Forum Archive Index - July 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Trevor,

I don't follow this share closely, but I do have it on the outer 
limits of my radar screen watching as a possibly future interestred 
party
>
> 
> Its what I would term a regional services monopoly 
>
>
You are referring to Wellington Airport?  What proportion of Infratil 
Assets is that?
>
>
> and has fairly
> consistent earning history over the last 5 years.
>
>
Infratil has traditionally been an asset trader, taking strategic 
positions in infrastructure assets and then flogging them off. 
As such, I can't see that you can have an earning history that has 
any meaning.   Once you sell an asset one year, you can't sell it 
again the next year!

Personally I don't like this asset trading approach for utilities.  
If an asset is a virtual monopoly (e.g. Wellington Airport), why 
would I want to sell it?   I'd rather hang in there.

And if an infrastructural asset is cyclical (e.g. Trustpower), I'd 
rather put my money in a company that isn't (e.g United Networks).
>
> 
> I've played around with the past data using Buffetology methods and
> come up with a projected per share earnings of $0.60 2011 and a
> share price of $9.00 at that date assuming a PE of a conservative
> 15.
>
>
I wouldn't say 15 was conservative P/E for a utility company.  And it 
sounds way too aggressive for an asset trading company.   Of course 
if Infratil transform themselves into an international airport 
holding company then 15 may not be out of the ball park. 
>
> 
> Discounting this to a present value using a 16% compounded return
> and I get a present share price of $2.04.
> 
> Its trading at $1.53 today and would on the face of it look like a
> good buy.
> 
> Any comments from anybody with greater knowledge than I?
> 
> 
>
Have you looked at Auckland International Airport?   How does it 
compare with that? SNOOPY




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