Views on AIA and TLG please
Hi James and Team, What’s your latest view on AIA and TLG. Cheers Mike F
The Latest Q&A
Answer
Hi Mike,
Auckland International Airport (AIA) is very solid and since Sydney Airports was taken out by private equity, it’s become the go-to for investors looking for listed airport exposure. It’s also been a major beneficiary of higher travel volumes post COVID, however there are a few things on the horizon that will keep us on the sidelines for now.
They have large development plans with a new 10-year development plan to be announced in June, ahead of FY23 results in August. The Auckland Council is also a major shareholder (~18%) and it seems they are a likely seller of that position. They also plan to rejig their dividend policy at the FY23 results, and with a yield of 1.1% expected this year, it needs to be higher although we suspect it won’t be a lot higher given the looming construction.
If we apply the same multiple that PE paid for SYD, AIA would be worth ~$10, but with so many moving parts in the short term, and the strength in the stock recently, we’ll likely sit on our hands till after they report.
Talga (TLG) rallied after they received environmental permits for its Swedish Graphite mine. They are still waiting on approvals for their processing facility to follow. Lots of uncertainty in a stock like this so we defer to the technicals , with a break and close above $2 looking very bullish, although if that happened, we would suggest using a stop loss below $1.80 as it’s a very hard company to value!
