Thursday, February 21, 2008

Auckland Airport profit stays grounded

Full NZX profit announcement for AIA
Update on CPPIB Bid
CPPIB response to payment of Interim DIV
NZ Herald report

I haven't got much to add to today's profit announcement by Auckland International Airport
(AIA) except to point out that the total revenue for the first half up 7.9 per cent to $NZ172.325 million, even though after tax profit was down by approximately 4% to $47.5 million for the half year and all other important figures for future performance and profitability are good.

Other important key performance factors from the half:

* Total passenger movements increased 4.9 per cent to 6,449,543.

Retail income was up 10.4 per cent.

* Car parking income, up 15.5 per cent.

* Rental income was 15.7 per cent higher.

One can also see from the stats below that AIA makes for a good long term investment.

Revenues (m)
Operating margin(%)
Depreciation (m)
Amortisation (m)
EBIT (m)
Net profit before abnormals (m)
Net profit (m)
Income tax rate(%)
Net profit margin(%)
Employees (thousands)
Long term debt (m)
Shareholders equity (m)
Net Gearing (%)
Net Interest Cover (x)
Return on capital(%)
Return on equity(%)
Payout ratio(%)

Although profit has stalled recently, due mainly to increased capital expenditure on expansion of terminals, retail space and other airport upkeep, revenue and passenger numbers have increased well year by year.

When shareholders vote to accept or reject the Canadian Pension Plan Investment board offer they must look at todays and past profits and look at where the airport and therefore their investment might be in 10 years time.

The Airport is paying an increased dividend of 5.75c per share to use up imputation credits should the Canadian bid take off, so the offer by the CPPIB has been reduced by the dividend payout.

Further to the merger proposal, as of yesterday, CPPIB has advised that acceptances have been lodged for 81,422,529 shares, representing 6.66 per cent of the total shares in the company.

89,267,833 shareholder votes, representing 7.30 per cent of the total shares in the company, have also been received. Of the votes received to date, 57.62 per cent are against CPPIB acquiring a 40 per cent stake and 42.38 per cent are in favour of the offer.

Slowish going so far for the CPPIB but New Zealanders are notoriously mogadonish when making decisions and tend to leave these things to the last possible moment but shareholders still have until March 13 2008 to make up their minds.
c ASB Securities 2008

One can see from the 10 year chart that long term shareholders have been handsomely
rewarded. Generous dividends amounting to 55.1c over 10 years plus tax credits have been

Long term AIA management seem bullish about company prospects but short term drags related to "the global economy" and "global credit tightening" appear to be excuses used to defuse shareholders expectations should profit be stagnant in the coming year.

Related Share Investor reading

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?

Disclosure: I own AIA shares

c Share Investor 2008

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