Darren Sissons
Auckland International Airport Ltd.
AUKNY-OTC
BUY
Apr 18, 2022
With the New Zealand reopening, operating leverage is going to be huge. Great long-term businesses. There's a tax on everything there from coffee to parking. He likes businesses that just clip coupons as customers go through. Long-term, more upside.
New Zealand had almost no COVID cases. It is a call on a recovery of air travel. They dealt with debt levels faithfully. On a recovery they will build a second runway. The business of an air port is basically a toll business. (Analysts’ price target is $6.67)
(A Top Pick Jun 18/20, Up 15%) Part of the recovery trade. Believes there will be a large demand for international travel due to pent up demand. Airports are essentially a tolling business. Likes the space for this aspect. A lower risk way of playing tourism recovery. Thinks there is more upside.
Recovery story. Low beta. Airports tend to perform well over time. Revenue growth is driven by passenger volumes. The country is now open for business. Revenge travel is growing. Anticipates dividend being reinstated. You can buy the stock in the US as well. (Price target in NZD.) No dividend. (Analysts’ price target is $7.49)
Added during 2020. Currency pressures (CAD vs. New Zealand) a concern, but overall a good business. Will continue to own shares. Lots of high margin products (duty free etc.)