With the global downturn, and the NZ tourism industry hit hard, contrarian investors might see AIA as a buy right now. Especially with the AIA share price being so close to the Net Tangible Asset (NTA) value, it’s easy to view this as a case of “buy some property and get a NZs largest airport business free with your purchase”.
But here’s why I am not so confident that AIA is a screaming buy right now:
- Property prices are set to tumble, which could deliver a significant blow to AIAs NTA.
- AIA have recently announced a Share Purchase Plan (SPP) valuing shares at $4.66 each, which is over a dollar discount to current value. Historically share prices typically follow the SPP price down, as opportunistic traders buy stock and are happy to sell at any price above their buy price to make profit, driving the price downwards.
- Finally, because lists are always nicer when there are 3 items, the NZ government have recently suggested that travel into NZ will likely remain locked down for months to come*. This will not have a positive effect on the share price.
*”…[Jacinda Ardern] reiterated that New Zealand would not be coming out of level four early and border restrictions would be in place for ‘a long time to come’…” Source: https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12324565