“The share price of Australia’s largest fly-in fly-out airline operator, Alliance Aviation, had a lukewarm response to the company’s recent FY21 results, despite the 25% lift in profits and promising outlook,” Shih Thin said.
“Investors have focussed on short-term issues, such as the potential impact of domestic lockdowns on the pace of the rollout of newly acquired E190 aircraft to Qantas, and possibly higher operating expense in the near term.
“These concerns should prove to be timing, and not permanent issues, as AQZ’s position has been enhanced through the pandemic, with the acquisition of 18 E190 aircraft, and parts, at depressed prices.
“Returns on these assets are highly attractive and will crystallise as the outlook for economic opening eventuates.
“Valuation remains attractive with the stock trading on an FY23 PER of 12x and dividend yield of 4.3%,” he said.
Alliance Aviation (AQZ)
Source: Google
Raymond Chan, Head of Asian Desk, Retail at Morgans gives his view on Aurizon (AZJ).
“We just upgraded AZJ to ADD today,” Raymond said.
“We upgraded it to ADD, given its improved return potential at current prices.
“This includes c.7% dividend yield and c.9% upside to our revised target price of $4.14.
“AZJ’s revenue protections and the essential and long-dated nature of its assets make its earnings less correlated with the business cycle, providing a defensive element to a portfolio.
“Also, its strong cashflows and debt capacity give it flexibility to pursue growth investment and/or undertake capital management initiatives,” he said.
Aurizon (AZJ)
Source: Google
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