why? Are you desperate to enter or exit in the next couple of days?
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Not to sure couta1, read this bit specially the last part.
Benefit of FX hedges in 2016 not
expected in 2017
8
Key factors support sustainable
profitability through the cycle…
Increased competition
Continued inbound tourism strength
Corporate brand and employee engagement has never been stronger
Scale efficiencies from fleet programme
Leveraging alliance partnerships
Fuel price outlook continues to be favourable
We see further opportunity for growth, but recognise
the environment will be different
…with some near-term
challenges ahead
2017
Impact
Unknown
~$120M
Expect 2017 earnings will be solid,
while not at the level of 2016
why adopt such a short timeframe? Why not wait a year and see what happens? At current prices, this stock is so far underpriced its incredible.
I have concerns about the medium to long term economics/fundamentals of ours and international markets and cashed up my holdings over the last few months. I bought back into AIR for a quick turnaround as earnings season in the US wasn't the catalyst it could have been so happy to play a short term game and not be tied up in a buy and hold. The market has been like a bipolar person off medications.
That's my take on things and as per the black Monday thread there are those on either side of the fence.
with an expected gross dividend yield > 10%, I am very happy to hold. But each to their own!
Yes it is, but at least buying more as it is coming back up is better than buying more as it was coming down :ohmy:
I don't think there would be a shortage of us on here that don't think AIR has been unjustifiably punished and no one can say with any certainty what will happen to any stocks SP in the future but its not a stretch to think AIR was going to bounce back a bit.
Were these presentations yesterday? Or today
just released this morning, winner. Not sure if there was any corresponding meeting etc
Forest, even if next years earnings were half of 2016, this stock would still be cheap relative to earnings. In fact, it would still have a PE of only about 10. Many others in the NZX50 are trading on PEs of closer to 40!~
Market seems happy if the first 10 mins are anything to go by! :cool:
Had a quick read of presentation and have decided to stay away from this one. Yield might be good, however capital appreciation (or lack of it) might not be worth the punt for me. Just my perspective though, GLTA.
True, but being an airline stock it is not unusual to get a number of years of declining profits following each other. Remember AIR Chief Strategy sold an substantial share holding recently as well as CFO and Group Council, between them there much be a good understanding of the company.
Sorry, but I don't interpret those sales as being a forebearer of gloom. Insider trading rules are pretty clear, and I think senior management know that....
Anyway, let's review this in a couple of year, which is my investment horizon. Anything between now and then is largely irrelevant to me personally.
Bottom line for me is its a blue chip stock currently selling at a discount with increasing divvys, happy to hold even though currently in the red.
A couple of weeks ago people here were celebrating $3.
People will see and read into messages what they want to see in them - confirmation bias.
Very interesting following this discussion over the last month - reality is what actually happens not what you want to happen or what the fundamentals (yours) say should happen.
On a more serious note
@AirNZFairy: To kick off the celebrations I'm giving away the below. To be in to win you need to guess what the picture is of :) https://t.co/ULMvtL32uq
Surprisingly bit muted response today from our biggest AIR supporter, Roger....
And in the meantime more staff sales...
https://nzx.com/companies/AIR/announcements/281736
The VAH result I posted about yesterday was a real shocker and I think wanting to sell a flea ridden mutt and actually doing it are two completely different things which begs the question seeing as VAH is presently trading at a loss and at a gearing ratio of 6:1 debt to equity what do AIR's directors do if they can't sell and VAH need another equity injection ? Further, Is the short term loan they recently made within VAH's capability to repay it without an equity injection...I'd have to speculate it isn't.
The $120m of exchange rate tailwind not repeating in FY17 was also a bit of a shock, but with recent exchange rate strength we may see a little less than $120m impact. Consensus analyst estimates for FY17 of 55 cps are going to be downgraded, that is absolutely certain in my opinion. Too difficult to know if consensus analyst estimates of 42 cps for FY18 will change and by how much. AIR's management see yields normalising once new capacity is established and with intrinsic tourism growth but over what timeframe ? Medium term suggests yield compression exists for some / all of FY18 ?
Interesting that they are already planning of shifting capacity onto the Houston route in response to AA's new service.
Fair value for the stock must come back with the VAH matter and FY17 downgrade...by how much is the question and over what timeframe will yields normalise is the other key question.
Less bullish than I was... At this stage my early thinking is somewhere around $650m underlying profit before tax for FY17, about 44 cps after tax, well south of present consensus analyst estimates.
I have pulled back this year's estimate to $850m, no contribution from VAH and less 2H RPK growth than I was previously estimating).
Not intended to be advice and preliminary thinking only. DYOR. Consensus broker fair value is presently $3.16...I see this coming back by 20-30 cents, effect is roughly split evenly because of the VAH fiasco and FY17 earnings downgrade. A successful sale of VAH even at the current market price of VAH shares could see a pop of approx. 20 cps as I think most analysts have or will be heavily writing down the value of VAH in their valuation models.
Given the uncertainty of the VAH sale process and the diabolical state of that company and the FY17 downgrade I'm not expecting a recovery to $3 any time soon, with the obvious caveat that a quick and successful sale of VAH could have precisely that effect or close too it, but I for one won't be holding my breath.
I am disappointed with managements systematic selling down of shares and I find the timing of this a little disconcerting. Management would have known last week when they were selling that there was an investor day this week wherein they were going to downgrade FY17 earnings. Sailing pretty close to the wind in terms of the insider trading rules there by my reckoning.
Quote Roger "I am disappointed with managements systematic selling down of shares and I find the timing of this a little disconcerting. Management would have known last week when they were selling that there was an investor day this week wherein they were going to downgrade FY17 earnings. Sailing pretty close to the wind in terms of the insider trading rules there by my reckoning."
You thinking of having a word with the shareholders association and AIR NZ Directors/Management a la SUM ?
I would have thought AIR.NZ would have had more robust policies in place anyway , especially compared to SUM.
I fully agree with your last 2 post and like the detail you give in post no 6041
Some high volume this afternoon and SP held up well.
Another great post Roger. I think its pretty spot on and with VAH being treated as fair value on profit/loss AIR will be taking a hit on full year results if they haven't sold them off.
Well i pondered at the weekend how the executives would be thinking how to spend the proceeds of their shares and if I had done the same thing, similar context, three years ago when i was an executive in the US, rightly or wrongly, yes I would have the money yet be expecting a SEC probe. After this weeks disclosures just makes it worse.
Agree with what you've said Raz. FMA are a completely different kettle of fish though in my experience. I have given this a bit of thought this afternoon and suspect if I did go to the considerable trouble to formulate a complaint that AIR management would get away with their conduct on a technicality. Thing is, (notwithstanding the market perception for earnings in FY17 by consensus analyst view being ostensibly the same as FY16 earnings), formal guidance for FY17 by AIR management themselves had not been formally issued before so technically one can't say it was a downgrade per se.
It was inconsistent with market expectations YES but didn't amount to a formal downgrade of previously issued company guidance...i.e. this was first formal AIR management guidance for FY17. In my view they would have been in clear breech of insider trading laws if previously issued company FY16 guidance of $800m+ before tax was downgraded.
I might yet find the time to take this matter up with Tony Carter either before or at the next annual meeting as I am sure the board want to encourage management to be seen to be conducting themselves with the upmost integrity at all times. Classic case of some older wisdom required to be dispensed by the Chairman here in my opinion.
"formal guidance for FY17 by AIR management themselves had not been formally issued before so technically one can't say it was a downgrade per se"
That's true in a strict sense Roger, but nevertheless presumably the management knew at least a week ago that they were going to inform the market in this week's investor briefing that next year's earnings would be below this year's earnings. So on the face of it, at the time they were dumping the free shares that we gave them for doing such a good job of looking after our interests, they were in possession of relevant insider information that had not yet been released to the market (that information could have been released a week ago, prior to their selling spree, but if they had done that maybe they wouldn't have got as much for those shares)
When all said and done its only a few hundred thou shares these management are moving, but each one has a magnifying effect because insiders are cashing up … suggesting recent SP is as good as it gets and they don't want the sunk capital or dividends. Still minnows judging by the volume moving, so it will pass, while we all try to figure out who the real money is that's moving the SP. Nice to see some objective balanced discussion and viewpoints.
I am to be honest mate. These are people who's salary package is already extremely generous so they shouldn't need to sail anywhere near the line with their share transactions and I think that point needs to be made to them in a forthright manner. Maybe someone needs to write a letter to the editor of the herald pointing out all the management selling in the week leading up to the profit downgrade so AIR management get put under the spotlight for the wrong reason. The halo has slipped very badly here. While we are peering down the dark well that sailing so close to the wind with share sales represents...a real cynic might even ponder if certain AIR management had some advance knowledge about the likelihood of VAH posting such a grim Q3 result yesterday when they were selling last week ?..not suggesting they did or didn't just wondering... No matter how you slice and dice this thing...its not a good look. Really meaningful management share sales last week just before bad news on VAH on Monday and profit downgrade on Tuesday :ohmy:
Might very well do that after some consideration Roger.
A couple of extra thoughts occur to me though
Firstly, I must admit that AIR management predicting a lower profit next year wasn't exactly a surprise to me (and I'm guessing it wasn't a surprise to you either:), pretty much in line with our expectations as a cyclical company and we've discussed as much here before) so I can't really claim to be disadvantaged. My actions re my shareholding wouldn't have been different if they had announced this a couple of weeks ago
Secondly, I'm also inclined to believe that the share price might actually be lower now if the order of events had been reversed ie if they had announced the lowered 2017 profit expectation and then management had started to sell, what do you think?
Management should be aiming to follow the highest ethical standards and be seen to be doing so, i.e. perception is just as important as the execution of transactions themselves. Its not just about following the barest minimum legal rules as I've eluded too above. The $120m exchange rate matter caught me by surprise, (depending on future exchange rates some of this may be mitigated) as did the VAH loss, (more than hefty doses of flea powder is required there), so yes FY17 will be materially lower than I was previously expecting and if I'd known those things a couple of weeks ago I would not have added at $2.78.
I don't think it's worth getting into a theoretical about if they'd reversed the order...all that matters is are they in breech of the insider trading regulations and / or the companies own governance policies for management share transactions. What about the share sale referred to in the link above. Mr Morgan selling a whopping 350,000 shares one trading day before what amounts to a profit downgrade.
The other technicality management will cling too is this. The SP actually went up significantly after the release of information contained in today's investor briefing so management could make the case that it contained price sensitive information that was positive, (slightly bizarre I know). They could argue that their expectation of yield recovering in the medium term, (FY18 onwards) was good news for the company and DCF modelling using higher long term anticipated yields is a positive for the market. Another useful technicality for management to assert one thinks...
Time for dinner I think...its been an interesting day.
The day the CFO hocked off nearly 400,000 shares that was just under 20% of the days turnover .... and that was just a week after he hocked off 200,000 odd
The 400,000 odd he got over $3 - must believe in TA and used TA as the signal to sell - Hoop would be proud of him
Like must accountants he pretty canny that CFO
Disclosure - think I read the notices properly
is any one else having trouble viewing the AIR thread ? it keeps giving me an error "not found" :(
Incentive schemes like this Air NZ one align management interests with those of shareholders - ie enhance/maximise shareholder wealth
So as Chris, Rob et al enrich themselves by playing within the rules of the game what's all the fuss about - after all they have shareholder's interests at heart
Does anyone actually know how often AIR NZ execs are permitted to sell each year? And, would it not make sense for some of them to sell out given the recent rapid drop in SP if they don't have another opportunity for a few months?
While I accept there could be some element of unethical/inside trading involved, you can't point straight to that every time an exec sells shares. It makes you look a bit silly IMHO :)
I think the point is they have sold . Then a profit guidance has been released , mentioning increased competition etc . It's not the fact someone has sold some shares , it's in the timing re the release of a price sensitive announcement . Surely some of the management were aware of this information , so you can question the reasoning behind the sales .....
That is just one possible explanation. Inference is difficult. Poor inference is easy.
Obviously with insiders it is hard to prove or disprove any allegations that they have acted wrongly or with poor judgement. They all have information that we don't and we trust that they don't profit from that information in ways that we can't. We'll never prove it either way.
It's good to see the disclosure that David Morgan sold out at $2.50 hasn't swayed anyone from thinking that insiders are cashing in at the height of the boom.
Anyway, how does one get an invite to this Investor Day? Surely between all of the holders here on ST we must own a good chunk of their stock. Enough for someone to get on the guest list. Or is it just open to bankers and fund managers?
Management are very fortunate that the SP has tracked north since the VAH announcement on Monday and the investor day presentation on Tuesday. Knowing how the FMA and NZX work this gives them a very convenient defence against any suggestion that the actual release of that information was price sensitive in a negative way. Having invested a huge amount of time in the SUM matter and hundreds of hours working with the Securities Commission on a finance company matter in years gone by I believe this convenient SP bounce would render any further enquiries on this matter as ineffective. I believe you good folks already know my view on the morality of this matter though...Greed, self interest and human nature are seldom pretty things to watch as they play themselves out...over and out from me on that matter.
I can only conclude from the release of yesterday's investor day information that institutions took some comfort from management's belief that yields will normalise in the due course of time and seeing as launch specials are normally limited time frame events for other airlines to build demand and establish their new route management probably have a reasonable basis to be thinking the way they are.
I guess that begs the question of what is fair value at present now we know VAH is a cancerous pup and FY17 is a fairly reasonable sized downgrade to FY16. For me a lot depends on the successful extrication from VAH. If they can do that I can see $3 again in the foreseeable future, without that I see the SP tracking mostly sideways with swings up and down depending on market sentiment and any other new competitors that might enter the market or any other new route AIR are embarking on. I see the SP was $2.55 at the end of June 2015..history could easily repeat this year in my opinion.
$2.60 plus or minus 20 cents in the meantime till VAH is sold. My 2 cents but DYOR and this is not a recommendation one way or the other. For what its worth if anyone is interested, I am not looking to add any shares to my modest position at this stage.
Interesting stand off for the last 20mins on AIR. No shares traded and sellers locked at 2.57. Who will flinch first......
Well I guess we know who flinched now...........was beating myself up for not buying at $2.50 a couple of days ago, think $2.35 may be quite realistic now.
And I was happy I had got back in at 2.51! Mind you, I am in for the longer term yield. Was surprised to see the 2.60+ yesterday so quickly. I can never catch stocks at the tops or bottoms so always happy to buy something I believe in at a price that I haven't had to chase and fits with the portfolio.
For everyone's knowledge... (not sure if it has already been mentioned)
Forsyth slashes 12 month target price from $3.30 to $2.80 noting the "cycle now turning against AIR", "with competitive pressures beginning to impact and fuel prices rising"
Lowering the price target was mainly as a result of:
- Earnings Revisions to FY17 estimate
- Applying historic average (to price to book valuation) as opposed to premium
- Reducing market PE relative multiple given increasingly defensive nature of domestic market
Although I don't follow AIR in-depth, I did happen to see it's share price performance has been "adverse" recently... personally, I'm expecting AIR to be more volatile than ever
As always, DYOR, and hopefully this was of use
Ouch. Basically writing off the value of VAH, which I agree with and another 20 cents as well for earnings downgrade in FY17. This analyst downgrade won't be the only one coming... that's for sure.
If they're basically writing off the value of VAH, does that mean/imply they have low confidence of a sale? Might be stuck with VAH for some time perhaps, which if performance doesn't improve will mean shoring up the balance sheet again in due course. What a debacle.
To be clear I am ostensibly writing it off in my assessment of AIR, not Forbar, (but I have heard rumours some brokers have a very low value for VAH in their valuations), but you are dead right, with the recent loan to VAH and about face to try and sell and then the shocker announcement of a statutory loss of nearly $60m for Q3 and grim outlook statement its turning into a real fiasco.
I was only raising the issue of other forms of value--If China air or Singapore wanted access to OZ via VAH it would have strategic value and would possibly be worth them helping to make it profitable if they could--or just the added traffic could go a ways to do that---But Im by no means assuming this will definitely happen,only raising the possibility---Guess by now we should learn to expect anything.
Yes it was only an exercise of free options. I wouldn't be the least bit surprised if they were sold on market today. I think Forsyth Barr are pretty much on the money, fair price target 12 months out is $2.80 assuming reasonable flying conditions between now and then.
Fair enough Skid, as you suggest anything is possible, I know one kind soul that adopts mutts from the pound that nobody wants that would otherwise be put down, (what a great bloke he is) so there's always a chance someone might want VAH for its network, planes and flight slots but operationally it sure is a pup !
Today looks like a DCB closing on support. Traders dream, Holders not so (esp if they look at the sp every day).
I have been lately and sold half holdings at 2.57 today during the Mexican standoff, then bought back in at end of day, same $ value but more shares. Do this a couple of times and might just break even...... of course the flip side is losing more if the SP drops further but hopefully support at this level holds :scared:
The latest new competitor is Hong Kong Airlines, breaking the Air NZ/Cathay monopoly on HKG-AKL. Starts November https://www.facebook.com/hkairlines/?fref=nf
Haven't seen this mentioned anywhere else. Air NZ plan to sell VAH by June 30th: http://www.smh.com.au/business/aviation/air-new-zealand-has-quick-timetable-for-virgin-australia-sale-20160503-golln0.html
If you look at this as a giant game of monopoly---Singapore air may go for a hotel--(owning the airline(VAH) to revamp as they see fit) time will tell...it would be imo the best outcome for AIR as they code share with Singapore air--(article
says alot of their business comes from code share.)
I get the impression that allowing the senior managers to hock of their shares is an extension of the HR strategy of synergistically reinventing team building exercises
Anyone brave enough to catch the falling knives, thought 245 was big support and that line is wiped out completely.
C'mon Hooop, give us an updated chart from TA perspective...
Was just thinking the same, we will be in the $2.30's by COB today.........
It's been discussed here http://www.sharetrader.co.nz/showthr...l=1#post618025
Other high divi stocks are benefiting look at mel and co
Down she goes, where she stops nobody knows. Currently those stocks I thought would be doing well went down.... Lucky I have no spare money otherwise I might become impulsive and buy on a down trend
Sometimes you have to pay for your education--i should have known better --was all out but went for the bait.
I should have seen the omen when I was talking to a neighbour and he told me never again (AIR)as they froze on the way back from Hawaii (just like we have done several times before --more than a coincidence.) Hell,I dont even like air New Zealand--they are a mediocre airline touting themselves as premium,and charging accordingly)
I wont tolerate more than a 5% loss though --im out (I may be a slow learner in one way --but not that way--Im not afraid to cut my loses,for better or worse)...nevertheless good luck to all
I was out and came back in as well Skid. I've learnt a few lessons along the way too (and still learning) but the ones I remember well are those occasions when I sold too early - only for the share to recover and head back into green territory. There are no doubt times when it just keeps going south and never recovers but I think those are fewer than those who dip and then recover. I guess it depends on the type of business it is. The one share I followed all the way down was Chorus. I bought some at $2.60 and then it went south. I bought some more at $1.87 when it looked like it had bottomed and then it went down to $1.30's. Then it came back and I finally sold when it was in the low $3's. I should have hung on coz now it's just over $4 (another lesson). Not sure if this one was an exception to the rule but I'm now a little hesitant to sell too soon given previous experiences.
I'm down 11.3% on AIR today and 17.5% on NZR but overall - my portfolio is only down 2.4%. So for me - I'm gonna hang in there as I think AIR is still fundamentally sound (albeit 2017 doesn't look as bright as 2015/16). I might even add a couple more companies to increase my portfolios diversity so as to balance the winners and losers a bit more.
Happy to take onboard advice from others.
This slump in the AIR share price is killing my chances in stocktastic
Another couple of days and it will be doing as bad as VML
Plenty of weak holders to shake out yet, good things take time aye, patience not panic required. PS-Mickey im down 11%on Air and 16% NZR so your not alone.
To those of you stressing about the current SP dip: What is your investment horizon? 2 days? 2 months? 2 years???
Seems like you are acting as if you HAVE to sell today...
You may be right --only time will tell--for me there are a number of things Im not liking in the market as a whole and although AIR may still be fundamentally sound,to many things are pointing in the wrong direction for my liking--It can be @$2 and be fundamentally sound--it aint going broke,but the lofty days may well be over as they are not on easy street anymore imo.
From where im sitting they operate on a strategy of charging premium prices, so we will see if that keeps on working for them in this new environment.
For me ,in this environment a smallish loss and a potential lost opportunity is better than possibly a big loss and the game is never really over--there is always possible opportunities at a much lower price...never know.
My dosh is sitting in my share acc.-yours is sitting in AIR shares--thats the only difference atm.
That was a couple weeks ago - chart that went with it below
Somebody just PM'd me and said hey winner your red line ends at 245 which is spooky
But I was being lazy at the time - in the context of a true cyclical that red line possibly will continue to go down ..... sometime in the future to somewhere where it started (but possibly higher because even cyclicals can cycle higher)
An OBV chart be interesting for AIR - doesn't that tell whether the smart money is buying or exiting?
sold my Ohe and topped up air
Still a great trading share, to be honest i was surprised the SP didn't drop like a stone with initial VAH news, it was and is still unlikely they will sell for a wind fall or come out of it well. Australian market has been cutting back capacity all this year. It gave a golden opportunity for Shareholders to exit. Where the SP is at now looks fully price in. Will it overshoot even more?