Air New Zealand: On the Way Down

Air New Zealand is probably a very good airline.

I can either not afford to fly with them (in New Zealand I have to) and when I can it is some sort of forced codeshare thingy.

Those of you who know this blog well know i'm not a big fan of airlines and I share my fear of investing in them with that famous billionaire Warren Buffett.

I fear the end of the line for Air New Zealand, soon.

What I am saying is the number of news stories, local and international, about airlines expanding into new territories is particularly worrying. GROWING airlines, growing seats, lowering fares, its the only business I know that people(investors)get excited about prices going down - you should be worried.

The Airline has been doing ok for a number of years but this year after oil prices hit the bottom (i'm picking in the mid to high teens) and start rising things will start to move the other way.

The staff labour costs, fees paid to airports, divs to the govt, cost of food, cost of computer systems and long flights proportionately cost more. There are in the air for longer and burn a shit load of fuel.
Passengers just pay for one ticket. Air New Zealand are flying longer flights - along with everyone.

Of course there's hedging. The person in charge of this I would say has the most important job in the airline. What he does now will ultimately affect what happens a few years down the road.

By all accounts Air NZ has a very good one/s.

Be very careful if you are a long term investor. I would avoid this stock at all costs.

If however you are in it for the short term then Bobs your uncle, go for it.

You probably know when to pick it.


AIR @ Share Investor

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Discuss this stock at Share Investor

c Share Investor 2016

Welcome to Sharetrader Members!

I note the site Share Trader site has been down for over 24 hrs. Come on over

 I seem to have some visitors from there reading this blog.

We have a history between us, I used to contribute as member to that aforementioned forum and was banned for having an opinion.

I have been banned for life so it seems, because I have been lurking here and there but eventually caught out.

Welcome to those of you that knew me on Sharetrader as Bongo and to those of you that don't thanks for reading this blog.

If however you would like to contribute to my Share Investor Forum, you are most welcome to sign up and let rip. I don't censor strong or contrary opinion to the website owner, nor am I bound by loyalty to advertisers or make you sign a disclosure that abdicates your right to the content you submit.

Sharetrader do!

I am independent and proud of it.

So welcome Sharetrader members, welcome to Share Investor.



You can get the forum at the following URLs:

www.shareinvestor.nz
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www.shareinvestor.co.nz
www.sharetrader.biz




c Share Investor 2010, 2016

Murray & Co: Overachieving Kiwi-style

I had to hunt high and low but I found something.

This piece really has everything a little Fisher & Paykel holder really wants to know.

What he neglects to tell us is, has Mike Daniells passed all his business acumen on.

I would have to answer that by saying yes by looking at the figures, 29-800 million, in 26 years.

What is more important is, has he passed that "we are a company that is going to spend northwards of 70 million next year on R & D" and you would have to say yes again.

Lewis Gradon is still there as head of R & D and as long as he is I don't have one worry.

The biggest value creator in the history of the NZ sharemarket, Mike Daniell (CEO of Fisher & Paykel Healthcare) quietly handed in his resignation slip recently without any fanfare or great media interest.

Mike Daniell’s board at Fisher & Paykel blew his trumpet on the announcement of his forthcoming retirement but they really should have played a full reveille. This is the untold story of NZ finance, a company that grew from a prototype made with an Agee preserving jar after a physician at Auckland Hospital in the 1960s became concerned about the adverse effects of ventilating patients with dry air.

Consider the numbers. When Daniell took charge of the Healthcare division in March 1990 his predecessor was ruling off the accounts showing about $29m of sales and $4m of EBIT. When Daniell steps down in March next year 

Photo: Dave O'Hare and 3280 Humidifier (1970)

Healthcare will report sales of over $800m and EBIT of >$200m.

Annual compound sales and EBIT growth of 14% and 16% respectively over 26 years; approximately $500m of shareholders funds turned into marketcap of $4 billion - that’s $3.5b of value creation, 99% of it on Daniell’s watch, the biggest such “market value added” on the NZ market.

If Healthcare had been a listed company the whole time it would have been a 100-bagger. As it was it saved its previous parent company, Fisher & Paykel Appliances, and has done well since listing despite currency headwinds.

How has the company achieved this? Five key aspects, all pointing to good strategy from the top:

A consistent team, in particular Lewis Gradon and Paul Shearer, who have respectively led the R&D and international sales teams over the same 26 year period.

The company persistently plugged away (through sponsoring numerous studies and direct marketing) at the seemingly boring hospital humidification market, gradually leaving less committed competitors in the dust.

It then segued into humidifying air used in “blowers” for sleep apnea in the home. The company quickly worked out that people would get sick of having separate blowing and humidification devices hogging their bedside table and introduced a combined unit before anyone else. This action led to a much bigger fast-growing market.

The company determined that value is in consumables and introduced (and importantly concentrated on) proprietary chambers and tubes to go with its hospital gear and masks to accompany sleep apnea devices.

It has invested in R&D to open up new sales areas, the latest of many is humidifying air pushed over body parts during surgery.

Daniell is an old-style NZ CEO, little ego, no twitter account, his one company generates export sales the equivalent of 60% of the vaunted NZ wine industry with about 1% of the fanfare. Thanks Mike.

Fisher & Paykel Healthcare @ Share Investor

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c Murray & Co   Share Investor 2016 

The Warehouse: What the ***k is it doing?

Let me begin this piece with I no longer wish to be a shareholder in The Warehouse.

You have seen it before.

The Warehouse finally seems to have done the business, straightened things out and is now on the way to increased sales/revenue and therefore ever increasing profits.

It did this a few days ago when it showed 'promising signs after spending about 200 hundred million odd (this time) on this that and the other' - buying companies left/right/and centre. (the speech patterns are mine but the above takes up a good few years of this and I'm too tired to re-hash the same old stuff)

But is the Warehouse going to buy every retailer in the country in order to be 'Where Everyone Gets a Bargain?' (watch out Dick Smith)

No.

They have to get more people through their doors and the way to do that is through offering THE cheapest branded goods around.

That is it.

Leave the rest up to us.

If by the smallest of chances I'm wrong and this is just the beginning of a new era of the red sheds,

Good luck.

But, you have lost a loyal supporter.



The Warehouse Group @ Share Investor

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c Share Investor 2016