Seems a bargain to me! If new to AIZ, worth looking at their...

Seems a bargain to me!

If new to AIZ, worth looking at their recap pres from 30/3/22. This recap was promised about six months earlier than that, without details, and was open door - so was already significantly factored in before this announcement.

And the pacific thing I mentioned above seems to be more good news for AIZ's longer term outlook. Might they eventually add some capacity and routes as part of this pacific group? Maybe 10% of rev comes from Pacific group flights at a guess ATM, so maybe this could double, plus add international and cross tasman connections into that region. Maybe there will be a little economic investment plan coming. I suspect that plan will have to be tourism and communications/remote working and fisheries? focussed to provide jobs, with easier visa access to the signature nations. These are small communities, but tourism and remote working would raise the flight and income level.
And it just so happens that they have a new fleet of Boeing 787-10 dreamliners arriving from 2024 to 2029 to service long distance flights into the region, just when they might be needed. They are also simplifying their widebody fleet from 2 different body types to 1 by FY 28, with 787-9s and 10s 95% interoperable, and have been moving from 5 to 3 other body types for domestic and regional from June this year.

i really think at current times, AIZ is a great cyclical play, maybe in about four years we might be factoring in the pacific thing and the upcycle max post covid and cyclically lower oil and gas, new planes creating new non stop international flights and getting divs eventually.
- They earned an unpat of about 570m in FY 2016 (and 3b NZ Market cap), and 463 statutory after losses from divesting Virgin shares of 86m and a legal settlement of 57m.
- If they can get to $600m NZ npat, that will be about 18c, and if a growth phase due to the above you will get a PE of at least 12x (protected species - see pg 18 in recap pres) adds to allure with NZ gov a very interested party, and stock domiciled in a country with no Capital gains tax, but negative is little prospect of takeover) you could realistically count on a top of the cycle $NZ2.16 SP ($1.96 AUD) or more. Plus you'll get some unfranked divs if they don't focus on the balance sheet or expansion - if you are getting 12c, that is 24% on the current price unfranked.

The downside risk seems to be immediate problems with Covid and fuel costs not subsiding over the next year or two. The NZ dollar/economy falling in a hole relative to Australia is not really such a biggie, as tourism to NZ gains from that.

They will have liquidity of 1.8b approx. Cap ex in the next two years will be about $1b in total. They had a cash outflow for FY (to June) 2020 and 2021 of $800m, which included $850m in cap ex over those two years. In the HY to DEC 2021 they had a cash outflow of $110m including 234m in cap ex. So seems that if Covid continued to be bad they would still have a total cash outflow of less than their cap ex, and would probably defer some aircraft to reduce that.

So I bought for those reasons. Might sell in a four or five years time when things are going well!