Im Buying: 2009

Close watchers of mine would have noted a renewed interest in Auckland International Airport [AIA.NZ] over the last few days. I have written a couple of articles (1 2 )on Auckland's near monopoly air services provider.

My interest has culminated today by buying a small additional shareholding of 2000 shares to add to my existing 1000. Cost NZ$1.70 per share.

I have taken my eye off the ball over the last few months with other commitments and it is not until you can sit down and look at the figures that you can start to make a case to spend more money in this turbulent investing environment.

Only yesterday did I write that I felt that collectively investors had seemed to reach some kind of investing "Tipping Point" where they have got thoroughly brassed off with all the gloom and focused on the more positive aspects of business and investing.

This has certainly been the case for me today with my new purchase but lets not get carried away. I have bought at a good price for me, my original foray into AIA being at $2.15 in November 2006. With dividends and tax credits included in that initial AIA purchase my cost price comes in at $1.88 per share. Today's purchase then is 18c per share lower than it was more than 2 years ago.

That is like a sale at Bricoes!

Readers may like to be reminded that Canadian and Arab investors were last year willing to pay more than twice today's closing price for a half share in the Airport before being stopped by Government legislation.

My wandering into the market today was the first time since July 2008 when I bought Hallenstein Glasson [HLG.NZ] and Postie Plus [PPG.NZ] shares.

No extra money went into the Share Investor Portfolio today, the $3400.00 plus $30 brokerage was funded from a part of this reporting seasons dividends.

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Auckland Airport needs main focus on its core business

Auckland International Airport [AIA.NZ] looks like they are using a downturn in passenger numbers and therefore revenue to move away from their core business of airport services.

The downturn in passenger arrivals coincided with the release of a new strategy plan for Auckland Airport by Moutter, himself newly appointed to the job.

The previous management team had responded to the drivers of the day, which was strong and continuing passenger growth, said Moutter. But the dynamic had shifted, and there was huge uncertainty as to when that growth might return. "But if we hunker down and drop everything to the lowest cost base, then we won't be able to capitalise when growth triggers return," he said.

His new strategy concentrates far more on developing the substantial land holdings held by the company. Property, he says, is one area where the airport company had the highest hopes and greatest opportunity of surviving, and even thriving through the recession. Full Story ( Doc attachment)

Investors need to beware that when a company with a core business changes tack there can be problems with that change and all the associated financial fallout that entails-increased capital expenditure being just one of those fallout's.

Auckland Airport have done well in the past from operating an airport and that is where their business expertise principally lies.

Granted they are landlords for retail outlets that operate inside and outside their main airport buildings and revenue also comes from their large car parking facility. These areas of their business comprise 55% of their income but management need to keep in mind why those facilities are there and are successful in the first place - the foot traffic that comes from airport user and visitor foot traffic.

New Zealand listed businesses are littered with the failure of management moving outside their sphere of business experience. Recent examples include The Warehouse Group [WHS.NZ], Restaurant Brands [RBD.NZ], Telecom NZ [TEL.NZ] and Hallenstein Glasson [HLG.NZ] making moves into markets they didn't know well and their shareholders were materially affected by these poor decisions.

Don't get me wrong, you have to adapt to changing markets. Auckland Airport passenger numbers are currently falling, but this will not last and management simply cannot take their eye off the golden goose lest they be caught unaware when traffic numbers climb again.

The focus for the long term must be on planning for increases in airport facilities, for passengers, planes etc and driving demand for more airline business.

The other bolt on revenue streams, while clearly important, need to come second to the main business and driver of those other revenue streams, core airport facilities.

Disclosure I own AIA, WHS, and HLG shares

Auckland International Airport @ Share Investor

Marketwatch - Auckland International Airport
Why did you buy that stock: Auckland International Airport
Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Discuss this stock @ Shareinvestor.net.nz


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AIA Financial Data

As at 2:16 pm, 20 Apr (20 min delay)

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Investors have reached a Tipping Point

I have got to say it, I am over reading, watching, listening and writing about economic crises, recessions, banking collapses and companies sinking under debt.

Enough already!

Lets get on with the real stuff of business, finance, companies growing and returns we can all get from investing, in the stockmarket and other financial sectors.

I, and I feel others, have reached a psychological tipping point where we just cant take all this bad news anymore and we want to concentrate on content rather than the emotional turmoil of turbulent markets. Whether it is boredom or pure negative information overload we all have a tipping point that we reach at one stage or another.

That is not to say people want to bury their heads in the sand and forget what is happening around them but this change in market "feeling" (some say would say greed instead of the most recently prevailing fear) is palpable in my circles of influence.

I was reasonably pessimistic about economic events over the last few years but there came a point where my tiny little brain just couldn't take any more bad news and it did a 180 degree turn.

That happened a couple of weeks ago.

When that happens as a group, or in this apparent case millions of investors, the more positive mental outlook lifts everything around them.

We have been told at least half of the economic downturn is due to state of mind rather than real economic factors, and I believe that has merit, so finally hitting the wall of economic bad news is, well, good news for the real economy.

Let me repeat, I am not sticking my head in the economic sand. I and I would contend many others are sick of the dire economic news, just cant take anymore and are ready to move on.


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MarketWatch - Auckland International Airport

Auckland International Airport [AIA.NZ] is presently a well underrated stock, for a number of reasons. It, like every either stock on the NZX, is getting a pasting by nervous investors and post the merger hubbub the share price has tanked.

OK, I do own this stock but it is pretty immaterial really, I only own 1000 shares, so if you do rib me just make it a small ribbing if you would.

I bought my shares at $2.15 and at today's closing of $1.70 (I originally started this yesterday when AIA was at $1.64) it makes the company a cheap proposition. $1.56 is its 52 week low. (see 2 year chart above for details)

Just over a year ago they were fetching more than $3.60 due to competing bids to buy a share of the company.

Lets forget about the share price for a moment though, even though that is the main reason for this particular column.

For $1.70 per share what do you get?

* An essential monopoly with the ability to raise prices consistently above the rate of inflation.

* Add-on revenue streams from large retail areas inside and outside the port proper.

* Large tracts of undeveloped land surrounding the port.

* Consistent organic growth through increased passenger movements.

To add to this there has been a softening in National Government policy to allow assets like these an easier saleability to overseas interests; Previous Government regulation led the AIA sale to fall through.

In addition to the above point and politics again I'm afraid, with the imminent "super city" about to dawn on Auckland the question of airport shares being held by Auckland and Manakau City Councils will definitely come up again.

Regardless of the short and long term propositions that I have pointed out for owning this stock you will have to make your mind up whether you want to buy Auckland Airport stock but I rate it a buy at these price levels.

Auckland International Airport @ Share Investor

Why did you buy that stock: Auckland International Airport
Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Discuss this stock @ Shareinvestor.net.nz


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AIA Financial Data

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

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c Share Investor 2009