Gama Aviation Share Discussion Threads

[rivaldo] 30/3/2017 09:17

Simon Thompson says Buy as follows - his 250p target is pretty short-term imo relative to WH Ireland's 340p, which is much more realistic imo given EPS of 26.5p rising to 29.1p.

ST will probably simply have to increase his price target again as he's had to do several times already!

"Plotting a return to growth

Alternative Investment Market (Aim)-traded Gama Aviation(GMAA:218p), an operator of privately owned jet aircraft, has modestly beaten analysts' earnings expectations, albeit its European air operations faced challenging market conditions due to "the absence of discretionary spend and lack of confidence", noted chief executive Marwan Khalek during our results call. The sharp decline in divisional underlying cash profits wiped out growth posted in other parts of the business, leading to a fall in Gama's adjusted pre-tax profits from $14.6m to $13.7m to deliver EPS of 30¢.

Bearing this in mind, both finance director Kevin Godley and Mr Khalek expect modest growth from the European ground services in 2017, a view backed up by "the current pipeline and level of enquiries in areas we weren't seeing in 2016". That's good news, as is a "right sizing" of the European air business and exiting from underperforming contracts, which improved margins and boosted profits. Add to that a surge in cash profits from Gama's fast-growing US aircraft management businesses, which are being merged into a joint venture with BBA Aviation (BBA), and a return to growth this year is highly likely. Analyst John Cummins at WH Ireland and Robin Byde at Cantor Fitzgerald both expect EPS to rise by around 10 per cent to 33¢ in 2017, implying that the shares are rated on a modest eight times forward earnings, or half the support services sector average and significantly below the ratings of rivals Air Partner(AIR) and BBA.

The other key take for me was management's guidance for a "significant improvement in cash conversion". Mr Godley expects net debt to halve to $9m-$10m by the year-end, which is not only good news for a continuation of the progressive dividend policy - the payout increased modestly to 2.6p a share - but with a net debt to cash profit ratio of 1.1 times well within banking headroom of 2.5 times, the company is well funded to consider making further acquisitions. The bottom line is that, having last recommended buying at 175p ahead of the results ('In the ascent', 23 January 2017), and seen my 225p target price subsequently achieved, I feel that a return to growth this year should deliver further upside and so have upgraded my target price to 250p. Buy."

[twirl] 29/3/2017 19:05

could you post the IC article here - did it have a share price target?

[mfhmfh] 29/3/2017 13:11

positive update today by ST in IC

[rivaldo] 29/3/2017 09:26

WH Ireland in their new note have retained their Buy advice, with a 340p target price.

They note that 2016 EPS was slightly ahead of expectations at 30.1c. Their forecast for this year is 32.9c, with 36.1c next year.

At $1.24 that's 26.5p EPS this year rising to 29.1p EPS, i.e P/E's of 7.9 dropping to 7.2.

They conclude:

"Whilst there were a number of challenges in 2016, Aircraft under management increased by 12% in the year to 165 and good operational progress has been made in strengthening the Group’s position. We believe that Gama is fundamentally a strong business with excellent growth prospects over the next few years across a number of territories, including in the US following the tie up with BBA.

Following the results, we nudge our revenue expectations marginally higher, whilst our EBITDA, PBT and EPS forecasts remain unchanged. We believe the shares remain undervalued and reiterate both our Buy recommendation and 340p share price target."

[rivaldo] 27/3/2017 23:08

Nice bounce back today.

Mfhmfh, last year's went ex-div on 30th June and was paid 15th July - the Notice of AGM RNS in a month or so will presumably give similar info to last year's as regards the dividend.

[mfhmfh] 27/3/2017 18:52

anyone know when the dividend will be paid, not mentioned in results.

[igoe104] 27/3/2017 11:18

I`m more than happy to continue to hold, extremely positive outlook for 2017, any dip in the share price, has to be a fantastic buying opportunity especially at this level.

[czar] 27/3/2017 08:42

Tried to but but nothing available

[rivaldo] 27/3/2017 08:28

Looks like short-term traders who bought pre-results have been getting out - volumes are tiny and the stock is pretty illiquid.

A buying opportunity imho given the fundamentals and the outlook going forward, especially with the new JV with BBA, with Wheels Up's expansion and with the recovery in Europe.

[glawsiain] 27/3/2017 07:54

There is this section:

"Cash

Cash increased by $2.7m to $11.2m (2015: $8.5m).

Operating cash inflow before movements in working capital increased 33.6% to $16.3m (2015: $12.2m) and the working capital movement improved by 46.3% to an outflow of $14.1m (2015: $26.3m outflow).

Cash generated by operations was $2.2m for the year compared with an outflow of $14.1m in 2015. The Group is focused on improving its working capital management and we expect the business to generate significantly higher cash conversion in the future.

Net debt at the year-end was $19.4m, up from $9.0m in 2015 as the Group drew on debt facilities to fund the acquisitions and related costs in the year."

[wjccghcc] 27/3/2017 07:44

Shame their cashflow is still bad. The statements aren't very transparent, and without good cashflow, IMHO it makes it less worth the effort trying to make sense of them.

[glawsiain] 27/3/2017 07:33

The troubled european division has done slightly better than expected too. ST wrote (in jan) that
"Robin Byde expects the division's cash profits to decline by just US$200,000 to US$1.9m even though revenues could be down more than a fifth to US$106m"

But the figures were US$117m rather than US$106m; and US$2.09m rather than US$1.9m.

[czar] 27/3/2017 07:31

Solid results and strong outlook, Europe recovering is the key. This is an institutional quality share and should command a pe in the mid to high teens.

[glawsiain] 27/3/2017 07:21

Looks like results beats (or at least meets) forecasts. Simon thompson had written

"And because one-offs will be substantially less than in the previous year, Mr Byde expects the company's reported EPS to almost double to 37¢ when it reports full-year results on Monday 27 March. Based on an average exchange rate of £1=US$1.35 this equates to 27p, although I prefer to focus on his lower underlying EPS forecast of 30¢ which equates to around 22.4p."

But results show EPS was 42.9¢ rather than 37¢ and underlying hit 30.1¢

[rivaldo] 27/3/2017 07:19

Results are out. Lots of different EPS figures to use, but I suspect this is the most useful - 31.5c is 25.4p, which is above consensus forecasts of 24.61p EPS:

"Underlying EPS is down 18.9% to 30.1 cents (2015: 37.1 cents). However, the EPS in 2015 benefitted from a tax credit of $2.5m against a tax charge of $0.6m in 2016. On a like-for-like basis, the underlying business produced an EPS of 31.5 cents in 2016 compared to 31.2 cents in 2015."

That's a historic P/E of only around 8.7, with 27.11p EPS forecast this year.

Decent results given the already known downturn last year in Europe, but the outlook this year is much more bullish, especially for the USA and with Europe recovering in both Ground and Air.

Cash could be better given poor w/cap, but they specifically talk about improving this for this year.

I do like the very positive outlook:

"2017 has started well and our expectations for the year remain unchanged.

The US market remains very buoyant and with our enlarged US Air platform, as well as the contracted growth from Wheels Up, we expect the division to continue to grow strongly. Similarly, the roll out of new maintenance bases, coupled with the significant cross selling opportunities that arise from the enlarged fleet within US Air, give us confidence that the US Ground division should also continue to grow strongly.

In Europe, we expect to see a return to modest growth in Air and Ground. We are encouraged by the recent contract wins across both divisions and some early signs of a pick-up in discretionary spend in Europe Ground.

We expect the progress within our Asia and Middle East divisions to continue as these operations develop.

Overall, the Group is well positioned to deliver growth and performance in 2017 in line with our expectations. "

[rivaldo] 24/3/2017 13:42

Yep, good to see some relatively small buying having an impact on the share price - hopefully Monday will wake the market up to this company and its prospects.

[someuwin] 24/3/2017 13:01

Some buying ahead of Monday's results.

[rivaldo] 23/3/2017 09:19

Bit of consolidation at present after the big rebound. Monday's results - and most importantly the outlook - will hopefully bring about another surge given the P/E of only 7 or 8 for a globally growing market leader:

News of Wheels Up's expansion (GMAA's partner), with mention of GMAA:



"Wheels Up brings private flights to wider market
By Macaela J. Bennett
Published 4:35 pm, Thursday, March 16, 2017

With the growth of Wheels Up, executives believe the sharing economy has hit the next industry domino.

“We want to disrupt and redefine the entry level for private aviation,” Wheels Up Founder and CEO Kenny Dichter told Hearst Connecticut Media. “By digitizing and democratizing the space, we want to bring it to more people.”

Technology companies such as Airbnb, Amazon and Uber have a reputation for broadening an industry’s market, Dichter said. He envisions Wheels Up doing the same by offering private flights with the price point and convenience available to more people than have historically taken advantage of such services.

Since its start in 2013, Wheels Up, a membership-based private aviation company that allows users to book flights through an app, has sold more than 4,000 memberships, Dichter said.....

......Dichter hopes that as news of the company’s services spread, its membership base will grow rapidly. Wheels Up’s next “membership milestone” is getting to 10,000 in the next few years, which would make it the “largest private aviation company in the world,” he said.

For now, the Wheels Up fleet counts around 70 planes and employs many Connecticut residents, Dichter said. Some of its planes, including its most popular the King Air 350i, are operated by Gama Aviation, which has its U.S. headquarters in Shelton.

Something Wheels Up makes clear in its ads and information sheets is that it doesn’t operate planes. Instead, licensed pilots through companies such as Gama are in charge of flying members. That’s a big portion of why Dichter said he’s not worried about regulators interfering with his business. In addition, he’s not dealing with uncertain and evolving rules regulating his industry, he said.

“In what we do, regulations are very defined,” Dichter said. “In the industries that Uber and Airbnb operate, there have been evolving regulations.”

Dichter’s resume is filled with other prosperous business innovations, including Tequila Avion, Marquis Jet — later acquired by Berkshire Hathaway — and Juice Press, which has a location on Greenwich Avenue. Lessons from those operations, as well as contacts, makes him confident Wheels Up could be his next success."

[paleje] 22/3/2017 10:52

Ok by me:)

[twirl] 22/3/2017 09:13

It could buy GMAA with its xs cash.

[paleje] 22/3/2017 08:21

That target increase by Jefferies was prompted by the prospect of a special dividend which is all well and good except the reason being they think BBA has little opportunity to put the cash to better use. I don't think that's anything for us to worry about but it might have made a few wonder:-

Jefferies expecting special divi from BBA
Jefferies believes there is scope for cash returns at aviation services firm BBA Aviation (BBA) as it lacks the opportunities to make more deals.

Analyst Joe Spooner retained his ‘buy’ recommendation and increased the target price from 295p to 340p on the stock, which was trading 2.8p higher at 307p at the time of writing.

The company completed the acquisition of aircraft services and private jet hire firm Landmark last year which has ‘bolstered group scale’, said Spooner, however ‘it looks unlikely that there will be sufficient opportunity for BBA to fully reinvest strong annual cashflows’.

‘The 2017 equity story, we believe, pivots to focus on scope for future cash returns to stop BBA from deleveraging too far,’ he said. ‘Once financials settle, our scenario analysis suggests BBA could return 17-18 cents per share annually as a special dividend.’

[twirl] 21/3/2017 14:37

Most share prices drop on results day unless surprisingly good.Presumably the sellers anticipate that to be the case.

[czar] 21/3/2017 14:27

A few little nervous sellers today, I can't see why. Results out on Monday have already been flagged as inline and since then several significant deals will boost the current year. On a pe of about 7.5x this price should double from here imho.

[someuwin] 21/3/2017 09:44

Jefferies International increases BBA target from 295 to 340

BBA Aviation PLC BBA
Jefferies International
Buy
price 308.45
Old target 295.00
New target 340.00
Retains

[czar] 20/3/2017 14:11

Good spot rivaldo, I thought there would be strong buying ahead of results next Monday, I feel confident they will be positive on the year ahead.