Share Investor

Thursday, March 24, 2011

Queenstown Airport: Queenstown Airport Update

If you have been following the issues closely surrounding Auckland International Airport Ltd [AIA.NZX] and their purchase of a 24.99% stake in Queenstown Airport you will probably already know that a couple of significant pieces of news have been released on this matter over the last week or so.

Queenstown Lakes District Council (QLDC), through council owned subsidary Queenstown Airport Ltd, initially gave the green light for the deal last year and members on council are now opposing it and have completed a comprehensive 76 page report on it and have come to various conclusions as only a long winded ratepayer funded report can.

Their main point seems to be that Auckland Airport paid too much for their shareholding:

Page 41 of the report finds that the price paid by AIA for the first tranche shares (24.99%) was $6.91 per share:

“This incorporates a discount of approximately 7.5% on the value of 100% of the shares assessed by QAC and AIAL at that time of $7.47 per share. This discount is relatively low (and the price per share relatively high) for non-controlling, albeit large shareholding and may, arguably, have included a ‘strategic premium’ to gain a cornerstone stake.” – PricewaterhouseCoopers.

This is something I agree with, they did in the short term but perhaps not over the long-term as there have already been some good gains on the balance sheet for AIA.

The disclosure in this report that AIA has paid a significant premium to the present day value of the company surely runs counter to the council's opposition to the AIA/Queenstown ports arrangement? The Queenstown Airport and by default the council (which majority owns the airport) got good value for the 24.99% stake and for Queenstown ratepayers and they should be given a pat on the back for extracting every last cent out of AIA that they have. This clearly should bode well for AIA in court proceedings brought against AIA by QLDC/Queenstown Community Strategic Assets Group (QCSAG) and Air New Zealand Ltd [AIR.NZX].

There has also been an agreement by both Queenstown Airport and AIA that the option to by a further stake up to 35% is going to be given the bullet:

“On one hand Queenstown Airport could have received further cash of between $11 million and $21 million, of which the community could have received a sizable portion (around $10 million) as a dividend. On the other hand if Council ownership fell below 75% it would no longer have control of the constitution,” Ms Lawson said.

In the event that the Council’s shareholding fell below 75% page 38 of the report stated:

“It will no longer have control of the constitution, be able to pass special resolutions and pass ordinary resolutions without a meeting of shareholders. It will still have in excess of 50% of the ordinary shares and so will be able to pass ordinary resolutions and control the composition of the Board. However moving below 75% will diminish the control the Council can exercise over the Company.” – PricewaterhouseCoopers.

This important development pretty much removes any opposition to the deal where AIA has a 24.99% stake, clearly still has some board influence but will not attain a sizable controlling stake in the business, points which the local council, local business people and Air NZ have issues about.

The latest developments pretty much put Queenstown Airport in the box seat as far as their partnership with AIA goes. They have a cornerstone shareholder that has allowed them to release much needed capital back onto the balance sheet and they can also use the expertise, management and size of Auckland Airport to leverage growth for the Queenstown Port.

Lets be clear though, it will be mutually beneficial for both partners but Queenstown Airport is in the box seat and will make its business decisions as it sees fit.

The High Court Judicial Review latter on this year on the port deal looks tenuous for the proponents.

Disc I own AIA shares in the Share Investor Portfolio

Queenstown Airport Buyout @ Share Investor

Auckland Airport CEO on Queenstown Airport Fracas
Queenstown Airport: Court Case looks set to Drag
Queenstown Airport: Loud Voices & Loyalty
Queenstown Airport: Air New Zealand's Crocodile Tears
Queenstown Airport: AIA purchase good Long-Term but will cost shareholders Short-Term

AIA @ Share Investor

Share Investor Q & A: Auckland Airport's Simon Moutter
Auckland Council look set for a Auckland Airport Takeover
Auckland City Council new AIA Policy Doc
Make me an offer I cant refuse: Auckland International Airport Ltd
Long Term View: Auckland International Airport
VIDEO - Simon Moutter on Australian Airport Purchase
Auckland Airport Capital Raising a fair call
Auckland International Airport lands Australian Ports
What Infratil sale of Auckland Airport stake means...
Is another Auckland Airport bid likely under a business friendly Government?
Latest Airport coverage
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 @ Share Investor Forum - Register free
Download AIA Company Reports

THINK BIGGER: HOW TO RAISE YOUR EXPECTATIONS AND ACHIEVE EVERYTHING
BY MICHAEL HILL

c Share Investor 2011

Tuesday, March 22, 2011

Global Economy: Interview with Pepsi CEO Indra Nooyi

I have been looking to post this interview since I heard comments made by Pepsi CEO Indra Nooyi on the state of the Global economy. She hits the mark closer than anyone else I have heard over the last 3 years.

Special attention should focus on her comments about sustainable job growth in the private enterprise. She has made comments somewhere else (I cant find them but heard her speaking) to the effect that what we are seeing now in an apparent economic recovery in some countries is that it is hard to see that this "recovery" is sustainable or real given that much of the job growth and key economic indicators that are apparently looking better are because of massive amounts of Government stimulus based on increased foreign debt. Clearly this is not a real recovery and I agree with Indra Nooyi about her assesment that it will not be until private enterprise are doing better for a significant period that we can all start to breathe a little easier.

Her basic idea is something I have been saying for along time but she has put it much better than I and that is why I have posted this interview on my blog.

From Money Control - Watch the Video Here.

Indra Nooyi runs one of the biggest consumer businesses in the world, Pepsico and has a pretty accurate pulse on demand in most economies across the world.

In an exclusive interview to CNBC's Maria Bartiromo, Indra Nooyi, CEO, Pepsico, talks about where growth is still sluggish and also about doing business in China at a time when Google has chosen to pull out.

Below is a verbatim transcript of the exclusive interview on CNBC-TV18. Also watch the accompanying video.

Q: What you are seeing in terms of the consumer today whether it is in the US or around the world, where do you say we are in this recovery?

A: I don’t know, this one worries me a bit. In the Western world especially in the United States, what I have not yet seen is the construction worker coming back to work. I think you need that worker coming back because the true test of the economic vitality of the economy is when that worker is employed. We are not seeing that as yet.

I hope that as we progress through the year and we come into the summer, housing stocks will go up and some more construction jobs come by. But we need jobs and I am not talking about 5,000 or 10,000 jobs, we need several 100,000 jobs fast so that we get confidence back in the economy, we can get people back to work then have the multiplier effect of people going back into construction jobs and then the multiplier effect of them dragging other jobs with it.

Q: As a global leader, what would it take for you to create new jobs? I know earlier you said that you are expecting a low double digit EPS growth in 2011 and 2012, what is it going to take for you to move at PepsiCo and other companies just like you to move from the cost cutting phase of things to the growth part of things where you are going to create new jobs, is it a policy out of the administration or something else?

A: I think it comes down to, ‘is the core economy doing well?’ Even Larry Summer said something which I have never forgotten, he said, “We could see GDP (gross domestic product) growth, we could see a statistical recovery for a human recession,” To me that is not good enough because the statistical recovery and a human recession is not going to be long-lived. We need to see sustainable job creation, we need to see statistical recovery and human growth, employment growth. So if that happens, confidence is back in all of private enterprise and we can start hiring and growing and planning for the future. We are still refreshing our talent and still hiring at many places including in US, but I think if you really want companies to come back to hiring cycle, we need to have confidence so there is going to be job growth in the country.

Q: A number of executives come on the programme and there are too many uncertainties at 2011, not just higher taxes which we know are coming, but also healthcare. So when you see this extraordinary healthcare bill done through reconciliation, as a leader in the global community, what do you think about this, how is this going to change your business?

A: The bill is just passed. Give us sometime to go and study it and understand the implications for the company. But the first thing we have to do is pause as Americans and say, here is the President who put everything out there to go sell a bill that he felt was right for the American public and it is right for a lot of people who don’t have healthcare insurance. So I think at this moment we are going to sit back and say, here is a President who deliver on the promise that he made during the campaign.

As far as the implications for PepsiCo, we have got a lot of people studying the implications of all of that what is the final mark-up in the bill. Over the next weeks and months, we will have a much better perspective.

Q: Let me ask you about the rest of the world. The last time we spoke you were in China and you were talking to me about the new plant that you were putting up there and you were planning on doing 13 plants in China, talk to me about the opportunity China? Google says it is coming out, it is going to shut down China because they cannot be censored, and you haven’t obviously had any issues with the Chinese government because you are creating new plants there?

A: Chinese government has been very good to us. We just got permission to build another 14 plants. We have got 22 plants on the ground already, we are going to build another 14 plants, and we are growing double digits in China. It is an important region for us and I must say specially recently the Chinese government has been particularly good to us, has been supportive of our strategies both on the beverages and on the snack side because we also do good for farmers, we developed agro, in all of these areas I think we are real partners for the Chinese government.

The one thing about PepsiCo is that we are a global company, a great global company, headquartered in United States, but we are local in every country in which we operate because you cannot export soft drinks and chips. You have to be local.

Q: And you are creating jobs.

A: We are creating jobs everywhere.

Q: So can you break it down for instance for us the international landscape or you still seeing much of the vibrancy at the company coming out of outside the US and emerging markets and how you Europe doing?

A: East to the Middle East, the markets are extremely vibrant. I think Japan has always been slow market, but in all other markets, East to the Middle East we are seeing extreme vibrancy, especially in markets like India we are seeing a level of excitement that is unbelievable.

We are also seeing a lot of vibrancy in South America, South of Mexico, especially markets like Brazil, there is a lot of optimism people are feeling great about that market. I think the slowness is in East and Western Europe and North America and Mexico. So those are the markets we need to have targeted attention to and figure out how to get the unemployment rates down. It is not just GDP growth, we have got to address jobs.

Share Investor Q & A Series

Auckland Airport's Simon Moutter
Warehouse Group CEO Ian Morrice
Briscoe Group CEO Rod Duke
Ryman Healthcare's CFO Gordon Macleod
Ecoya's Geoff Ross
Xero's Rod Drury
Mainfreight MD Don Braid
Burger Fuel Director Josef Roberts
Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Convention Centre proposal interview with Sky City CEO Nigel Morrison

Buy Toughen Up: What I've Learned About Surviving Tough Times

Toughen Up: What I've Learned About Surviving Tough Times

Toughen Up - Fishpond.co.nz

c Share Investor 2011

Keep cash at the ready & be patient!

The Earthquakes in Japan and Christchurch, along with the eruption of the Middle East, have certainly highlighted the nervous nature of the markets over the last month or so, especially the last 2 weeks.

All these macro factors of course have actual economic impacts on local and global economies and are going to drag on stockmarkets over the coming months.

I am keeping my dividend pile at hand ready for some bargains because global stockmarkets have gotten well away from their true values given the tenuous nature of the global economy.

They are set for further pull backs in my humble and not so humble opinion.

Many people are emailing me asking whether they should be selling now that markets are retreating and they are worried about the Middle East and the economic fallout from that.

My reply to those wanting to sell is always the same. If you own shares in a good company and outside influences may have perceived or actual impacts on the company and therefore its share price, take the opportunity to buy a bigger stake!

This is not a permanent thing and long term you will be a happy little camper if you don't follow all those other lemmings over the cliff.

Keep the cash at hand and most of all be patient!

Here is a song to help remind you dear readers

Recent Share Investor Reading

Discuss this at Share Investor Forum - Register free

From Fishpond.co.nz

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

c Share Investor 2011

Monday, March 21, 2011

Share Investor Portfolio: Value @ 21 March 2011

The Share Investor Portfolio was down in the third week of March. The portfolio was down by 1.17% or $3193.10 on the March 14 update . For the first 11 weeks of 2011 the portfolio has increased by 4.58% or $11218.77. This weeks fall was due, primarily, to WHS and SKC stocks falling, with a wide range of other small falls across the portfolio.

The total of unspent dividends and interest in the bank from the 2010 - 2011 earnings years is $23339.21 at close of reporting season for 2010 and partway through the 2011 year. There are also approx $50000.00 in tax credits earned from the portfolio since it began in late 2002.

Share Investor Portfolio as at 10:19:48, Monday 21 March, 2011 (NZDT)

Stock

Quantity

Cost price

Total cost

Market price

Market value

Change

AIA

2,000

$1.700

$3,400.00

$2.145

$4,290.00

$890.00

26.18%

AIA

2,000

$1.510

$3,020.00

$2.145

$4,290.00

$1,270.00

42.05%

AIA

558

$0.000

$0.00

$2.145

$1,196.91

AIA

754

$2.150

$1,621.10

$2.145

$1,617.33

$3.77

0.23%

ASBPB

3,027

$0.000

$0.00

$0.660

$1,997.82

ASBPB

6,973

$1.000

$6,973.00

$0.660

$4,602.18

$2,370.82

34.00%

BGR

619

$0.000

$0.00

$1.430

$885.17

BGR

2,381

$0.990

$2,357.19

$1.430

$3,404.83

$1,047.64

44.44%

FBU

284

$0.000

$0.00

$8.700

$2,470.80

FBU

830

$9.750

$8,092.50

$8.700

$7,221.00

$871.50

10.77%

FPH

3,000

$2.350

$7,050.00

$3.030

$9,090.00

$2,040.00

28.94%

FPH

541

$0.000

$0.00

$3.030

$1,639.23

FPH

1,459

$3.720

$5,427.48

$3.030

$4,420.77

$1,006.71

18.55%

FRE

2,054

$0.000

$0.00

$3.050

$6,264.70

FRE

6,577

$3.630

$23,874.51

$3.050

$20,059.85

$3,814.66

15.98%

GFF

586

$0.000

$0.00

$1.520

$890.72

GFF

1,414

$2.330

$3,294.62

$1.520

$2,149.28

$1,145.34

34.76%

HLG

244

$0.000

$0.00

$3.700

$902.80

HLG

756

$2.530

$1,912.68

$3.700

$2,797.20

$884.52

46.25%

KIP

190

$0.000

$0.00

$1.010

$191.90

KIP

810

$1.480

$1,198.80

$1.010

$818.10

$380.70

31.76%

MFT

1,000

$7.960

$7,960.00

$8.750

$8,750.00

$790.00

9.92%

MFT

1,838

$8.000

$14,704.00

$8.750

$16,082.50

$1,378.50

9.38%

MFT

657

$0.000

$0.00

$8.750

$5,748.75

MFT

1,505

$4.200

$6,321.00

$8.750

$13,168.75

$6,847.75

108.33%

MHI

1,646

$0.860

$1,415.56

$0.890

$1,464.94

$49.38

3.49%

MHI

7,000

$0.630

$4,410.00

$0.890

$6,230.00

$1,820.00

41.27%

MHI

494

$1.050

$518.70

$0.890

$439.66

$79.04

15.24%

MHI

860

$0.000

$0.00

$0.890

$765.40

PPG

$0.000

$0.00

$0.260

$8.06

PPG

1,500

$0.440

$660.00

$0.260

$390.00

$270.00

40.91%

PPG

1,004

$0.800

$803.20

$0.260

$261.04

$542.16

67.50%

PPL

1,000

$3.090

$3,090.00

$1.300

$1,300.00

$1,790.00

57.93%

PPL

1,000

$2.870

$2,870.00

$1.300

$1,300.00

$1,570.00

54.70%

PPL

939

$4.200

$3,943.80

$1.300

$1,220.70

$2,723.10

69.05%

PPL

975

$0.000

$0.00

$1.300

$1,267.50

PPL

1,086

$1.530

$1,661.58

$1.300

$1,411.80

$249.78

15.03%

RYM

459

$0.000

$0.00

$2.350

$1,078.65

RYM

4,586

$1.970

$9,034.42

$2.350

$10,777.10

$1,742.68

19.29%

SKC

5,750

$7.430

$42,722.50

$3.350

$19,262.50

$23,460.00

54.91%

SKC

1,000

$7.600

$7,600.00

$3.350

$3,350.00

$4,250.00

55.92%

SKC

2,750

$7.700

$21,175.00

$3.350

$9,212.50

$11,962.50

56.49%

SKC

1,431

$8.750

$12,521.25

$3.350

$4,793.85

$7,727.40

61.71%

SKC

272

$4.720

$1,283.84

$3.350

$911.20

$372.64

29.03%

SKC

25,712

$0.000

$0.00

$3.350

$86,135.20

STU

$0.000

$0.00

$2.600

$202.80

STU

303

$4.740

$1,436.22

$2.600

$787.80

$648.42

45.15%

WHS

4,500

$3.730

$16,785.00

$3.400

$15,300.00

$1,485.00

8.85%

WHS

6,979

$6.000

$41,874.00

$3.400

$23,728.60

$18,145.40

43.33%

WHS

$3.710

$55.65

$3.400

$51.00

$4.65

8.36%

WHS

3,506

$0.000

$0.00

$3.400

$11,920.40

21.20%

	Total cost	Market value	Change
	$271,067.60	$328,521.29	$57,453.69

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $9.73
Usually ships in 24 hours

Security Analysis: The Classic 1934 Edition by GRAHAM
Buy new: $37.80 / Used from: $29.48
Usually ships in 24 hours

Buy these two Books @ Fishpond.co.nz

c Share Investor 2011

Share Investor

Thursday, March 24, 2011

Queenstown Airport: Queenstown Airport Update

Tuesday, March 22, 2011

Global Economy: Interview with Pepsi CEO Indra Nooyi

Keep cash at the ready & be patient!

Monday, March 21, 2011

Share Investor Portfolio: Value @ 21 March 2011

Total Pageviews

Translate

Search Share Investor

Share Investor Blog Archive

Share Investor

Share Investor Portfolio Individual Shareholder Websites

Market/Financial News

Stockmarket/Business Blogs/Share Forums

My Favourite Reading