap on an average PE basis at present, most especially so in a post GFC ultra low interest rate / generally higher prevailing PE environment.
Concluding remarks from Christoper Luxon CEO in the annual shareholder review.
Does that sound like management have the right idea or what !!
Even at $2.24 the stock will be at a theoretical ex price of $2.085 this Wednesday. Notwithstanding the recent recovery in price on an ex divvy basis it still looks very cheap and I'm very happy to hold :)
I would buy more if I wasn't already pushing the boundaries of my self imposed 20% limit for any one stock.
P.S. W69 I haven't got info further back than five years but its interesting to note that in 2012 and 2013 when the PE was below average total shareholder return was 72.7% and 40.1% respectively, (source 5 year statistical review page 55 2014 financial statements).
Just shows that old adage is true - above average returns when stocks are cheaper than they should be and conversely dispoointing returns when stocks are overvalued - even when profits keep increasing
Like AIR v SUM at the moment ..... and couta wants to sell the one with prospects of average returns and keep the ones that will probably underperform. Your advise to him was appropriate
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Quote:
Originally Posted by
winner69
Just shows that old adage is true - above average returns when stocks are cheaper than they should be and conversely dispoointing returns when stocks are overvalued - even when profits keep increasing
Like AIR v SUM at the moment ..... and couta wants to sell the one with prospects of average returns and keep the ones that will probably underperform. Your advise to him was appropriate
I think I've just about convinced you too :D
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no offence but I don't think some people on here understand how to value cyclical businesses very well... at least the PE analysis and conclusions being reached are misleading.
Let me explain
When AIR was earning very little (trough of the cycle), the PE multiple should be very high (20 or 30 times even). If earnings are negative like Qantas PE is undefined! At this time price to book is often used to value the stock.
When AIR is earning well with growth expected (mid cycle), the PE multiple should be medium - perhaps 12x
When AIR is earning best and investors expect things can't get much better, but could get a lot worse (peak of the cycle), the PE multiple should be low - possibly even 5 or 6 times.
In reality
At any time it is a best guess of where we are in the cycle and the cycle could improve or deteriorate on uncontrollable macro factors.
Investors tend to focus too much on the current - therefore putting too low a multiple when things are bad, and too high when things are good.
The question facing AIR investors now
Are we mid cycle or peak? I believe we are now mid-cycle - capacity growth so far has been limited. Over the next 3-4 years we will move towards peak, but I can't predict what will happen to the NZ or global economy.
Is AIR cheap? I believe so because earnings can grow 20%+ for the next 2-3 years, dividends can grow even faster, and free cash flow is rising as Capex declines past FY16. Further the VAH stake is worth some 30 cents per share.
My valuation now
I expect earnings of between 28-32cps this year. If you take 29c put that on a PE of 9 (late mid-cycle) you get $2.61. If you add the VAH stake at 30cps, and the upcoming dividend of 15c you get $3.06. That's my current valuation.
What valuation in 12 months?
I expect about 34cps in FY16. If you put that on a PE of 7.5x (nearing peak) you get $2.55, Again adding VAH stake you get $2.85 post dividend valuation in 12 months.
Between now and then you get 15c + at least 12c in dividends. So by another method today equals Valuation $3.12
Conclusion
PE's fall as earnings of cyclical stocks move through the cycle. Beware the cycle, know the company, and understand the factors impacting earnings in order to judge sustainability.
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modandm, with due respect you comments re PE ratios through the business cycle are misleading or you didn't explain it very well.
The gist of it I agree with but the detail confuses me a bit.
Anyway looking at AIR from the depths of my black box I have charted AIRs EPS and earnings over the last 10 years and trailing PEs
As I see it when AIR earnings are down the PE goes above 12 but in between times the PE cycles between 8 and 12. I cant follow your rationale that when earnings are high the PE should fall to maybe 5.
All good though. As earnings have been increasing the market has not been reacting and the PE hasn't has declined. Looking forward one would think tat the PE could increase to 12 over the next 2 years.- just like it did in 2006/2007. But do you really expect it to fall to maybe 5?
Problem with AIR I that EPS has had many more earnings down years than up years so hard to feel comfortable about your reasoning. Also need to consider Rogers other points that this time its different with low interest rates etc.and of course there are now more shareholders than in the past.
Anyway methinks that based on how key players on the NZX have valued AIR in the past it is likely to be favourable rerated even though the underlying trend is that AIR is generally valued at less than 10 times earnings.
Whatever AIR looks undervalued at the moment - especially as that EPS line heads into the 30 cent plus range
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I like to see where shareholder returns come from, ie from earnings growth, dividends or market reratings (PE expansion or contraction)
You might be interested in these numbers from the black box.
The last couple of years have been very good. A buy and hold investor would not have made any money over the preceeding 4 years. The 2007 gains were all wiped out in 2008.
Interesting to note that as earnings have increased the last 2 years the PE ratio has fallen. Investors have not benefited from the all the earnings growth.
Roger - maybe moandum is right and this is what does happen when earnings increase and the PE might fall maybe to 5.
I have taken the liberty what may happen over the next years, the numbers in yellow.
If this happens great returns can be expected.
Couta wants to sell next week! I wont be buying because I couldn't live with the thought that maybe I contributed to hundreds of people being killed in a crash. I will ensure the safety of AIR passengers (and well being of AIR investors) by staying out.
Laugh if you want to at my forecasts - I won't be offended.
Best wished to you all - no doubt you will do well
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Thanks Roger for your thoughts.Hey winner just because I thought about selling doesn't mean I wasn't going to buy back on the ex divvy drop having made double the divvy amount by selling before the ex date, I'm into thinking outside the square these days and looking at all possibilities, if I don't sell and collect the divvy instead i have some money set aside elsewhere ready to buy another block if it goes low enough ex divvy so all bases covered,I'm into trying different things and having a bit of fun along the way:cool:
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Quote:
Originally Posted by
couta1
Thanks Roger for your thoughts.Hey winner just because I thought about selling doesn't mean I wasn't going to buy back on the ex divvy drop having made double the divvy amount by selling before the ex date, I'm into thinking outside the square these days and looking at all possibilities, if I don't sell and collect the divvy instead i have some money set aside elsewhere ready to buy another block if it goes low enough ex divvy so all bases covered,I'm into trying different things and having a bit of fun along the way:cool:
I don't know if you are having a laugh with that post, but just in case some novice traders are reading it, here 3 reasons why it is foolish.
1. All things being equal, the share price will drop by the amount of the dividend. So in this case, you will lose 2 lots of brokerage.
2. You will lose the imputation credit
3. Gambling is fun. Investing should not be fun. It should be satisfying.
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Quote:
Originally Posted by
noodles
I don't know if you are having a laugh with that post, but just in case some novice traders are reading it, here 3 reasons why it is foolish.
1. All things being equal, the share price will drop by the amount of the dividend. So in this case, you will lose 2 lots of brokerage.
2. You will lose the imputation credit
3. Gambling is fun. Investing should not be fun. It should be satisfying.
Noodles I'm not saying anyone should follow what I posted above but nothing wrong with thinking outside of the square and for people that bought at $2 or under the above idea could work well(If the price hits $2.30 or above before going ex)the imputation credit is no real advantage for those on the top tax rate, thirdly investing is satisfying but why can't it also have a fun element?
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as a complete novice trader who bought in a 2.20 I have no idea what to do :(!
trying to soak up as much info as I can..
have done alright with TUA, MET & PEB though if that helps
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Quote:
Originally Posted by
vin
as a complete novice trader who bought in a 2.20 I have no idea what to do :(!
trying to soak up as much info as I can..
have done alright with TUA, MET & PEB though if that helps
Well iI guess if your trading it you have 2 options,number one wait and see where it gets to on Tuesday before going ex and if your happy sell and take your profit or number two collect the divvy and then wait till it gets back to $2.20 or above and then sell depends on what would give you the most profit and your time frame:cool: