Hi b patterson, comparing AIR to CBD you raise fair point, but...

Hi b patterson,

comparing AIR to CBD you raise fair point, but AIR's abilty to generate greater returns on its equity is why it is valued higher. Plus read their announcement about the last quarter earnings , quarter earnings were equal to previous half year. The trend indicates a higher return on equity next year and higher earnings.
Next year however ,it will pay a dividend which will bring it into the broker's views . The ROE thereafter will drop due to lesser retained earnings , but at the moment based on my valuation , the company is trading at a significant discount to its intrinsic value.
Other positives include : low price to sales ratio, directors buying, AIR is a spin off from tamawood which has a good track record of returns on equity for last 10 years. Therefore i would expect management to run AIR similarly. MD of tamawood is a significant shareholder.
Negatives: negative cash flow, will keep an eye on it this half year. lack of competetive advantage ( at least not one i can clearly identify).
Will hold for two years
Even if earnings per share next year are same as current year at 50% payout ratio, do the numbers the yield is attractive. Trading at a discount , no doubt IMO
good luck