Quote from ...
http://www.nzherald.co.nz/business/n...ectid=10704203
Forsyth Barr's head of research, Rob Mercer, said the share price heavily discounted the market value of Tourism Holdings' assets. "It's certainly an excessive discount, therefore there is an element of overreaction," he said. But profit performance continued to be an issue for investors.
The issue was cyclical rather than structural, he said. When you've got a large investment in fleet and a high fixed cost structure, when you get these pull-backs in demand and yield pressures that they're experiencing, then the earnings suffer and that makes people want to question whether this is a sustainable long-term business, which I think it is." Releasing capital through reducing the size of the fleet would be a better use of capital than raising equity. "We've seen it before - when they've had earnings come off, they [can] downsize their fleet, release capital for the business, retire debt and then look to reset the fleet to match demand the following year."
Haven't looked but a have THL overcapitalised in their fleet purchases anticipating huge demand from the RWC and the recent downturn has simply got them cashsqueezed?