I took the money and ran yesterday. Maybe worth more, but it cycles and I have a better home for the money (going conservative for the time being)....maybe will buy and hold at another time.
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I took the money and ran yesterday. Maybe worth more, but it cycles and I have a better home for the money (going conservative for the time being)....maybe will buy and hold at another time.
Guru analysts FNZC - winner of many awards - well respected - say AIR worth only $2.50
FIRST NZ AIR NZ TARGET PRICE 19%, LOWERS RATING TO 'UNDERPERFORM
Friday 2nd June 2017
Text too small?
First NZ Capital lifted its 12-month target price on Air New Zealand to $2.50 from $2.10 but lowered its rating to 'underperform' from 'neutral' based on its updated valuation and current share price.
The shares last traded down 2.3 percent at $2.95 but have gained 38 percent so far this year. On Thursday the company said it now expects its 2017 financial year earnings before taxation to exceed $525 million versus previous guidance of $475 million to $525 million.
First NZ Capital lifted its passenger booking total or PBT estimates by 10.5 percent in FY17, 31.4 percent in FY18 and 30 percent in FY19, reflecting the latest operating statistics, revised fuel cost assumptions, improved cargo revenue, modestly lower depreciation, the company's latest update and its operating leverage, said research analyst Andrew Steele in a note. He also said FNZC now assumes that Air New Zealand's pre-tax return on invested capital or ROIC reverts to 14.5 percent in the long term, versus its prior assumption of 14.0 percent.
However, despite the upgrades to its PBT forecasts "we estimate that the current share price of around NZ$3.00 implies a sustained through-cycle pre-tax ROIC of 16.5 percent," he said. Steele notes this is 200 basis points ahead of FNZC's revised long-run assumption and 150 bps about the company's targeted return.
Steele said the key risks to the target price include material changes in the competitivhttp://www.sharechat.co.nz/article/3fb4a17e/first-nz-air-nz-target-price-19-lowers-rating-to-underperform.htmle landscape, fuel costs as well as underlying demand.
http://www.sharechat.co.nz/article/3...erperform.html
Last N.Z. have consistently done their clients no favors with AIR. They have consistently had the lowest valuation on AIR for several years now.
Clients who believed their valuation model were told as recently as yesterday that a fair price for AIR in 12 months time was $2.10. Obviously that's a complete joke. The guesswork, (yes that is a deliberate choice of term), underpinning their valuation model is systemically flawed in my opinion.
N.Z. analysts generally have consistently been behind the curve with AIR...investors are far far better to listen to management and follow the monthly stat's and work their own numbers and that's what I'll continue to do. Some of their analysts are very good and have won awards, their analyst covering AIR is without any merit, in my opinion.
Why $575M?
The pressy says "are likely to exceed $525 million"
likely = not guaranteed.
Much better that you take a conservative $526M, remove the $22M one-off Virgin bonus and end up with $0.323 eps.
As things are still going reasonably well for AIR, assume that they are not going to get any better going forward and definitely you do not want to paying anywhere near $3 a pop for this.
Mind you, neither do you want to be paying $5 for Qantas.
Best Wishes
Paper Tiger
Jared Dillian (the 10th man) like airlines, and points out that Buffet does now too!!
gee...calls it 'the golden age of flying, here and now'
I second that Roger. Why would anyone care what the local analysts think. UBS upgraded from 2.25 to 2.85 and left them as a neutral. What that means is most of their clients probably haven't owned AIR as its gone from $2 to $3 and paid a 10c dividend along the way. So FNZ & UBS dead wrong the past 12 months. Why put any weight in analyst views that are consistently wrong?
Morningstar have been the most bullish as far as I'm aware and have had them at $2.60 for quite a while. they are looking for c $575m NPBT.
I care about what analysts think. Some of them are pretty damn good and i know they are good at what they have specialised in. Its great to get amateur sleuthing values and ideas off here too; throw them in the mix, gather as much info as poss; try all the tools out; i respect trained valuers who put their name to it; it all helps especially when they are looking ahead up to a year. Just had a look at my brokers valn, similar to others. And at an estimated 6.65% D/Y now not so attractive at this pricing .
My preliminary estimate PT. I'll have another look next week. I am holding for dividend yield.
Even at 20 cps per annum fully imputed that's a gross yield of 9.6% at the current price of $2.90 and I believe that's sustainable across the cycle.
Factor in a couple of juicy specials in FY20 - FY22 when the capex program has a massive hole in it and the five year dividend outlook starts to look extremely attractive.
With the $170m revised capex reduction next year I am wondering if they might pay more than a final divvy of 10 cps this year...
The exhuberant calls put the hoo doo on the voodoo, like a beckoning call to the nimble profit takers, AIR SP above all analysts except those who reckon they have better insights here, and sure enough boom. Who knows where it's going from here but at the current parabolic rate it's fair to assume there's reason for tighter stops for the capital sensitive. But who uses stops anyway, almost never mentioned on ST, like naked trading, feels good until the cool breeze of a correction blows on ones nether regions.
Don't underestimate the influence of the vocal few on the passive masses, even the 4% can move the SP and there's 5x more lurkers here than members online. That said, I would wonder about why a yield and returns stalwart would engage in SP discussion as that's irrelevant to their strategy and objectives.