AIA 0.00% $7.10 auckland international airport limited

research and guided numbers

  1. 22,691 Posts.
    A sample of my NZ work-it seems that my guided predicton of $77 mill made in March could be very close as AIA did mention 2 months ago that this number was the one they were looking for.

    From "Sharetrader":

    Posted 30 March:

    Interesting highlights from the Interim Report:


    International passenger movements up by 7.3% to 2.7 mill. Domestic passenger movements up by 11.2% to 1.9 mill.

    Retail Concession revenue up by 32.6% to $39.5 mill. Amidst strong competition, a new 5 year contract was signed last last year.

    This increases the guaranteed retail licenses by $15 mill. dollars per year. On top of that further income is due to AIA and this is based on retail turnover. It went into effect on 1 July 2002.

    International aircraft movements up from 14497 to 15154 and domestic passenger movements increased from 1.78 mill. to 1.98 mill.

    I estimated non-aeronautical income to be 52.8% of total revenue; it actually is 53.7%! Add the Development charge of 17% and the total is 70.7% of all revenue. This income is derived at little cost and the higher this sum, the better the prospects.


    Additional post, dated 17 April, 2003:

    NPAT from AIRFIELD and NON-AERONAUTICAL activities.

    In the report of 23 Febr. 2001 (Stockness: Australian section-News), the following is an extract:

    "These financial statements illustrated that for the year ended 30 June 2000 the after taxation return on the airfield activities of $13.585 million" .

    My comment: This is 26.6% of the total NPAT of $51.053 mill. However, non-aeronautical fees have increased faster since, so I estimate the profit of the airfield activities to run at about 23% at present. That leaves 77% for non-aeronautical income after tax.-See below.

    From: Previous thread, date 30 March 2003:

    " I estimated non-aeronautical income to be 52.8% of total revenue; it actually is 53.7%! Add the Development charge of 17% and the total is 70.7% of al revenue. This income is derived at little cost and the higher this sum, the better the prospects".

    So, this income after tax is about 77% of total income. Current operating margin: 77.4%.

    And that is why the P/E is 20% plus! And that is why the Auckland Airport is the most profitable one in the world.


    Interim Report.


    I would say that AIA has two major objectives:

    1. To increase the non-aeronautical charges as a percentage of total revenue and hence strengthen its financial standing while being less dependent on aeronautical revenue.

    2. To bring the building costs of investment properties in equilibrium with the rentals and from then on increase building or levelling it off but let rents rise all the time.

    At present they are building about $24 mill. worth and receive about $22 mill. rent. So, the equilibrium is not that far away. (They can of course get money at 7.5% and rent out at say 15%).

    Needles to say, to study successful rent increases, the AIA is the place to go and not Queen Street, Auckland. AIA will carefully control the type of tenant and the spending of cash on building.

    The ADC or Airport Development Charge is spent on the extensions to the Airport and the building of new runways, This charge is $25 for clients 12 years and over and leaving NZ. $5 of this goes to the Gvt.

    A new runway with a lenght of 2150 m. is to be built; the first stage with a length of 1200 m. will be completed before 2010.

    It is not only the non-aeronautical revenue which has improved, so has the operating margin: from 74.9% to 77.4% and this reflects the increase of non-aeronautical revenue as a percentage of total revenue.


    DATE 26/4/03: The following extract from this post is not correct:
    "At present they are building about $24 mill. worth and receive about $22 mill. rent"

    I have done further work and the post of 5 April, this page comes up with: "There are no rents available for the years to June 2001 and 2000 but here is a short table of info:

    Year up to 30 June 2000: Market value: $60 mill.
    Ditto, 2001, mv. is $85.2 mill., expenditure $ 17.1 mill.
    Ditto 2002, mv. is 98.8 mil. and expenditure was $12.5 mill. Rents $21.6 mill.

    Expenditure in the 6 months to Dec.31, 2002: $8.8 mill".


    I mentioned in this thread, that I expected up to $80 mill. profit for the year but would reduce my guidance of $78 mill. to $77 mill.

    Based on a current price of $5.18, 304 mill. shares and a div. payout of 72.8 % of NPAT (instead of the previous 80%), The E/S is 25.3 cents, the P/E is 20.3 and the fully imputed div yield will be 5.3% or 5.9% if the payout is 80%.

    The Report which I received yesterday also points to some $80 mill. profit but mentions that any adverse event could well affect the company's performance.

    As there are only just over 3 months to go till end of June, I belief that a profit of $77 mill. or more is achievable.

    Readers, please do your own research before deciding on any investment.


    NB: That report was made when SARS was not really mentioned. It is difficult to gauge the outcome and duration of this disease.


    What will the future bring?

    1. Commerce Commission.

    The Minister has the final Report on pricing issues from the Commission. The Commission recommends price control of "airfield sevices". The Minister has advised that he will make a decision by the end of this month.

    AIA maintains that the commission used the wrong methodology.
    There is every likelyhood that the issue will come before the court.

    Some time ago, the Wellington Airport wanted increased landing fees and won in court. There has been a massive increase since and I believe AIR NZ is not happy with it.

    Meanwhile, AIA revised its landing fee increases: the 1st Sept. 2000 fee was reduced to 7.5%, the 1 Sept. 2001 increase confirmed at 5% and the 1 Sept. 2002 increase was forgone.

    AIA is committed to hold these charges till 2007 and Air NZ then abandoned its request for a judicial review

    2. Terrorists. This danger is a real one and will be concentrated primarily in the nations which supported the US, the latter together with the UK could become chief targets.

    I belief that the future for AIA is a good one.

    That is my opinion,

    Gerry Stolwyk

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