Amedeo Air Four Plus Share Discussion Threads

[retirementfund] 04/12/2023 21:53

Firstly the accounts were audited so I suspect carrying values are realistic. Given the ever growing travel industry at this time the future is very bright for AA4. Imho

[eeza] 04/12/2023 21:09

It'll all dissipate as soon as the share price moves up.

[hpcg] 04/12/2023 19:50

By my modelling returns are decent even if the A380s get sold for the balloon payment, which appears to be the case at the moment. I honestly think this is far too low, especially for the two with reduced flying hours. Discounting makes it difficult to tell precisely; obviously a higher discount rate reduces the value of future dividends, but it ought to increase residual values as the cost of new aircraft increases.

Essentially residuals on the twin engine planes covers the equity at current share price (discounted to original lease expiry), very obviously estimated, and the predicted dividends discounted are upside. A move back to 2p would be upside. There are multiple ways of looking at it - I looked through every publication across the history of the company for the figures for the various methods. Try tracking the movement of equity, for example, and one can see that the value originally estimated for the residuals of the Emirates A380s has already been destroyed with the share price where it is, it doesn't get destroyed again. Indeed with each airframe within its own non-recourse company there is no downside even on the junior loan.

So I am extremely comfortable with my position here, the comfort that only a look at the numbers multiple ways can provide.

[pigeonfeeder] 04/12/2023 19:19

Candid Investor,

By all means read Carcosa’s analysis. However it seems to me that Carcosa doesn’t understand the basis of the £1.16bn valuation of the aircraft in the accounts and why it is so different to the market value of the aircraft. The difference of £1bn which seems to concern Carcosa is irrelevant.

[clive7878] 04/12/2023 15:24

Good news is the dividend, and income and costs are stable,
but could the share price now tread water?
Emirates seem to have got it right, more premium economy seating,
bigger aircraft, more revenue per flight and profit,
especially as the market is now picking up.

[garbetklb] 04/12/2023 13:11

Candid Investor

RNS 19/11/19 was Emirates seeking agreement (which AA4 granted) to modify aircraft 201/A6-EOQ & 208/A6-EOX to include Premium Economy seating. These were the 2 aircraft where reintroduction was delayed - presumably / maybe because they were undergoing modification.

I'd definitely read Carcosa's post - look at post 828 in this thread & follow the link to Lemon Fool.

I bought a small position - and rapidly sold when I realised that I didn't understand the residual value aspect nor the paying down of debt.

[andyandyoj] 04/12/2023 12:32

Two other things that may offer interest:
1. The contract for looking after the landing gear for the next 10 years is for 116 aircraft. Pretty sure that will include all the AA4 ones. So while only 67 get fitted with the new product it looks like the plan is to have 116 flying for 10 years.
2. The most reliable estimates I have seen predict a $16m cash surplus per year for the next 3 years. I think this will give some security re the balloon payments. I also understand from some of the statements that part of the “overpay”; from Thai pay by the hour has gone towards unforeseen debt repayment.
The main commentators (institutional) seem pretty comfortable on releasing the necessary cash.
@candid re the unlocking value - fully agree - either a worry or a nice upside potential. Given the moves they have made in the last two years (ditch Doric, new Board member, share buy backs) my money is (literally) backing them to release value rather than as a problem.

[candid investor] 04/12/2023 00:48

The one comment that I missed out , was the statement made in the last fact sheet...where the board said that their primary focus is on finding the best way , to unlock the shareholder value, that they know exists within the company ..

That suggests to me , they haven't yet done so , which if true is a major worry , or a key uncertainty, depending upon how you view it .

[candid investor] 04/12/2023 00:36

Andy , I agree with everything you have said ...I am a contrarian investor so try to moderate my views so as not to either get carried away , which many investors do , and then put down those with opposing views , conversely, i dont want to find myself mired in despair...both are difficult to avoid .
.
A couple of things I would like to throw into the mix ..

1. A380's super economy refit ...I would love to know how many, if any , relate to our aircraft ..Lord Gnome seems to think two but he couldn't remember the source ..I think the future is definitely secure for any A380 which has been refitted

2. The I.C. drew attention to the fact that the Emirates agreeing a 10-12 year extension for AA4 A380's was almost a nailed on certainty .. if this happens , even on less favourable terms than as at present , the outlook will improve immensely.. if it doesn't , the dividend dies, and the share price sinks , because, to my knowledge, there is no plan B. . The revenue from the Thai aircraft barely recovers the financing cost .

3. Our aircraft serve as collateral for the bank loans taken out on them ...the banks therefore effectively own our assets, which is again why I am so keen to establish what happens if the Emirates return the aircraft

Does anyone know ? Or like me are you crossing your fingers and hoping for the best ..

PS I haven't read or seen Carcosa's analysis so any link to it would be appreciated .

[clive7878] 03/12/2023 21:27

Scrawl thanks for that.
Share price could remain static until more news does come out. I do not think much will arrive until 2026 as aa4 looks like a long term investment as the next 2 years income & dividends should not change being already known.

[clive7878] 03/12/2023 21:22

Hargreaves Langdon has estimated NAVIGATION down as 125.45p ?

[andyandyoj] 03/12/2023 09:42

My impression is the market is not liquid - but it exists - it is really only Emirates though. So there is only one buyer, but it is in their interest to agree a “fair” deal for both parties. Where the sides have had too rigid an approach neither side has won (as in the case of SQ airlines and their lessors which resulted in no on sale from Dr Peters). But for both parties a fair deal saves time and money and stress. The bottom seems to have been set at $35m per aircraft (A380) and I am estimating a range of between 35 and 45m depending on aircraft state (is it still flying etc). The 777s have a liquid market and the A350s would fly off the shelves. I’m not sure if the distinction of illiquid v existing works for you but it’s my reading. I thought a lot of Carcosa’s analysis was very good on the dna fleet but I think his hypothesis was based on a lower valuation than is being achieved. And that was a pretty good assumption which at least an even chance of happening. As it turns out the valuation has turned higher for now so the values seem to me to be higher than his forecast. That could change again downwards (Gaza, oil, pandemic etc) but my expected value is now higher than it was. The challenge for me is havinga thesis but trying to always stay sceptical and avoid confirmation bias. Superficially the numbers are good here but the risk is quite high. My “expected̶1; investment outcome remains highly positive if far from risk free.

[skyship] 03/12/2023 08:10

A reminder from earlier. See end of P.1:

[candid investor] 03/12/2023 02:19

Thanks for your comments Andy in clearing that matter up , and I had previously read the link you posted ...I also read their 2023 Annual report , I am a qualified accountant ...but companies only disclose the information set out in IFRS...and what isn't disclosed is as (if not more) useful than what is disclosed . It is a delicate tightrope though, because they don't want to precipitate a fall in the share price unduly if they can avoid it

The questions I asked , can't be obtained from their annual report ..

The comment which spooked me in their last release was the declaration that the market was NOT liquid , indicating that sales of aircraft would unlikely to be possible in the short term , hence me wanting to know what options they would have in that eventuality .

[clive7878] 02/12/2023 20:42

The debt is x now, but they should be cutting this down year on year,so the debt should be reducing.
This is a long term investment although the only current concern is theat the share price could stagnate in the short term. How much can it drift though with a 16% dividend looking on the black side?

[andyandyoj] 02/12/2023 05:35

hxxps://simpleflying.com/emirates-ceo-buy-more-airbus-a380s-right-price/

[andyandyoj] 01/12/2023 13:55

Not really interested to hear the information you are after thanks @candid. But good luck on your other investments

[rimau1] 01/12/2023 13:37

If that is your most likely outcome any rationale person would sell. It happens to be my least likely outcome so i buy and we make a market. You should try to understand aircraft leasing and the debt and income payment profiles, it helps. I think you want definitive answers on aircraft valuations in 3 years time and a guarantee on emirates intentions in 3 years time and unfortunately this is not possible so we use forecasts based on invomplete information.

[candid investor] 01/12/2023 13:04

Which article are you referring to ? Is it the Investor Chronicle article ..
If so this article is talking about what MIGHT , happen , that's the same as relying on the roulette wheel landing on red ..do we want to gamble our stake on red ?

I am only interested in what IS happening ..as things stand the six cash cow A380s have a finite lease expiring within a couple of years , and the remaining aircraft are largely only recovering cost of debt ..

In my mind , what is the most LIKELY outcome , the dividend is cut or eliminated to ensure the lender gets their loan repaid , and we get a reduced return on our capital

Might be wrong , I have been before and I hope I am again , but like I said , even though the yield is attractive , the share price continues to fall further ..almost in a never ending spiral of decline in line with the expiry rate of the leases

That was a quick outline of the numbers , maybe if I was able to do a deep dive my opinion might be different , but I don't think that the information I need is in the public domain

I am happy to spell out the information I need separately if people would like to hear that ...