The announcement of the opening of the transtasman bubble on April 19 has been followed by positive stories of Kiwis rushing to book flights with Air New Zealand.
But one investment firm remains convinced that it will take the return of long-haul travellers to bring the national carrier back to profitability again.
Jarden analysts Adrian Allbon and Andrew Steele reiterated a sell rating on the airline stock this week, saying that while the transtasman announcement was an "important milestone" in the normalisation of Air NZ's operating environment they expect the company to continue to be a heavy loss-maker this financial year.
"Our published forecasts assumed that the bubble would open up at the start of July, as such this news likely provides a modest incremental uplift to AIR's FY21 earnings.
"That being said, we expect AIR to face stiff competition from Qantas on transtasman routes and more importantly we continue to expect the company to be heavily loss-making in that year, our current forecast is for a PBT [profit before tax] loss of -$489 million and to remain loss-making until long markets reopen."
However, they say the announcement will likely support market expectations that Air NZ completes its capital raise by June 30.
The airline signalled it would undertake a capital raising by mid-year
in February but has given little in the way of any details since.
"We believe the completion of this capital raise is the minimum necessary first step in building confidence in the recovery of AIR's investment case. While the company
has suspended its cash burn guidance of $45m-$55m / month, we continue to expect that AIR will need ~$1.2 billion of new equity to recapitalise its balance sheet."
That is lower than the $1.5 billion the analysts estimated the airline would need in February but would still be one of the biggest capital raises the New Zealand market has seen.
The pair have a target price of $1.15 on the shares which closed at $1.81 on Wednesday.
Three stocks that are expected to be indirect winners from the bubble include Sky City Entertainment Group, Tourism Holdings and Kathmandu.
Roland Houghton, investment analyst at Milford Asset Management told Australia's Close of Business that outside the obvious airlines and airports the bubble would benefit accommodation providers, restaurants, certain parts of retail and car rental.
"One company that would benefit is Tourism Holdings that rent out campervans in New Zealand."
"We would expect it to see a pop in demand for their business."
Houghton said investors looking to jump into travel-related stocks should balance up the exposure of the company to leisure and business travellers and both transtasman and global travel.
"Those that have really specific Australia/New Zealand tourism exposure, they probably have the most to benefit from this transtasman bubble opening up, particularly those in New Zealand because New Zealand is a net exporter of tourism - a Kiwi spends more overseas than someone who travels to New Zealand. That is not the case in Australia."
Jarden's Allbon and Steele say the bubble should underpin a stronger margin recovery for Sky City's Auckland business via its hotels, food & beverage and the Sky Tower assets.
"On the flip side, we may see some leakage from high-value domestic players now having the wider choice set to game at Crown casinos or those run by Star Entertainment Group."
They maintain a buy rating on Sky City with a target price of $3.40.
But Houghton was less convinced that Sky City would benefit from the bubble.
"An Aussie isn't really the demographic that goes to a Sky City. Presumably you would be staying in Auckland central which is generally not where people stay when they are going on a holiday. You are if you are going there on business or to gamble specifically.
"The holidaymaker we expect to travel to New Zealand from Australia is not looking to go to Sky City downtown."
Allbon and Steele say the bubble is also an incremental positive for Kathmandu with the sale of travel products expected to pick up.
"In addition, we believe transtasman travel likely increases demand for winter product lines and as such partially de-risks the key winter sale period."
My Food Bag
A second broker has initiated coverage of My Food Bag after coming out of the black-out period required by firms involved in a float.
Forsyth Barr has given the meal kit delivery firm an outperform rating with a target price of $1.85 - in line with its IPO price.
Analysts said the company was attractive based on its strong cash generation, a demographic trend towards convenience, future growth opportunities and its discounted trading price.
"While the product premise appears similar to an online grocer, we believe meal kit providers are a lifestyle product and offer a value proposition to the customer beyond convenience and price, with room to further disrupt the traditional grocery and food service markets."
Last week Jarden, which also acted as a joint lead manager alongside Forsyth Barr and Craigs Investment Partners, gave the company a buy rating with a $1.90 target price.
The Jarden and Forsyth Barr valuations come in stark contrast to the $1.32 price put on the food delivery business by investment research company ShareClarity a few weeks ago.
ShareClarity released its valuation in an email sent to Jarden Securities Direct clients but then suspended its coverage hours later after it emerged Jarden was in the process of buying ShareClarity.
Oliver Mander, chief executive of the New Zealand Shareholders Association said any action that reduced available research for investors was concerning.
"With three major brokerages acting as lead manager for the recent My Food Bag offer, and subject to blackout restrictions, ShareClarity has provided one of the few valuations currently available to investors.
"With Jarden's impending investment in ShareClarity, there is a risk of this situation recurring, and even less research being available for investors in future."
Craigs Investment Partners has launched a rating system covering environmental, social and governance factors for the stocks most widely held by its clients.
The rating out of five gives an equal weighting to the three categories and then brings them together to give an overall score.
Roy Davidson, research analyst at Craigs who undertook the report with colleague quantitative analyst Vanessa Stevens, said ESG was a massive area of growth in the investment industry.
"More and more of our clients are asking for it. So in one way it is to meet that demand. We want to use this as a tool to improve the practices of some businesses. To help show to them what areas investors, particularly our investors see as important."
Of the 15 New Zealand listed companies it has so far rated most have come off pretty well, with Meridian, Mercury and Spark all scoring a five out of five.
Restaurant Brands received the lowest rating at 2.8. Davidson the low rating for Restaurant Brands was mainly driven by a lack of disclosure.
"They provide some disclosures for the NZ business but they operate in Australia, Hawaii, mainland US now, so more information about those businesses where the operating environment, especially in the USA, is quite different to New Zealand, would be good, especially from a supply chain point of view."
Davidson said there were other things the business couldn't help. "They are fast food operator - that is just the way it is."
But he said Just because a company was in a bad industry did not mean they couldn't get a good score, pointing to Australian packaging firm Amcor which scored a 4.2.
"They have pretty sophisticated targets and disclosures to get to a better place which isn't perfect but is better so they score a lot better.
"It is not purely about you are bad, you are good, it is much more nuanced than that."
Even the Oracle of Omaha isn't getting it right. Warren Buffet's investment company Berkshire Hathaway scored a lowly 1.3.
Davidson said the company did not have any ESG framework at all, despite its investors asking for it.
"There is no consideration for sustainability factors in their investment process. They don't disclose anything. Investors have been asking for ages for them to disclose something. But they don't believe it is their place to do that or their job."
So far the analysts have rated about 50 companies in New Zealand, Australia and the US but will look to expand that to about 200.