Norwegian airlines, Company evaluation and long-entry strategy

31 de mai. de 2020

ABOUT
- Low cost airline company that offer nice and comfortable, cheap flights to (especially) Europe and Worldwide destinations.
- Adapting Bitcoin as accepted payment from August.

MANAGEMENT
- One of two major airlines in Norway.
- Been taking a substantial beating during the Coronavirus crisis, risking bankruptcy.
- Change of management last year. Previous management took a lot of irresponsible
expansion risks. Current management is more responsible and have a lot of experience.
Continuous restructuring since takeover.
- Company saved through converting bonds recently, lowering the debt/equity ratio
although the ratio is still high. Converting-action had the company meet loan requirements
set out by the Norwegian government. Now set to survive and hopefully thrive as boarders open.

BALANCE SHEET
- Total Assets - Total Debt = 20.965 B
- Market Cap = 11.542 B
- Price to Book ratio = 0.1535 (in comparison - other airlines: SAS = 1.0348, LHA = 0.4604, UAL = 0.6294, DAL = 1.0739)
- Price to Sales ratio = 0.118 (in comparison - other airlines: SAS = 0.0919, LHA = 0.1276, UAL = 0.1736, DAL = 0.3565)
- Debt to Equity ratio = 14.8798 (in comparison - other airlines: SAS = - 24.6038 LHA = 0.9780 UAL = 2.4877 DAL = 1.6054)
- NOTE: Total debt of approximately 10.0 B has been converted from bond debt to stock shares and is reflected in the Market Cap
noted above, however it is not reflected in the Total Debt since the conversion will not be visible until the 2020 Annual Report.

RISK FACTORS
- Bankruptcy a lot less likely, but may still be possible if the crisis stretches out for a while.
- Total Assets value probably does not reflect actual value if many airlines go bankrupt at the same time since demand for
assets will fall, especially if travel restrictions continue.
- Price is volatile with a one year beta of 2.0667.
- Company is highly leveraged which obviously makes this investment risky, but this will likely be reflected in the profits.
Norwegian Airlines reached its all-time-high back in 2015 with a price of NOK 220 which means that the current value represent
a shave-off of 98.4 % since then.
- Human psychology of Norwegian small scale (private) investors represent a significant contribution to price fluctuations.

VOLUME
- Recent PUMP-UP in volume on the daily (idea post) and the monthly chart (below) signals a massive ramp up by institutional investors.
As you can see, the monthly volume is HUGE in the context of volume history since the start in 2004. We have never seen such wild
volume. CAUTION: wait and see if this is a PUMP-UP-SIGNAL or a WARNING-SIGNAL.

Monthly volume:


TRADING STRATEGY
- The price has been falling on this volume, although not significantly. In comparison, the price fell by approximately 88.1 %
due to the coronavirus crash.
- Wait and see what happens with daily, weekly and perhaps monthly indicators. If parabolic SAR dots start supporting an upwards trend
and we see a shift in configuration of the Exponential Moving Average ribbon, it will be a good time to get into a long position and we can
consider the recent volume pump up to reflect a charge signal.
- Get out if SAR and EMA-ribbon switch direction in momentum, also pay attention to the resistance- and fibonacci-levels.

Macro resistance-levels and -zones to watch out for:


Macro fibonacci-levels:


I you have any questions, feel free to ask me in the comments.

Cheers,
Navigating Shifting Landscapes