Originally Posted by
modandm
A very important and reassuring set of operating stats, after relative weakness in February. The yield pick-up was most important, and if sustained bodes very well. Dilution of yield by the new route to Singapore is not as bad as feared. With capacity growth really picking up, new fleet arriving, the outlook is very positive. 30-32c EPS this year with 40-45c next year my current expectations.
Positive surprises that neither I nor analysts are modelling which I think could come: (besides fuel/fx/demand which are the majors)
- cargo revenue could pick up (I model flat)
- ancillary revenue should pickup from new cc agreement (hopefully by a lot!)
- labour costs, through a training bubble, and with new cabin crew on lower wages than past agreements, could we see costs under control and rising <4% p.a (for once...)
- other cost item beats (maintenance maybe?)
The question for investors is will FY16 be peak, or can we go higher, what fade or can they sustain earnings, and how fast do we get cash back via dividends. After figuring these out, its what multiple are we using, PE 8,9? EV/EBITDA 4? How will the market value the stock?
I have been good at forecasting earnings improvement, but am less confident about my ability to forecast how the market will respond and value the stock given questions above.
At this time I'm staying in with a full position, I still see >25% upside over 1 year, and until I see dark clouds forming I'm going to stay on-board (1A please)...
-mod