ABWTQ - China Yuan Revaluation
I want to once again re-iterate the point that as the Canadian Dollar rises (relative to the USD) -- ABWTQ's operating earnings will fall (they say roughly 22 million for every 1 cent rise), but ABWTQ fails to disclose that they receive "foreign currency translation" gains on their U.S. Denominated Debt + Accrued Interest.
And, if properly managed (hedges -- caps -- whatever), they can "Capitalize" on the renewal of / payback of / exit financing etc. by converting their debt for Canadian Facilities back into Canadian Dollars.
In short, everything is "back-to-back" -- debt and higher labor costs or higher electricity costs or whatever are all in Canadian dollars. Profit by Facily comparisons are much easier.
If Canadian Facilities have a combined 3.8 billion dollar U.S. denominated debt -- would you rather try to re-finance at 1:1 or 1.25 : 1. What I want is to convert all to Canadian dollars, becuase as the Canadian falls back to $0.80 vs. 1 U.S. Dollar over the next five years, the Canadian plants would do better operationally and debtwise.
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Consider a short blurb from today's Newspaper Article on the Re-valuation of the Yuan higher.
"Because a large portion of Chinese airlines' debt is denominated in U.S. dollars, any dollar weakness would give them significant foreign-currency translation gains, said the Deutsche Bank strategists.
Though, I think the author really meant to say "dollar stength", but the article was promoting certain stocks -- and may have been bias in order to deplete broker inventory.
AI
