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Equity Research Report

12 Jun

I went to my “bravehost.com” website. I  felt that my predict was not bad after I saw my previous assignment in 2008 as the below .hahaa…

 

Air Canada Corp. (AAR Corp—NYSE)                                                          Target price (1 year): $16.70 USD

Quebec, Canada Current (10-Oct-2008): $12.22 USD

Industry: Airlines Return ( 1 year): 36.67% Risk: Mid

Crude oil demand declined in the middle of a worsening economic outlook caused by a global credit crisis. Investors concerned a weakening global economy is causing businesses and consumers to cut back on fuel consumption. The crude oil prices are going to decreasing and their prices would be between $65 and $75 during 2009. It is a good news for Airline industries. The stocks’ return of the airline industry will take a slight positive as oil prices are moving down. The airline industries’ profits have affected by the high fuel prices in recent years.

                       

The Canadian Airlines industry’s volume is expected to rise to 67.2 million people by the end of 2011, this representing a total average growth rate is 7% for the 2006-2011. In 2011, the Canadian airlines industry is forecast to have a value of $19.3 billion, and have a volume of 67.2 million passengers. The Canadian airlines industry’s volume includes 63.5% domestic passengers’’ accounts and 36.5% international passengers’ accounts. The Canadian currency has depreciated recently that would lead to Canadian airline tickets’ sales increase. Airline Industry is highly price sensitive. The majority of customers try to find the lowest prices of airline tickets for their trips.

Air Canada together with its regional airline subsidiary, Air Canada Jazz, provides scheduled and charter air transportation for passengers and cargo to more than 150 destinations, vacation packages to over 90 destinations. Air Canada mainline provides services directly to over 20 Canadian cities, 30 destinations in the US and over 50 cities in Europe, the Middle East, Asia, Australia, the Caribbean, Mexico and South America. Air Canada’s extensive global net work, schedules and customer services are enhanced through its membership in the Star Alliance network with Lufthansa, SAS, Thai Airways International, United Airlines etc and Star Alliance carriers serve airports in over 130 countries.

Air Canada provides a full service online travel site offering low prices and one-stop access to 450 airlines, 53,000 hotels and 52 car rental agencies.

There are numbers of factors that could cause the stock price to come short of our expectations. The leading one is the market prices of crude oil. If the crude oil price is creasing above $100, it will reduce the Air Canada Corp’s net earnings.

The second one is that the world economy is in a deep recession period now. If the deep economic recession continues in the next year, the demand of airline tickets would be decreased during the next year. It would affect the Air Canada Corp’s revenues and net earnings.

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Posted by on June 12, 2012 in Finance

 

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