Currently completing some questions in relation to Chapter two and I thought it would be good to reflect on PeerWise.
If the aim of PeerWise is a P2P study model whereby you can
test your knowledge about Accounting than it becomes rather convoluted when you
start to sift through some of the questions that have been presented on the
platform.
Questions of a trivial nature do not add to the learning
experience nor do subjective questions about general knowledge non-related to
the subject. To the contrary they clog up the question feed. There are currently
714 unanswered questions on my feed. Asking a question about what year a movie
was released that is mentioned within the study guide to enforce a generalised
quote would be one example I can think of that adds no value whatsoever.
Furthermore, it appears the real game here is to post as
many questions one can to try and inflate one’s reputation score. Now I know
this can be combated by marking down people’s questions with a “poor” score but
that in itself seems de-valued the process especially when anyone can rate a question
of yours as “poor” and you can’t see who has done this or rebut the fact.
Perhaps a better idea would be multiple filter categories where
you could filter questions not only on someone’s reputation by also the
question ranking. However, some of these questions have been marked “good” or even
“very good” which makes my mind boggle. Perhaps an even better scenario is
where you could un-follow an author, so you don’t have to see any of their questions
in the future. This unfortunately doesn’t give much leeway to a redemption path
or second chance.
I think you could be forgiven for assuming
that an airport wouldn’t be a publicly listed company, in fact I often never gave
it much thought until I started being more involved with purchasing shares and
managing how my superannuation was invested. Moreover, many people including
myself often would think of an airport as a government owned infrastructure
much like roads. I’m interested to see the relationship between the New Zealand
government and AIA in this assessment.
Diversification is an important part in the
business world and airports have seen rapid change over the last 50 years
especially as they reach into international and business markets. It appears
from the outset that the AIA has set out on some large-scale capital developments
over the last few years. In fact, reading the FY18 annual report the first two
pages peel the lid back on AIA’s planning from FY18 through to FY28.
Delivering, Planning and Building are the
three key markers used in the graphic and this sets the foundation to the
message AIA is pushing in their report. It seems AIA has delivered on more international
aircraft gates across FY17/18 an airfield expansion and even a Bunnings
distribution center. Further airfield expansions are set for 2022 with a second
runway set for 2028. This would appear to be in-line with the rapid growth NZ
has seen in its tourism sector over the last 5 years as reviewed on the Tourism
Industry Aotearoa’s website.
Total annual tourism expenditure is $39.1 billion – $107 million per
day.
Annual international tourism expenditure is $16.2 billion – $44
million per day.
Annual domestic tourism expenditure is $23.0 billion – $63 million
per day.
Total annual tourism expenditure has increased by $11.9 billion or
44% in the past five years.
Tourism is our biggest export industry, contributing 21% of foreign
exchange earnings.
Tourism generates a direct annual contribution to gdp of $15.9
billion, or 6.1%, and a further indirect contribution of $11.1 billion, another
4.3%.
216,000 people are directly and another 149,000 indirectly employed
in tourism in new zealand – almost 1 in 7 jobs.
The annual gst paid by tourists is $3.7 billion, including $1.7
billion collected from international visitors.
Reading through the opening lines of the
report from AIA gets me thinking about value. Study guide chapter one discussed
how business is about creating value. It appears AIA has seized the opportunity
to piggy back off the tourism demand and create significant value to serve
demand and need. There is also substantial interaction within markets in their
business plan. The fact they are an airport displays their interaction with various
markets from the airlines that are using their infrastructure to deliver their
own service through to the hotels restaurants and shops that have set up businesses
within the AIA percent. Just thinking about it holistically all three markets
(input, product and capital markets) appear to be receiving interaction with
AIA.
Interestingly, the annual report opens up
discussing how AIA has recently sold their stake in North Queensland Airports
for a whopping $A370 million. I decided to do a little research
into this and it appears this was a capital grab in order to help facilitate the
major CAPEX projects planned for AIA into the next 5 years which were estimated
at $1.8 billion whilst reducing some of AIA’s debt. After the NQA had had
significant turnaround in earnings after a weak FY16 it appears AIA were keen
to strike while the iron was hot and leverage the turnaround for their own
developments. As seen below it appears the sale of stake in NQA has related to
an upward trend in AIA value over the year.
Another fascinating point in some of the
opening monologue is that Chinese arrivals into AIA growth was around 10.9%. Doing
some reading recently on the impact of the Chinese markets across Australia I decided
to look into the Chinese economy and if the reports on it “cooling” would bring
impact to a company like AIA especially noting one of AIA’s key aspirations is
to “double Chinese arrivals to 400k” in FY17. The Yuan has been reasonably steady
in relation to the NZD over the last year, hovering around 0.22c on the dollar
with only mild fluctuations. There have been many analytical reports that the
outlook across the Chinese market has been glim, however it would appear this
may affect industries such as manufacturing and trade rather than tourism such
as NZ.
FY18 results looked pretty good for AIA.
Total profit after tax to 30 June 2018 was up 95.3% to $650.1 million, while
underlying profit after tax increased 6.2% to $263.1 million. 95.3% increase in
profit seems very dramatic from the outside looking in. Revenue saw an 8.7%
increase to $683.9 million which the company attributes to “strong growth in retail,
transport and investment property revenues. The AIA report details a 13.6%
increase in operating expenses due to operational resources and asset management.
EBITDAFI sits at $506.4 million up 7%. Interestingly I have only ever been
exposed to EBITDA a first for the fair value adjustments and investments in
associates part of the acronym for me.
One of the key areas I have struggled to
comprehend within this report is a statement pertaining to derivate fair value movements.
“We have reversed out the impact of derivative
fair value movements. These are unrealised and relate to basis swaps that do
not qualify for hedge accounting as well as the ineffective valuation movement
in other derivatives. The group holds its derivatives to maturity, so any fair value
movements are expected to reverse out over their remaining lives”
I have absolutely no idea what this means.
A quick google search brings up topics on hedge accounting and buying stock.
Perhaps this is something that will become clearer throughout this unit?
I’m looking forward to inputting the financial
numbers of AIA into the spreadsheet provided by Martin. I like to think of
myself as reasonably handy with excel so perhaps some pivot tables can be
developed across the three years’ worth of data to establish some trend analysis
and extrapolate onto some graphs.
From the outset it appears AIA is a reasonably
solid company with a very diversified business and investment structure. Positive
results across the FY18 report indicate the company is in a reasonably strong position
with regard to financials and there is a streamlined vision for infrastructure development
across the next 5 years. It seems their plan for growth across the Asian and Chinese
markets are statistically in-line with the tourism figures and New Zealand and Australasia.
An Educational journey about stumbling through the racks (units) of the store (degree) just to make it to the counter (Graduation) and then find out the item was on sale (Best thing ever, same as completing your degree).
Hayden Anderson - CQUniversity 