Aeroflot.

24 сентября, 2021 от fake Выкл

«Without me, you, my beloved, fly with one wing»

(C) A. Lashmanov

Mosbirja regularly publishes the so-called «People’s Portfolio» — a review of preferences of private investors on the Moscow Stock Exchange.

Not once, not two noted how much my portfolio is similar to the portfolio of a simple «popular investor». Here you and Gazprom-Batyushka, here you and the preservation of the preservative support and the hope of the Russian dividend investor in the past two decades.

In general, the similarity with the «folk portfolio» is striking.

Yes, and besides Solve with Gazprom, many papers, loved by the «People’s Investor,» also cause me a living interest and attract the closest attention to themselves. And Severstal and Norilsk Nickel, hotly beloved by our people, these are wonderful companies that are simply obliged to be early or late to be in my portfolio.

There is in the «People’s Portfolio» of the paper that I do not consider for myself for some reason, but at the same time I understand well that forces people to acquire them. This is, for example, a magnet or LUKOIL.

But there are one paper in the people’s portfolio that was there for nothing to do with me. Yes, I am about the hero of today’s article — Aeroflot.

Long ago, Wise Buffett advised people to invest in those companies, products (or services) that you ourselves constantly use. Surely, when he said it, I thoughtfully kicked my favorite Coca-Coke, a large package of shares of which owns)) Logic in such an investment board is obvious and indisputable — if you use some product / service constantly, it means that it is most likely a high-quality and competitive Service / product. And since you use it for a long time — it means it takes a steady position in the market.

That’s just Buffett forgot to make an important clarification — all this logic does not work if we are talking about a state company.

The state company may have been able to provide mediocre quality services for a year — using their monopolist.

Or — can carry losses for many years without optimizing costs.

Or — can carry an unbearable social burden.

Or — have all these problems immediately.

And at the same time, the state-owned company will not go out — the state will always support it afloat. It will not go broke … but will not flourish.

I think that some kind of logic and stood for the purchase of Aeroflot shares by the «people’s investor»: «I often use the services of Aeroflot when traveling, then the company is good.»

Well, let’s look at the company more closely. Maybe she really is a worthy object for investment?

The first thing that the investor turns on with a superficial look at the Aeroflot shares schedule — now the price seems low. And what? Now the crisis of the air transportation industry, aviation suffered from a pandemic — it’s time to buy air carriers while they are sold inexpensively.

Indeed, if you just look at the schedule — in 2017, one action of Aeroflot cost 200 rubles, and now — 69. What a wonderful sale, isn’t it?

No, it’s not true, it’s not really true))

And why???

For several reasons.

Firstly, against the background of sad financial indicators from its maximum values, Aeroflot fell to 100 rubles per share and without any crisis and a pandemic. So the point of reference for the «discount» is still more correct to take the price in 2019, and not in 2017.

Secondly, from the moment when the shares cost even in 2019 100 rubles per piece, until the moment they began to cost 69 rubles each, these most «pieces» of shares became more than 2 times more. Yes, yes, Aeroflot conducted a giant additional issue to somehow cope with his financial problems and issued 1.3 billion more than 1.3 billion to the previously existed 1.1 billion. And I repeat — a significant part of these financial problems of the company arose to a pandemic and without a pandemic.

So, the conclusion about the «low cost of» Aeroflot shares will now make themselves.

Keep your hands:

In 2019, the company had 1.1 billion shares, at a price of a little more than 100 rubles per piece.

And what we have in 2021? We have a company with increased debts, a company whose business ran a pandemic, a company that is unknown when it will restore its indicators. How much does it cost? You probably think that it is much cheaper than a pandemic? Let’s catch up: 2.4 billion shares, about 70 rubles each. It gives us — Tadam !!! —

Oops! Today the company is one and a half times more expensive than a pandemic. What a twist! Here you have «Aeroflot beware», here’s the «sale» — right on the best style of our stores before Christmas — you see a minus 50% discount on the price tag, and you will start to understand — it turns out that you are trying to sell Neliques Schildor))

Well, okay, with the price of this Issuer figured out. There is no discount, as it turned out. Let’s look at what such achievements in the business is so loved by investors, which is so expensive now — when the rest of the airline is only trying to come to themselves from the effects of a pandemic and crisis.

I think that investors liked

With profit, everything is more complicated.

Net profit from the company is an unstable phenomenon like sunny weather in St. Petersburg. In 2017, the company earned 23 billion, and in a year — only 5. The company itself explained it by the increase in fuel prices and competition. It seems to me that neither the fuel will continue to be cheaper or competing to weaken.

What other steady revenues have pluses? People with good memory can remember good dividends paid in 2017 and 2018. But since that time, the company did not demonstrate stability in their financial indicators (except for the growth of revenue) — and without any pandemic. And the pandemic inflicted a very serious blow to the company’s business.

Moreover, the growth of revenue without profit growth (or even with its fall) is so-so achieving. And if we are thinking about where this phenomenon is taken from — from the forced number of non-smallest flights, which the state will not be allowed — it will make them think about the prospects of the company.

Total, what do we have at the moment?

Aeroflot is a company that has had serious difficulties before Pandemic. Yes, the state will never give an Aeroflot, this is a fact. But, unfortunately, the turnover side of state ownership in the airline is the social burden — unprofitable airlines that the air carrier is forced to contain at a loss.

Now, when the company on the one hand carries the burden of all the same problems and unprofitable lines that were before the pandemic, on the other hand, the debt load and losses from idle in Pandemic were added, and from the third party, additional emissions blurred the share of ownership — no argument «For» Purchase of Aeroflot shares. Although no — one argument is — folk love for the company))

And love, as you know, evil. From this love, the shares of the air carrier may probably grow on the enthusiasm of investors when removing restrictions on flights and the opening of all routes.

However, there will be no financial attack in such enthusiasm — in the coming years even came out of the crisis and achieved his best in the history of indicators Aeroflot will not be able to surprise shareholders. Even with the reaches of their best in the history of indicators, the company will be able to pay shareholders only 4-5% of the dividend yield to a new number of shares. Agree, not at all that 9.8% paid in 2018.

So, continuing to use the services of a national air carrier, I nevertheless, I propose to colleagues investors think: to fly Aeroflot airplanes is good, but is not it time to pull out the Aeroflot from the people’s portfolio? ))

Still, the «People’s Portfolio» should be adding only the best and reliable, what will bring a stable income, high dividends and will help become