Noted Worth What
However, according to one respected Investment Bank
· "Qantas reported FY10 underlying PBT of $377m. Operationally the result was in line with expectations with higher than expected lease costs seeing a slightly lower number at the PBT line.
· No dividend was declared for FY10, however this was not a huge surprise and reflects a conservative approach from the board ahead of a period of significant capex spend. Given an expected rebound in earnings next year, we are forecasting dividend payments to resume,
· Qantas guided for 1H11 PBT to be ‘materially’ higher than 1H10 underlying PBT of $267m. We are forecasting a 45% increase in PBT in 1H11 to $387m supported by yield growth and capacity additions. We expect the market to view positively some bullish comments from management around the potential for a strong recovery in yields over the medium-term towards FY08 levels.
· Qantas reaffirmed plans to invest significantly in its fleet over coming years outlining plans for $2.6bn in capex next year and $2.7bn in FY12, in line with our expectations. Qantas maintains the flexibility to manage its fleet size should capacity growth requirements fall away.
· The result gave further indications that yields are recovering, albeit gradually, and follows positive incremental data from the August airfare index released yesterday by BITRE.
· We have downgraded slightly our Jetstar yield growth expectations given continuing domestic competition and discounting. However, this was offset by an increase to our yield expectations for Mainline, which is benefiting from a pick up in business and corporate travel and the re-emergence of a premium yield for its domestic business relative to competitors.
· We retain our Overweight recommendation for Qantas and $3.00 Price Target. Our thesis for Qantas remains unchanged. We continue to see good valuation support for the stock based on historical trading multiples while we expect a gradual yield recovery in FY11 to support a strong rebound in earnings."
Think United!