bbi vs aio

I have been looking at both BBI.ASX and AIO.ASX (amongst others).

In terms of Market Cap - AIO is about 2x BBI (depending on the second you measure it).

Both are burdened with debt and both rely on substantial intangible assets to raise the "book value" into positive territory over NTA.

At this point in time, I reckon a cashflow analysis is more important that an inspection of the balance sheet. It is really a question of survival - if the company can survive, it will probably prosper, in the future.

I have chosen to invest in BBI and BEPPA.

I would like comment, from the wise heads on the thread, on the following:

1) AIO was floated in 2007 whereas BBI has been in the water for much longer. I would expect that the valuation basis of assets for AIO would reflect the "enthusiastic" view from a pre-credit crisis perspective. Some BBI assets could be expected to reflect a much more conservative valuation over AIO equivalents.

2) The BBI board has implemented some very significant governance changes, recently. Control over BBN fees and board control over BBI management seems to have been implemented. A name change and direction independent from BBN would appear to be a possible new direction - based on BBI shareholder preferences. Hence, the "tarnish" of being a BBN satellite could be a thing of the past.

3) The suspended payments for BBI and BEPPA payout/interest is quite remarkable. BNB, as a significant holder, would have preferred to centralise as much cash as possible. This really does reflect a board with a single minded purpose to do the best for all BBI shareholders.

4) I would estimate that BBI revenues would hold up better in a recession over AIO. Transport and port assets will generate returns from economic activity. Gas, electricity and bottleneck port assets will hold up better.

5) AIO has some development exposure - this will burn capex when raising funds is expensive. BBI has some exposure - but at a later stage and directly covered by revenue expansion.

6) The BBI October financial presentation is very good. It clearly shows the level of "non-recourse" debt. The BBI operating units seem to be well "firewalled". I have no clear picture of AIO - but suspect that the situation is much worse.

7) If the Euro port assets and the Conneticutt cable project could attract co-investment - I would be very pleased with the gearing/interest cover of BBI. AIO, it seems to me, would have a much harder time to package up an investment (goldilocks problem - it is either "too large" or "too small"; BBI has "just right").

8) Norge Bank seems to be increasing holdings in BBI.

Also, the traders have got a hold of AIO - all sorts of price speculations - "It will hit $1.98 today!!" etc. BBI seems to have been weighed down by negative sentiment associated with BNB. I think, again, BBI is probably the better risk/return choice.

Would appreciate any alternative views on the above.

Would also appreciate any views on the cashflow or balance sheet numbers.