Qantas Update

Submitted by Craig Strzelecki on 8 May, 2007 - 18:23

Qantas has a restricted broker call and share price target from sharemarket analyst UBS. Initial bid fails but uncertainty continues: The Takeovers Panel denied APA's application to proceed with the offer after it failed to meet the 50% acceptance level in time. Qantas has announced that the bid has failed, but is currently in a trading halt as APA provides clarification in regards to a clause in its offer. If APA is successful in showing that it met the 50% level prior to the deadline then we believe the offer period could be extended. Strong operating conditions to FY08E: the analyst sees a very benign competitive environment at least until FY08E. Traffic numbers remain strong and international capacity growth remains low, both supporting yields. Qantas is currently enjoying 15% growth in international unit revenue. They are forecasting a drop to 4% in FY08 but given the limited capacity expansion for Qantas and the industry our assumptions could be conservative. Currently trading in-line with peers: On they current forecasts Qantas is trading at 12.1x our FY08E EPS. This is roughly in-line with a range of its comparable peers (Singapore, Lufthansa, Cathay). This is also trading at a 65% relativity to the Australian All Industrials average, which is at the upper end of its historical trading range.

Qantas Airways Limited is listed on the Australian Stock Exchange (ASX) under stock code QAN. You can view their investor website here. QAN was listed on the ASX on 31 July, 1995. Margaret Jackson is the chairperson for Qantas and Geoff Dixon is the CEO. The company is involved in the operation of international and domestic air transportation services, the sale of worldwide and domestic holiday tours and associated support activities including catering, information technology, ground handling and engineering and maintenance. They also also operate subsidiary businesses including other airlines, and businesses in specialist markets such as Qantas Holidays and Qantas Flight Catering. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade QAN. Check your charts and good luck with your share trading!

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