Author Topic: Fairfax India new issue  (Read 191704 times)

ICUMD

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Re: Fairfax India new issue
« Reply #420 on: August 27, 2020, 02:55:05 PM »
Airport revenue, to my understanding, is based on aero and non aero revenue.  The aero component is regulated via UDF modulation during the control period to provide 16% return on depreciated investment.  Non aero revenue is not regulated and will take a large hit. 

I don't know the proportion of each, but it is likely the value of the airport is currently impaired.  Oth, population continues to increase and there is talk of building a second airport. 

For the patient investor, I think this will turn out ok. Covid will likely reach a baseline in 12-24 months. The airport is not going anywhere.  NAV I think is $12-14.  50 % discount right now.
FIH.U TCEHY, IFFNY, BRK.B


Viking

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Re: Fairfax India new issue
« Reply #421 on: September 15, 2020, 08:52:32 PM »
BV at June 30 for FIH was $14.75. I updated my tracking sheet for FIH (see below) and their publicly traded equities are up about $90 million so far in Q3. Sept 30 BV could be in the $15.25-$15.50 range. This would bring BV to about 90% of where it was Dec 31 ($16.89).

Shares are trading today at $7.50, which puts current P/BV < 0.50
For reference, Dec 30 shares were trading at $12.90; P/BV = 0.75

So BV is down about 10% and the shares are down 40%. What gives? Their largest holding is an airport (BIAL). We may get some news on this front in the next couple of weeks as the Anchorage transaction is supposed to be completed by Sept 30 (if I understand things correctly).

In the age of Covid what is an airport worth today? FIH investors are answering very loudly: 'not very much'. FIH shares look very cheap and that is likely primarily driven by BIAL.

For those who think shares are undervalued the question is one of timing:
- buy today when you are pretty certain the shares are cheap but may stay that way for another 12-18 months (if vaccine's fail)
- wait for the catalyst to happen (vaccine's are announced) and possibly buy then

It is interesting to read what BIAL is doing. My guess is getting metro connectivity with Bangalore will make BIAL more valuable in the coming years and decades.

Here are a few articles:
 
Establish 4.95 km airport section of the ORR-Airport Metro: this Metro connectivity to BLR Airport, likely to be commissioned by December 2024,  would provide a sustainable and efficient mode of transport to the residents and business commuters from all parts of the city, facilitating the city to realise its economic potential and ease traffic congestion on the roads leading to the Airport.
- https://www.bengaluruairport.com/corporate/media/news-press-releases/public-private-partnership-between-bangalore-metro-rail-corporat.html

Summary of 90 Day Trend (June, July, August)
- https://www.bengaluruairport.com/corporate/media/news-press-releases/blr-airport-marks-100-days-of-successful-operations--since-resum.html

Cargo Hub
- https://www.bengaluruairport.com/corporate/media/news-press-releases/bial-opens-india-s-first-on-airport-public-bonded-warehouse.html
« Last Edit: September 15, 2020, 08:54:38 PM by Viking »

hobbit

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Re: Fairfax India new issue
« Reply #422 on: September 16, 2020, 08:10:26 AM »
BV at June 30 for FIH was $14.75. I updated my tracking sheet for FIH (see below) and their publicly traded equities are up about $90 million so far in Q3. Sept 30 BV could be in the $15.25-$15.50 range. This would bring BV to about 90% of where it was Dec 31 ($16.89).

Shares are trading today at $7.50, which puts current P/BV < 0.50
For reference, Dec 30 shares were trading at $12.90; P/BV = 0.75

So BV is down about 10% and the shares are down 40%. What gives? Their largest holding is an airport (BIAL). We may get some news on this front in the next couple of weeks as the Anchorage transaction is supposed to be completed by Sept 30 (if I understand things correctly).

In the age of Covid what is an airport worth today? FIH investors are answering very loudly: 'not very much'. FIH shares look very cheap and that is likely primarily driven by BIAL.

For those who think shares are undervalued the question is one of timing:
- buy today when you are pretty certain the shares are cheap but may stay that way for another 12-18 months (if vaccine's fail)
- wait for the catalyst to happen (vaccine's are announced) and possibly buy then

It is interesting to read what BIAL is doing. My guess is getting metro connectivity with Bangalore will make BIAL more valuable in the coming years and decades.

Here are a few articles:
 
Establish 4.95 km airport section of the ORR-Airport Metro: this Metro connectivity to BLR Airport, likely to be commissioned by December 2024,  would provide a sustainable and efficient mode of transport to the residents and business commuters from all parts of the city, facilitating the city to realise its economic potential and ease traffic congestion on the roads leading to the Airport.
- https://www.bengaluruairport.com/corporate/media/news-press-releases/public-private-partnership-between-bangalore-metro-rail-corporat.html

Summary of 90 Day Trend (June, July, August)
- https://www.bengaluruairport.com/corporate/media/news-press-releases/blr-airport-marks-100-days-of-successful-operations--since-resum.html

Cargo Hub
- https://www.bengaluruairport.com/corporate/media/news-press-releases/bial-opens-india-s-first-on-airport-public-bonded-warehouse.html

It will also be important to see whether OMERS renegotiates the valuation of the airport or goes ahead with 2.7B. The transaction is supposed to close by the end of Q3 2020.

ICUMD

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Re: Fairfax India new issue
« Reply #423 on: September 16, 2020, 08:38:43 AM »
The airport, being a regulated industry that's too important to fail, that all pandemics subside, it follows that any impairment is temporary.  People will fly again. Bangalore population is growing. Covid numbers will abate in 6 mo to 1 yr. Volumes will reach pre covid levels in 2 yrs.  The impairment will be shed when a large buyer sees the underlying value bidding up the share price. 
FIH.U TCEHY, IFFNY, BRK.B

petec

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Re: Fairfax India new issue
« Reply #424 on: September 16, 2020, 09:30:48 AM »
The airport, being a regulated industry that's too important to fail, that all pandemics subside, it follows that any impairment is temporary.  People will fly again. Bangalore population is growing. Covid numbers will abate in 6 mo to 1 yr. Volumes will reach pre covid levels in 2 yrs.  The impairment will be shed when a large buyer sees the underlying value bidding up the share price.

+1
FFH MSFT BRK BAM ATCO LNG IHG TFG

Viking

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Re: Fairfax India new issue
« Reply #425 on: September 16, 2020, 10:04:03 AM »
If the US$ is indeed at the start of a multiyear decline then this should be good for EM currencies. What has been a decade long headwind could become a multiyear tailwind.

bizaro86

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Re: Fairfax India new issue
« Reply #426 on: September 16, 2020, 01:07:06 PM »
BV at June 30 for FIH was $14.75. I updated my tracking sheet for FIH (see below) and their publicly traded equities are up about $90 million so far in Q3. Sept 30 BV could be in the $15.25-$15.50 range. This would bring BV to about 90% of where it was Dec 31 ($16.89).

Shares are trading today at $7.50, which puts current P/BV < 0.50
For reference, Dec 30 shares were trading at $12.90; P/BV = 0.75

So BV is down about 10% and the shares are down 40%. What gives? Their largest holding is an airport (BIAL). We may get some news on this front in the next couple of weeks as the Anchorage transaction is supposed to be completed by Sept 30 (if I understand things correctly).

In the age of Covid what is an airport worth today? FIH investors are answering very loudly: 'not very much'. FIH shares look very cheap and that is likely primarily driven by BIAL.

For those who think shares are undervalued the question is one of timing:
- buy today when you are pretty certain the shares are cheap but may stay that way for another 12-18 months (if vaccine's fail)
- wait for the catalyst to happen (vaccine's are announced) and possibly buy then

It is interesting to read what BIAL is doing. My guess is getting metro connectivity with Bangalore will make BIAL more valuable in the coming years and decades.

Here are a few articles:
 
Establish 4.95 km airport section of the ORR-Airport Metro: this Metro connectivity to BLR Airport, likely to be commissioned by December 2024,  would provide a sustainable and efficient mode of transport to the residents and business commuters from all parts of the city, facilitating the city to realise its economic potential and ease traffic congestion on the roads leading to the Airport.
- https://www.bengaluruairport.com/corporate/media/news-press-releases/public-private-partnership-between-bangalore-metro-rail-corporat.html

Summary of 90 Day Trend (June, July, August)
- https://www.bengaluruairport.com/corporate/media/news-press-releases/blr-airport-marks-100-days-of-successful-operations--since-resum.html

Cargo Hub
- https://www.bengaluruairport.com/corporate/media/news-press-releases/bial-opens-india-s-first-on-airport-public-bonded-warehouse.html

It will also be important to see whether OMERS renegotiates the valuation of the airport or goes ahead with 2.7B. The transaction is supposed to close by the end of Q3 2020.

Why would OMERS renegotiate? They get a free look at the upside, and FIH makes them whole with a bigger ownership if the IPO doesn't price out.

In many ways, the deal could be spectacular for them as written. If things stay slow for the duration of their option, they will end up with a bigger percentage of an irreplaceable infrastructure asset at a deep cyclical low price.

hobbit

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Re: Fairfax India new issue
« Reply #427 on: September 16, 2020, 02:35:30 PM »
BV at June 30 for FIH was $14.75. I updated my tracking sheet for FIH (see below) and their publicly traded equities are up about $90 million so far in Q3. Sept 30 BV could be in the $15.25-$15.50 range. This would bring BV to about 90% of where it was Dec 31 ($16.89).

Shares are trading today at $7.50, which puts current P/BV < 0.50
For reference, Dec 30 shares were trading at $12.90; P/BV = 0.75

So BV is down about 10% and the shares are down 40%. What gives? Their largest holding is an airport (BIAL). We may get some news on this front in the next couple of weeks as the Anchorage transaction is supposed to be completed by Sept 30 (if I understand things correctly).

In the age of Covid what is an airport worth today? FIH investors are answering very loudly: 'not very much'. FIH shares look very cheap and that is likely primarily driven by BIAL.

For those who think shares are undervalued the question is one of timing:
- buy today when you are pretty certain the shares are cheap but may stay that way for another 12-18 months (if vaccine's fail)
- wait for the catalyst to happen (vaccine's are announced) and possibly buy then

It is interesting to read what BIAL is doing. My guess is getting metro connectivity with Bangalore will make BIAL more valuable in the coming years and decades.

Here are a few articles:
 
Establish 4.95 km airport section of the ORR-Airport Metro: this Metro connectivity to BLR Airport, likely to be commissioned by December 2024,  would provide a sustainable and efficient mode of transport to the residents and business commuters from all parts of the city, facilitating the city to realise its economic potential and ease traffic congestion on the roads leading to the Airport.
- https://www.bengaluruairport.com/corporate/media/news-press-releases/public-private-partnership-between-bangalore-metro-rail-corporat.html

Summary of 90 Day Trend (June, July, August)
- https://www.bengaluruairport.com/corporate/media/news-press-releases/blr-airport-marks-100-days-of-successful-operations--since-resum.html

Cargo Hub
- https://www.bengaluruairport.com/corporate/media/news-press-releases/bial-opens-india-s-first-on-airport-public-bonded-warehouse.html

It will also be important to see whether OMERS renegotiates the valuation of the airport or goes ahead with 2.7B. The transaction is supposed to close by the end of Q3 2020.

Why would OMERS renegotiate? They get a free look at the upside, and FIH makes them whole with a bigger ownership if the IPO doesn't price out.

In many ways, the deal could be spectacular for them as written. If things stay slow for the duration of their option, they will end up with a bigger percentage of an irreplaceable infrastructure asset at a deep cyclical low price.
Because the ratchet clause only kicks in if the valuation goes below 1.3B in an IPO which in very unlikely even in a worst case scenario. Also OMERS 'upside' in a worst case scenario is capped -

"
It is intended that Anchorage will be listed by way of IPO in India by December 2021 using commercially reasonable
efforts, subject to regulatory approvals and market conditions. The third party investor will receive incremental
shares of Anchorage to compensate for the amount by which the valuation of Anchorage upon closing of the IPO is
below approximately 91.6 billion Indian rupees (approximately $1.3 billion at period end exchange rates). For any
IPO valuation lower than approximately 70.3 billion Indian rupees (approximately $1.0 billion at period end
exchange rates), the third party investor will receive no additional incremental shares of Anchorage
.
"

Given that all the publicly traded airports ( except china) are down 30-50% , OMERS can ask for a lower valuation around 1.8 - 2B
« Last Edit: September 16, 2020, 02:41:05 PM by hobbit »

bizaro86

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Re: Fairfax India new issue
« Reply #428 on: September 16, 2020, 03:16:40 PM »
Fairfax got 9.5  billion rupees ($134 MM) for 11.5% of Anchorage. The 2.7 billion is the implied valuation of BIAL, not the valuation FIH got for Anchorage. So the valuation of anchoeage is $1.165 B.

https://www.globenewswire.com/news-release/2019/12/16/1960880/0/en/Fairfax-India-Sells-Minority-Position-of-Anchorage-Infrastructure.html

FIH has to take Anchorage public at a 1.3 B valuation, or OMERS gets more shares. The embedded put option OMERS got as part of the deal was in the money when they wrote it. If you assume BIAL is less valuable now (likely) then it is more in the money.

valueinvesting101

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Re: Fairfax India new issue
« Reply #429 on: September 29, 2020, 11:47:55 AM »
Fairfax India Announces Intention to Make a Normal Course Issuer Bid

period commencing September 30, 2020 and ending September 29, 2021, of up to 3,500,000 Subordinate Voting Shares.

Fairfax India may purchase up to 15,429 Subordinate Voting Shares on the TSX during any trading day. It will take around 225 days to purchase close to 3.5 million shares. Repurchases could be around $21-30 million. Less than 0.3% of current market cap. Seems insignificant except to signal cheap price.

https://www.fairfaxindia.ca/news/press-releases/press-release-details/2020/Fairfax-India-Announces-Intention-to-Make-a-Normal-Course-Issuer-Bid/default.aspx