ANA Holdings (9202.T): At P/E 10x, Bargain Opportunity or Value Trap?

"The quickest way to become a millionaire is to start as a billionaire and buy an airline." - Warren Buffett.

Please note: This analysis is for informational purposes only and is not intended as investment advice. Mention of specific stocks is not a recommendation to buy or sell any securities.

"The quickest way to become a millionaire is to start as a billionaire and buy an airline." - Warren Buffett.

This is one of my favorite Warren Buffett quotes, just because of how accurate it has been for decades, and ANA Holdings (ticker: 9202.T) seems like a perfect case study.

The Japanese TOPIX index has absolutely crushed ANA Holdings in the past 5 years

Despite Japan’s booming inbound tourism following the Covid pandemic, ANA’s stock has seen a negative five-year gain of -0.36%. Airlines are notorious for capital intensity, cyclical risks, and razor-thin margins, but ANA has still rapidly increased profits and is now trading at a P/E of 10x!

With ANA facing significant fleet renewal costs, rising operational expenses, and external uncertainties, is this an overlooked bargain,or proof that Buffett was right all along?

In this analysis, I’ll break down ANA’s performance, future prospects, and how it stacks up against JAL and Singapore Airlines to find the best value investment.

Airline Industry Lingo

I did a lot of study for this stock analysis! So for you to better understand the key metrics and airline-specific terminology, here’s a quick breakdown:

• Available Seat Kilometers (ASK): The total number of seats available multiplied by the kilometers flown.

• Revenue Passenger Kilometers (RPK): Measures actual revenue-generating passenger travel by multiplying passengers flown by distance traveled.

• Cost per Available Seat Kilometer (CASK): The airline’s total operating cost divided by total ASK. A lower CASK indicates better efficiency.

• Yield per Revenue Passenger Kilometer (Yield per RPK): Revenue per passenger kilometer traveled. A higher yield indicates stronger pricing power.

• Load Factor: The percentage of available seating capacity that is actually filled with paying passengers. A higher load factor means better aircraft utilization.

• Fleet Utilization Rate: A measure of how often aircraft are in active service, affecting profitability.

Table of Contents

1. Summary

2. Company Overview

3. Investment Thesis

4. Valuation Analysis

5. KonichiValue Score

6. Conclusion