Monday, July 27, 2015

Aquis: the timeline titans

Have been quiet recently on the Friendly Fung Family (FFF) and Aquis. So after some recent distractions updated today developments re the backdoor listing on ASX of the Aquis empire and amazing investment opportunity offered by this investment.

My previous post noted that Aquis seemed to have a problem with timelines: Aquis Entertainment lost in Canberra fog?

I must update this in detail. Aquis have since splurged on a high profile sponsorship of the NRL Gold Coast Titans. Thousands of billionaires have been queueing up to back this sponsorship but were seriously disappointed when they were beaten to it by the FFF.

Never minds the chart looks fantastic:

However. DIS (aka Aquis Entertainment) remains suspended today. A replacement prospectus for the capital raising was lodged last week. This expired Friday. DIS lodged notice of extension only today. There were reasons which will be referred to the video referee at Loose Change.
Given that DIS last closed at 19c after languishing well below that and the capital raising is at 20c one can only presume that Aquis Entertainment has not been knocked over in the rush or it would have been quickly closed? 
Who knows? When it comes to repetitive underperformance on their own timelines, Aquis make their Gold Coast Titans look like premiers!

NT - The Joke State

Predictably, the Northern Australia white paper hype has seen another push for the NT to become a state by 2018. Bob Gosford nails this on his Northern Myth blog at Crikey: Joe Hockey was right – Adam Giles’ push for NT Statehood is a joke
Just in case you might believe this tosh the NT will NOT be getting Statehood by 2018 or anytime soon after. 

Gosford has previously noted:
As [Nicolas] Rothwell notes, the tax-payers of the Australian south-east fork out around $4 billion a year to keep the NT running. Divide that number by the 220,000 people in the NT—-about the population of your local shire council but without the productivity and contribution to GDP—-and the figure is around $18,000 per head.

At least they will have a catchy vehicle number plate slogan all ready to go.

Thursday, July 23, 2015

Adventure Festival boosts Airport

Passenger numbers grew strongly in June with domestic up 6.3% and international up 16% on the previous year. The airport attributed this to a later date for the Adventure Festival with participants arriving in June whereas arrivals the previous year started in May.

School holidays also started a few days earlier and the domestic growth figure also comes off the back of a rare negative growth month in June 2014. The big international growth number while encouraging also needs to be kept in perspective following the slump throughout 1H 2014.

The good domestic growth doesn't reverse my cynicism about the most recent HTW domestic trend growth of 8.2% with only a single monthly number above that or even close since January 2014, although this trend hasn't been updated since their April report.
Elsewhere both Sydney and Auckland airports reported positive international trends in June. Auckland was particularly impressive with international growth in June of 7.2% driven by China and the USA. Their Queenstown Airport numbers are also growing very strongly.

Tuesday, July 21, 2015

The regional rental gap

A few media reports lately on rental trends from property research houses but can't see why the quarterly data from the RTA based on actual new bonds lodged isn't the best data. The June quarterly data for the NQ cities shows a very different story for each over recent years:

In the three largest rental categories Cairns has opened up a significant gap over its southern neighbours in all as a relatively expensive place for rental housing.

Meanwhile, the real estate perma-bears at Macrobusiness have an interesting analysis and warning on the previously high flying Darwin market as the $34 billion Ichthys LNG Project approaches completion: Sell Darwin housing now! ($)
Look out below!

Sunday, July 12, 2015

Queensland's debt: financial engineering or transparent financial reporting?

If you hadn't noticed local Treasurer Curtiss Pitt has been leaking like a dunny with a faulty faucet ahead of his first budget. The big debate there is now the transfer of debt from the general gummint sector to the GOC's (government owned corporations).

Gene Tunny has been highly critical of this: Accounting trick wouldn’t improve Qld Government’s real financial position

Gene is absolutely correct on that. It does nothing for the overall financial position or interest payments. This has been wrongly reported by some media. It has though also been a 'source of funds' for previous administrations of both colours.

We could go back to basic Miller Modigliani economic theory. The value of a firm doesn't depend on how it is sliced. I recall an interview with Merton Miller. I cant find a link but it went like this:

Q: Can you explain your theory simply.
A: Yogi Berra was asked how he wanted his pizza cut, in quarters or eighths. He said cut it in eighths he was hungry today.
Q: You won a Nobel Prize for that?
A: We proved it rigorously.

There is some value IMHO in distinguishing between different types of government debt. Curtis has said that these GOC's would run with that level of debt in the private sector. Maybe so but is that appropriate? Should the public sector be taking the same risk as a private choice in the private sector?

There is a political issue beyond either the private or economic. During the last election I queried the local Greens candidate on why they were opposed to asset sales of coal power stations when they didn't actually see these as assets anyway. I think the response was that they were opposed because that would make the "assets" easier to shut down ..... in which case they are not "assets" at all.

Sunday, July 5, 2015

Pledging allegiance to Team Rupert

Opinion contributions this week from our newsroom elite:

"Green groups are also citing ocean acidification caused by carbon emissions as a threat to the Reef, but some scientists say just one volcano can spew out more CO2 in a day than mankind has in 250 years." - Cairns Post deputy editor Julian Tomlinson

"This week's unfolding Greek financial tragedy should be a cautionary tale for Queenslanders that relying on growth to fix government debt is a reckless response" - Courier Mail state political editor Steven Wardill

Would any further comment or discussion to refute either of these misguided (or even just arse-about wrong) statements be superfluous? Why bother to waste time poring through such as science or economic journals, or even recent IMF reports, to provide informed discussion and links to creditable sources when one can just go straight to the knowledge bank at Team Rupert?

A deeper understanding of the Euro crisis as Greece v Germany is provided from Monty Python:

Sunday, June 21, 2015

Employment cycles and exchange rates

A post at Conus on the most recent regional employment data: Cairns employment growth slows; unemployment rate up on back of female jobless

In response to some comments there I thought I would repost this graph of the unemployment rate differential between Cairns and Queensland with a TWI exchange rate overlay.

The early years of the series where the cairns unemployment rate was below Queensland (blue) was also a period of significantly weaker exchange rate (red) and weak commodity prices particularly coal. However I think I would probably be wary of drawing strong conclusions from any apparent correlations here.

Saturday, June 20, 2015

Bullshit. Nonsense. And Cairns Airport traffic numbers.

Well, the Cairns Airport have updated their traffic numbers for May and am sticking by my scepticism of the HTW CairnsWatch trend on domestic traffic. However the story was a big jump in International passengers for May up 27.4% on the previous year. The Airport even called this a record. It isn't. Yes, I am using the airports own numbers. Never mind sure the Cairns Post will be able to turn it into a headline.

The real record was that May 2014 had been a record low for currently available data going back to July 2004 and probably for a long long time before that. However the recovery in International trend is looking sustainable with the Silk connection to Singapore also commencing at the end of the month. In context best to look at traffic rather than volatile monthly growth:

A turnaround in the very early stages from a low base but still a way to go. Monthly growth with 12 month moving average for domestic and total (ex transits). International now a contributor rather than a drag on growth at least:

I await the next CairnsWatch with interest and can only presume any domestic "record" trend well above 5% should be easily identifiable as nonsense.

Source: Cairns Airport

Monday, June 8, 2015

Say What?

The latest CairnsWatch from Rick Carr at HTW popped into the inbox on Friday afternoon. Rick reckons the trend rate of growth for domestic passengers at Cairns Airport is:
Over the period from April 2014 to April 2015 domestic passenger numbers have shown an 8.2% trend increase.  
You can see my previous posts on Airport traffic in recent months:

 Airport growth continues in March; International recovery continues at airport

In my comments on the February numbers I quietly questioned the CairnsWatch trend numbers on this with reference to Chinese New Year. With late release of the March airport numbers this latest CairnsWatch provides a further trend percentage boost after another two months which I just can't stack up with any underlying data from the Airport.

I have checked the CairnsWatch archive but just can't make sense of the reported monthly variation in the trend numbers which did a massive jump in a month between January and February. I don't want to be critical of Rick who is a lovely guy but some of his trend numbers just don't work for me. I'm sticking with my numbers which are also not dissimilar to reported numbers from Cairns Airport and stakeholder Auckland Airport.

Reported in the Cairns Post: Airport and building approvals give rise to Cairns’ economic turnaround

Monday, June 1, 2015

A China fade for arrivals

It has been a while since I've had a look at the overseas arrivals data. After some changes last year there have been problems compiling the data and the ABS has only now caught up to January. Pete Faulkner at Conus has been diligently following the progress: Arrivals up but the China boom is waning

The trend for Chinese arrivals looks to have weakened quite significantly in recent months ahead of the lunar new year period. ABS do a seasonal adjustment for the lunar new year so what I have done is overlay all three series.

This shows just how significant the Chinese new year season is for tourism and the seasonal adjustment from the ABS can be huge. The faint dotted line there is a 3 month moving average thrown in to smooth out the seasonal variation in the original data a bit where the new year period overlaps months. Worth watching whether recent trend weakness is sustained or just a flat period before the new year and how it progresses after that period. The previous weak period in 2013 which shows up mostly in the seasonal data was the regulatory changes around package tours.
Meanwhile the latest data has allowed me update a favourite graph of the state where most time spent for visitors. This is all short term visitors which would also include such as business and education.


Oh no! Surely Victoria can't really be about to overtake Queensland?

Tuesday, May 26, 2015

Aquis Entertainment lost in Canberra fog?

Last month I posted on the manoeuvre by the Friendly Fung Family (FFF) to backdoor list the Canberra Casino on the ASX via Discovery Resources: Fung listing through the backdoor for Aquis

Having acquired a minimal holding in Discovery (ASX:DIS) of 5,000 shares with a current market value of $525, which should be adequate to imminently turn me into a billionaire casino mogul, I thought I should check on how things were progressing. There has been no further news at all from Discovery since the April 17 trading halt and announcement except for their standard quarterly cash flow report. This doesn't seem consistent with the indicative timeline in the announcement:

Particularly noted here is the indication that after this April 17 announcement they could provide an independent expert's report as soon as late April. Perhaps they had Pat Flanagan pencilled in for that?

My calendar says it is now late May 2015 with no sign of any prospectus, meeting, or even notice thereof. Well they did say it was indicative! Oh no, don't tell me it's the conditions again?

Monday, May 25, 2015

Reef Casino AGM

Reef Casino AGM was today. Somewhat disorganised after belatedly downloading the appropriate documentation for my small super fund holding, and with rainy weather, I drove the few blocks down Abbott St to the Casino.

I approached the lift with an elderly gentleman reliant on a walking stick also carrying his AGM documentation. However the lift would not accept L2 which was the meeting venue. Thankfully the open doors function was operational and spared me from being stuck in a lift with an elderly gentleman reliant on a pacemaker. Casino staff to the rescue. Just go to L1 and walk up the stairs. This took some time for the elderly gentleman who made it just in time for the meeting.

The meeting. Corporate AGM's have a reputation and this was no exception. A nearby gentleman started snoring very early in the Chairman's address. A gentleman unitholder asked if RCT had any debt (it's in the accounts dickhead) and stated that he was confused by changes in his tax statements.

Director's election and Gary Mauric standing against Queensland heroes DeLacy and Haire failed to even show up. Haire was wise and said not much. DeLacy chose to delve into the definition of an independent director which I may come back to with some disagreement. Keith insisted that independence was a state of mind and pointed to his head thereby demonstrating all required skills. Anyway, both independent directors were re-elected on the vote of 70% majority shareholders Accor and Casinos Austria so that's all good.

In such circumstances it is best to avoid direct confrontation and engage over tea and bickies. DeLacy was overheard engaging a couple from Noosa defending the viability of Reef regardless of Aquis. The Noosa couple were insistent to Keith that they wouldn't want anything like Aquis near them.

Meanwhile I had an excellent engagement over coffee with Reef CEO Allan Tan. In confidence all I will say is that this conversation did nothing to change any opinions previously expressed here at Loose Change related to Aquis and probity.

Leaving the meeting I encountered a Wildlife Dome worker attempting to access her workplace on the upper level. I explained to her the lift problem. AGM attendees were also given a free car park exit ticket. The ticket didn't work.

Monday, May 18, 2015

International recovery continues at airport

There were further positive signs for international traffic through the Airport in April which was up 21.8% on April 2014. This was attributed to the new Jetstar Bali service and 14% growth on flights operating in both April 2014 and 2015 (Auckland, Guam, Hong Kong, Osaka, Tokyo). While that growth number sounds impressive and is positive we do need to consider that it comes from similar double digit declines in the early months of 2014 so really only recovers the 2013 position. Consequently we should expect some good international growth numbers to continue and hopefully become also become less volatile.

Domestic continued consistent growth at levels below the recovery a few years ago but still generally in line with or above average growth at the major airports.


International is only around 12.5% of domestic, which remains the dominant driver, but is starting finally to show signs of a positive contribution to total performance.

Source: Cairns Airport

Saturday, May 9, 2015

Auction schmauction

This weeks real estate advertorial at the Cairns Post features a glowing endorsement of auctions: Auctions all the rage in Cairns property market
RE/MAX Cairns Real ­Estate Services owner Tony Williamson attributed the booming trend to television.
“More and more shows are demonstrating how an auction works, from Storage Hunters and Antiques Roadshow to The Block, so buyers are learning how to compete at them,” he said.
“In any market in demand, auctions are by far the best way to sell, because you still get to set the reserve and if there’s enough competition among buyers then we can push ­bidding above that.”
He said while a majority of sales in southern capitals were by auction, in Cairns about 10 per cent of properties sell under the hammer, but he said his agency was “trying to steer the ship around” with bulk auction events like one he held recently involving 14 properties that attracted a full house of bidders and spectators.

A majority of sales in southern capitals being auction doesn't sound quite right? This is a bit dated with numbers from 2011 and before the recent surge in Sydney but auction numbers then varied between 3% and 26% with higher rates towards the inner city: Fewer Sydney vendors selling by auction: What percentage of homes sold under the hammer? A regional breakdown: APM

I expect auction rates would likely have increased in Sydney since then so I also threw a tweet query on auctions to real estate identity and enemy of the property seminar spruiker Neil Jenman, who is a critic of auctions:

Neil Jenman@neiljenman 2 hours ago
NONSENSE! To prove it: ALL Cairns sellers can have my book FREE (May only)! See why AUCTIONS = WORST way to sell. 1800 1800 18.
Yes, it's a Loose Change exclusive offer from Neil Jenman!
The most recent Remax bulk auction in Cairns I am aware of was April 28 at Dunwoodys. This was of interest as there was a small unit to be auctioned in the old Park Regis near the hospital which is nearby my own salubrious bohemian unit building. I didn't go to the auction as a neighbor who also has an investment unit in the Park Regis was attending. Feedback was that she stayed for 8 auctions of which one had sold prior and only one sold at the auction. The Park Regis unit was passed in on a single bid at $101k (reserve believed to be $200k) and is now on the market at "Low $200'000s".
That all went well then  o_O

Note: There is also a handy guide to selling your property at Choice.

Sunday, May 3, 2015

The Narcissist Twins

#1 Gavin King
Cairns MP Gavin King said he had not ruled out taking legal action against the person who posted a picture on Facebook of his car parked in what appeared to be a disabled parking space at The Pier.
#2 Rob Pyne
GOODBYE: Watching the Edward Snowdon movie in town tonight makes you wonder if it really is all beyond the capacity of any individual to ‘make a difference’. Clearly the government, corporations and the media control the place with an iron grip. The Cairns Post is sure to do another job on me tomorrow and they may as well be owned by the LNP. Between the media, political trolls and apparatchiks I am not sure one can make a big difference. No more social media from me until I can make sense of it.
Poor Cairns  o_O

Friday, May 1, 2015

Airport growth continues in March

A late release this month for Cairns Airport statistics for March. Domestic was up 4.9% on March 2014 and International up 2.8%. Monthly Y-o-Y growth for the last five years looks like this with a 12 month moving average:

International only comprises about 10% - 15% of the total. Commentary on the volatile international routes remains positive and include the launch of Jetstar services to Bali and resumption of seasonal Air NZ flights to Auckland. Comparable flight routes with 2014 to Guam, Hong Kong, Osaka and Tokyo were up a combined 13%. There is also a comment that domestic growth was among the highest at the major airports.

I haven't looked for any available stats from Melbourne or Brisbane but Sydney Airport also reported a very strong March. Domestic was up 4.2% and International 8.9% which were both well above YTD performance. Commentary there cites effect of an earlier Easter, cricket world cup, and a 38.8% increase in Chinese passengers on the tail end of the lunar new year celebrations.

Note: The most recent CairnsWatch preceded these latest numbers but had previously estimated trend Airport growth in February at 7.7% which was up from 2.1% the previous month. I just can't figure that most recent number. The only months with growth rates above that in recent years have related to the Chinese lunar new year month and the 2012 eclipse. I blame the moon gods & godesses!

Thursday, April 30, 2015

Context on female participation rates

Following the last post and a query this is the long term female participation rate in context. This is the difference between the male and female trend participation for Australia and Queensland since the ABS series began in 1978. Cairns is the SA4 area since 1998 from the Conus Trend.

Cans = Conus Trend

Cans. Previously a city of workforce female participant Amazons reverting to the mean? Just for you Leigh Dall'Osto and thanks for provoking the idea!

Wednesday, April 29, 2015

Do you see what I see?

A recent post was noted at Conus on a favourite topic: A look at the gender split in Cairns’ jobs market .

This related to a recent post by a former politician and alleged journalist (or should that be the other way around) at Cairns Now: Is it getting harder for women to find jobs in Cairns compared to men?
If you're female and looking for a job, Cairns was a tough place to be in March. While economists prefer the trend rate when it comes to employment statistics, increasingly the month of March is showing more women are giving up looking for jobs in Cairns with last month's participation rate at its lowest point for women than at any time in the past decade.
There are some issues I think with this analysis and conclusion. I will ignore the dodgy king-parrot-nomics methodology of comparing the raw data female participation rate for the single month of March over the past decade. Lets start with the Cairns SA4 participation rate:

The decline in the Cairns participation rate has been a concern and significant relative to broad declines both nationally and in Queensland over the period. Not without irony the ex-member for Cairns only seems to have discovered this problem since becoming an ex-member.
The gender split in the Cairns labour force data has been a subject of interests and previous posts at Loose Change. Pete has kindly forwarded his Conus Trend gender data and I have overlaid this to update my existing graphs. This is the spread between the male and female participation rates for the series:

Blue = Conus Trend; Red = 12 month average
The male participation rate is typically higher. The early part of the series here shows part of the structural trend increase over several decades in female participation. The trend spread has been relatively stable and ranged sideways over the past ten tears which is also the period chosen by Cairns Now. The green line is the ten year average. The current numbers are sort of very average. The trend spread has been just below that average and very stable for some time.
Diversion: Note that as we break down data into sub-sectors it becomes increasingly more volatile even on a trend or moving average basis. The ABS data comes flagged with sample size warnings. The combined data for Cairns is sometimes flagged. The subsector male-female data is only sometimes not flagged. Also note that the trend data can appear more volatile at times than the lagging 12 month average but is also a better indicator of any turning points. I think Pete has posted on this before at Conus.
I find it difficult to justify that there is some kind of significant relative deterioration in the female participation rate in Cairns. Lets look at the unemployment rate differential:

Blue = Conus Trend; Red = 12 month average
Clearly there was a period around a year or so ago that was somewhat unusual when the two rates split with a low female unemployment rate diverging and opened up a wide spread against the male rate. Yes, participation rates can play a role in that. I think at the time I posted that this threw up more than usual caution for me on the sample. Lets look at female employment as a proportion of total employment:

Blue = Conus Trend; Red = 12 month average
As Pete has noted at Conus, the trend female data has shown some deterioration since last July. However that also comes off previous relative highs and remains in line with or above average. Again, some of those monthly raw data numbers in 1H 2014 throw up sample concerns. Could the proportion of female employment really have been 49% in May 2014?
Lastly, the male and female employment estimates for the series. In this one the Conus Trend is a dotted line and the solid line a 12 month average as used by the Qld Gov't Statistician.

Blue = Conus Trend; Red = 12 month average
I can't see any basis for comparative weakness in female employment here. What I see, or think I see, looks more to me like signs of a reversion to the mean in some of the  recent data.

Monday, April 27, 2015

Regional rental trends updated

RTA have updated their rental data for the March quarter based on new bonds lodged. The same trends remain apparent with continued weakness in Mackay taking rentals there below both Townsville and Cairns. Cairns continues to establish its position as the high rent capital.

A comparison with Darwin may also be interesting to watch with some warning bells starting to be rung for that property market.