Gama Aviation Share Discussion Threads

[corrientes] 23/10/2017 08:46

With all this so-called optimism around, you could be forgiven for thinking the price would go up, not down !!! These sound bites are a waste of time, in fact worse than that. Better to keep quiet ; we might get somewhere.

[glawsiain] 23/10/2017 08:36

Able to buy at 231 this morning. Already have plenty, but it seemed rude not to.

Just to remind what was the position after the interims:

"underlying pre-tax profit increased by 40 per cent to $7m (£5.4m) in constant currencies on group revenues up 45 per cent to $291m, the vast majority of which is being fuelled by the US air business, which increased revenues from $110m to $190m following the Landmark fleet joint venture with BBA Aviation (BBA). Divisional operating profits rose even faster, up 150 per cent to $6m, reflecting a 90 basis point improvement in margins to 3.1 per cent, driven by increased scale and operational gearing. The integration of the BBA business is delivering the benefits envisaged at the time of the merger, adding complementary west coast coverage to the existing east coast business; diversifying the overall client base; cross-selling maintenance services into Gama Aviation's wholly owned US ground business; and delivering cost savings, too.

Operating profits in Gama’s European air arm rose at a similar rate from $0.6m to $1.5m, and operating margins almost trebled to 3.5 per cent, moving towards the 5 per cent target rate, an outcome that vindicates management’s decision to exit underperforming contracts last year. The third driver behind the robust first-half performance was Gama’s European ground services business, which increased operating profits by almost 30 per cent to $4.16m on a modest rise in revenue to $20.9m"

[corrientes] 23/10/2017 08:34

Is the drop on tiddly volume connected with the legal action or is it something else ?

[igoe104] 18/10/2017 07:59

Gama Aviation PLC Acquisition of 51% of Gama Group Mena FZC
18/10/2017 7:00am
UK Regulatory (RNS & others)

Gama Aviation (LSE:GMAA)
Intraday Stock Chart
Today : Wednesday 18 October 2017

TIDMGMAA
RNS Number : 9175T
Gama Aviation PLC
18 October 2017
18th October 2017
Gama Aviation Plc (AIM: GMAA)
("Gama Aviation" or the "Company")
Acquisition of 51% of Gama Group Mena FZC
Background
As part of the original Jet Set Equity Partners Limited (FZC) ("Jet Set") investment into Gama Aviation in 2008, Gama Aviation and Jet Set agreed to establish a start-up operation in the Middle East to provide Air and Ground services regionally. Jet Set is a consortium of local private equity investors comprising Growthgate Capital Corporation BSC (C) Bahrain, Crescent Investment LLC and Felix Tr. Co. LLC ("Felix") each of whom is currently a share holder of the Company. Under the terms of this original investment, a regional holding company for the Air and Ground divisions, Gama Group MENA FZC ("Gama MENA"), was formed with the Company holding a 49% equity interest and Jet Set owning the remaining 51%. Gama Group MENA FZC provides aircraft management and chartering through its subsidiary Gama Aviation FZE (the ME Air division) and aircraft maintenance and FBO services through its Gama Support Services FZE subsidiary (the ME Ground division).
Acquisition of Jet Set interest
Today Gama Aviation announces the acquisition of the 51% Jet Set interest in Gama MENA for a cash consideration of $5.1m. Following the acquisition, the Company will own 100% of Gama MENA.
Consistent with worldwide regulations governing the foreign ownership of air carriers nationally, Gama MENA has divested a 51% equity interest in Gama Aviation FZE, its ME Air Division, to Felix for a nominal consideration. Under an agreement between shareholders, Gama MENA will retain management and operational control of the ME Air Division and will be entitled to 80% of the dividends paid by Gama Aviation FZE. In addition, Gama MENA will receive a branding fee of 0.5% of the revenues of Gama Aviation FZE.
Benefits and Financial effects of the transaction
In the year ended 31 December 2016, Gama MENA achieved revenues of $24.7m and profit before tax of $0.2m. Gama Aviation believes that there are significant growth opportunities in the Middle East generally. In particular, new compliance requirements in Saudi Arabia and the development of the Business Aviation Centre in Sharjah, UAE, present attractive aircraft management opportunities which are also expected to drive growth in maintenance and FBO services. Gama Aviation has therefore decided to increase its economic interest and management control in Gama MENA at a time when the business is well placed to grow and develop this market opportunity.
This transaction between Gama Aviation and Jet Set is considered to be a related party transaction for the purposes of AIM Rule 13, and accordingly the Board, having consulted with Jefferies International, the Company's nominated adviser, considers the terms of the transaction to be fair and reasonable insofar as the Company's shareholders are concerned.
This announcement contains inside information.
End
Gama Aviation Plc [phone]
Marwan Khalek, Chief Executive
Kevin Godley, Finance Director
Camarco [phone]
Ginny Pulbrook
Geoffrey Pelham-Lane
Jefferies International [phone]
(Nominated Advisor & Broker)
Simon Hardy
Will Soutar
Gama Aviation - Notes to Editors
Gama Aviation (GMAA) is a global business aviation services company that specialises in providing support for individuals, corporations and government agencies. Gama Aviation is now one of the top three global players in a highly fragmented market, with a fleet of over 250 aircraft. Gama operates across Europe, the US, the Middle East, Asia and Africa.

[rivaldo] 11/10/2017 12:08

Good to see 4 small-ish buys today totalling 7k shares causing a 2p move up. Perhaps a lack of stock around at last.

[corrientes] 10/10/2017 12:10

What's with the share price having doubled in less than a year and is consolidating.

Sounds wonderful, but some might say that its only recovered from a low of 125p when in fact it hit 350p as far back as 2014/15 and the company is now supposed to be in a better shape than it was then. Something's not right, though in fairness, the cap might show a different result.

[rivaldo] 10/10/2017 10:04

Cheers paleje. Just to put the Times mention in context it's in regard to a Buy tip for the relatively new Downing Strategic Micro-Cap fund, which has made GMAA one of its largest initial investments on the basis of the positives mentioned. GMAA is 6.2% of the fund at present:



The share price has doubled in less than a year. I suspect this is simply a consolidation phase. One more decent RNS may be enough to trigger a large further rise given the cheap fundamentals assuming no material sellers out there, or perhaps it'll simply be the next trading statement.

[corrientes] 10/10/2017 09:08

Whilst this talk of good cash generation is mentioned in several places, normally the trigger for a share price rerate,its not happening here, and some say that if you delve into the figures,the free cash flow isn't really that great. Now who is right ?

That, plus the recent legal issue seem to be the sticking points here. Maybe what it will take to get the share price moving, is for the next RNS to show a healthy unadulterated positive cash flow. Then again it could just be AIM, where you have to be flavour of the month to get any attention.

[paleje] 10/10/2017 08:27

Small positive mention in todays Times Tempus column..

The others include Gama Aviation, which serves aviation groups around the world and enjoys strong cashflow. Good management and cash generation are two of the trust’s main criteria for investment. Gama is in a highly fragmented market with good prospects for consolidation.

[rivaldo] 05/10/2017 07:35

WheelsUp - and therefore GMAA - are on a roll:



"Wheels Up set for further expansion following third round of funding
03 October, 2017

US membership programme Wheels Up is poised to complete its third round of investment, which will help fund additional aircraft acquisitions and expand its sales and marketing effort across the USA. The move comes as the New York-headquartered company also lays the foundations for its European expansion.

Wheels Up launched its members-only programme in 2013 on the back of a record order with Textron Aviation for 105 Beechcraft King Air 350i twin-engined turboprops. To date, the company has a fleet of about 80 aircraft, including a handful of pre-owned Cessna Citation Excel/XLSs.

John Colucci, company co-founder and president of Wheels Up Europe, says response to the programme has been “overwhelming”, due in part to the positioning of the product as “more than just a business aircraft service”.....

....This high-end, personalised approach has helped Wheels Up to build its membership to more than 4,000, with an annual retention rate of 90%. “We have barely touched the surface,” says Colucci. “Wheels Up has expanded the market from the bottom up, bringing the benefits of business aviation to a huge number of people. There is so much more potential for growth.”

Wheels Up has also set its sights on Europe, where Colucci says the programme will provide an ideal alternative to the “misery of airline travel”.

The company announced its intention to expand to Europe more than two years ago, driven by demand from US members travelling to the region. “We haven’t made the move yet, as the US programme has and continues to be our priority,” explains Colucci, who has moved to the UK to oversee the launch.

“I would like Wheels Up Europe to be up and running in 2018, with our branded aircraft, but I can’t provide a timeframe,” he says.

Wheels Up has begun to lay the programme’s foundations in Europe. It is establishing a network of “approved” charter companies – including its US operating partner Gama Aviation – to provide onward travel for its members, with flights to be booked and monitored through Wheels Up. “We hope to have this offering in place in November,” says Colucci."

[scottishfield] 04/10/2017 14:39

Make you want to buy more really..

[glawsiain] 04/10/2017 14:34

Great report, thanks for finding Riv.

Particularly like this part, even if it isn't new news: "Gama is a highly cash generative business growing at double digits but trading on a single digit multiple of earnings. The business trades at close to a 40% discount to its peers which Downing believes is unjustified given the quality of its earnings and growth potential"

[rivaldo] 04/10/2017 11:43

Here's what the Downing investment trust have to say about GMAA as outlined by Stockdale Securities in the above report:

"Aviation (GMAA): Ready for take-off

Gama Aviation is one of the world’s largest business aviation service providers. It has two divisions: Air Operations and Ground Operations. Air Operations specialise in the provision of aircraft solutions for individuals, corporations, and government agencies through aircraft management, special missions, and charter services. Crucially, charter represents less than 5% of revenues, while special missions and aircraft management provide long-term visibility on profits through fixed management fees and contracts. Ground Operations are focused on maximising the availability of aircraft and upholding their airworthiness. This entails various maintenance and design and modification activities.

Gama is a highly cash generative business growing at double digits but trading on a single digit multiple of earnings. The business trades at close to a 40% discount to its peers which Downing believes is unjustified given the quality of its earnings and growth potential. These attributes, combined with a dividend and an aligned management team who own over 30% of the company, led Downing to believe that this is a potentially compelling long-term investment.

Downing believes the business model is attractive and protected from much of the cyclicality which one might assume is inherent in the sector. Forward visibility is high with over 70% of gross profits contracted and a further 20% which could be deemed ‘recurringR17; where an owner has used Gama’s services for many years. Unlike airlines, the business has no exposure to fuel prices – the management fee is fixed and fuel prices are passed straight through to the user – or residual values, as Gama are not aircraft owners therefore they do not hold aircraft for
operations on their balance sheet. This reduces operational and cyclical risk. Maintenance activities tend to be determined on flight hours or calendar days, whichever comes first. Design and modification spend, while more discretionary, is catalysed by regulatory and ownership cycles and, therefore, also provides some degree of visibility at very attractive margins. In a scenario where owners fly their planes less (or not at all), Gama will continue to collect the same management fees and will continue to carry out calendar-based line and base
maintenance work.

Downing believes that the strengths of Gama’s full service model are exhibited through its special missions business. Typically, these are long-term government contracts. Gama has managed (and successfully tendered multiple times) the Scottish Air Ambulance contract since 1991 and has multiple maintenance contracts with the MoD, notably the Shadow programme which it first signed in 2008.

Gama operates in a highly fragmented market which Downing believes is prime for
consolidation. Currently, Gama is a top five industry player globally but manages less than 1% of the total US fleet and less than 2% of the total European fleet. No single operator has more than a 4% share in the overall market. The benefits of consolidation to aircraft owners are significant – scale increases buying power for consumables such as fuel, and for training and insurance, while global coverage ensures consistency and availability of service wherever fleet assets happen to be located.

Downing believes that this is a more attractive proposition for owners than the small, localised players that dominate the market currently.

Overlaying Gama’s strong operational model, are top down regulatory changes which
Downing believes are crowding out smaller ‘mom and pop’ players. The cost of compliance with regional air authorities is increasing and small operators do not have the infrastructure or investment to demonstrate adherence to tightening regulations. They are then spreading increased fixed costs over a small fleet, typically less than five aircraft, which does not work economically. Over its 34-year life, Gama has invested in a scalable infrastructure to deliver exceptional cross-border services to its customers.

The asset and working capital light model mean that the business is also cash generative.

The most recent interim results were positive with statutory operating profit of $9.6m in the first half compared to $3.8m in the same period last year. Stripping out exceptional items, on a recurring basis operating profit increased 25% from $5.6m to $7.0m. Crucially, cash flow was much improved with $5.7m of free cash aiding the reduction of net debt to $14.3m, or only 0.8x net debt/FY17 consensus EBITDA. The business is typically 60% weighted to the second half which bodes well for a strong full year performance. On consensus estimates, the company is trading on only 9.6x/8.7x FY2017/18e P/E and strong cash generation is expected to move the balance sheet to a net cash position by 2018.

Downing’s involvement with the company is prospectively to provide capital for inorganic growth. Downing has been a holder of Gama since January 2017 and as at 29 September, 3.0% of the company was held by DSM with 6.2% of the company being held across all of Downing’s funds."

[fizzypop] 03/10/2017 13:41

Well spotted riv.

[rivaldo] 03/10/2017 12:27

Stockdale Securities have today published a report on the Downing Strategic Micro-Cap Investment Trust (DSM), which had its IPO on 9 May 2017.

One of DSM's first 5 key investments is GMAA. Kudos to GMAA considering the following....

DSM invests "in companies below £150m market capitalisation at the time
of investment. The manager (Downing LLP ‘Downing’;) takes strategic stakes in
companies that it concludes have reached a transformational stage and yet are
undervalued. It does so after executing a private equity style due diligence
process. Downing is prepared to be constructively active and engaged in its
involvement. In our view this differentiates its mandate from the vast majority
of other small and micro-cap managers."

DSM's due diligence is extremely thorough as follows:

"To generate ideas, the team screen the universe of all UK listed companies. The result of the screening is typically a shortlist of c.200 companies with attractive fundamentals and where the team perceives some opportunity to generate attractive shareholder returns.

DSM’s due-diligence process typically includes an analysis of the attributes of each potential investee company including:

 Quality of management: Downing will seek to find a core management team, the
members of which behave as if they are owner-managers of the business and nurture
shareholder interests. Ideally, the management team will have its own cash invested in the business. Downing will help to complement the core team at the company with appropriate non-executive introductions to ensure good corporate governance.
 Capital deployment: evidence that the company has the ability to effectively and
efficiently deploy capital for the benefit of shareholders. Return on capital and return on investment are key.
 Cash flow monitoring: the businesses typically will be free cash flow generative or have a clear path to cash flow.
 Sustainable margins: evidence of long-term sustainable margins or the ability to achieve these given a change in operational structure;
 Balance sheet: a robust balance sheet, or the ability of Downing to restructure onerous debt;
 Value catalyst strategy: the ability for the shareholders to drive a strategy that has a defined value catalyst at some time in the future, for example an acquisition led strategy or requirement for working capital finance for growth; and
 Discounted entry value: an entry value at a discount to Downing’s intrinsic valuation of the investee company, determined by several diligence factors which are similar to that of a private-equity process, including discounted cash flow, qualitative evaluation of the quality and transparency of earnings and the ability of Downing to realise value that is not dependent on market sentiment or price/earnings expansion. Unlike private equity, however, DSM does not rely on leverage to generate investment returns."

[rivaldo] 27/9/2017 12:48

...and a £25,000 buy at the full 255p offer just now.

[rivaldo] 26/9/2017 11:41

Nice £61,000 buy at 250p just reported.

[rivaldo] 26/9/2017 10:09

RNS - Downing and their funds have increased above 6% with 2.75m shares.

They've actually bought around 440,000 more shares since their last holdings RNS last month, so they're quite keen:



I note that the last buying date was last Friday, which was the day after the Capital Markets Day, so we can hopefully deduce that the day went pretty well.

[rivaldo] 25/9/2017 12:41

WH Ireland have issued a new note post the Capital Markets Day.

They reiterate their Buy and 370p target price. They forecast 32.9c EPS this year, rising to 36c and 41.2c. That's around 24.3p EPS this year rising to 26.7p and 30.5p EPS.

They comment as follows:

"Capital Markets Day illustrates the platform built to support growth

Gama Aviation is a global business aviation services provider. The Group yesterday
held a Capital Markets Day at its Farnborough HQ, including its Air and Ground
operation centres. The event provided the opportunity both to revisit the operations at first hand and to meet the wider global senior management teams. Key
takeaways were: 1) the robust and scalable operational platform that has been built
against what remains a highly fragmented market, 2) strength of the wider
management team, 3) the growth opportunities in each of key geographies,
including in special missions and through cross-selling, 4) the focus across the
business on client delivery and 5) reinforcement of the regulatory environment in
which the Group operates. Whilst the shares have performed well since the
beginning of the year, we believe that the business is illustrating increasingly
positive momentum, including improved cash generation as illustrated in recent
interim results. We continue to see the valuation multiples ascribed as
undemanding and we reiterate our Buy stance and 370p share price target.

Gama’s HQ and core centre of operations in the UK is located at Farnborough Airport. In the Air division, this hosts the Group’s operations centre, international flight planning, charter operations, airworthiness and regulatory functions. Ground operations at the site include the Beechcraft authorised service facility, base maintenance and line maintenance capabilities.

We believe that each geography has interesting areas from which to deliver growth:
Europe - adding scale to the existing platform and expansion from what remains a
predominantly UK centric business into mainland Europe, US – adding further scale
from the established platform, leveraging the Signature network following the recent BBA merger and building on the single existing special missions’ contract in place, Asia – build scale from leveraging Hutchison Whampoa and CASL agreements and through acquisition and Middle East – build scale both through organic and
acquisitive means, including taking advantage of regulatory changes in Saudi Arabia.

Overall, we came away with the view that Gama has built a strong platform from
which to grow in this highly fragmented market. Our forecasts imply that the shares
trade on a FY 2017E PER of just 9.5x falling to 8.7x, which suggests a significant
40%+ discount to our basket of peers. As such, we reiterate our Buy recommendation
and 370p share price target."

[rivaldo] 20/9/2017 23:32

Good finish which bodes well for tomorrow, when the Capital Markets Day should hopefully bring in further buying interest over the coming weeks.

[rivaldo] 20/9/2017 14:40

LBO, that news was posted previously in my post 891. Good to read it again though :o))

Looking solid again after the MMs gathered in stock nicely following the silly markdown.

[lbo] 20/9/2017 10:01

https://www.bjtonline.com/business-jet-news/wheels-up-eyeing-100-aircraft-fleet-by-end-of-2018

[rivaldo] 19/9/2017 12:10

GMAA's Capital Markets Day "for sell-side analysts and institutional investors" is nicely timed this Thursday at Gama's site in Farnborough - should be a good chance to explain the company's strategy and attractions, and also clarify re Dryden's gubbins.

[watsonnimrod] 18/9/2017 18:31

To be honest it's a pretty congested market place but you get what you pay for and with Gama that's a gold standard service.Been a long term holder since the reverse take over and a long term admirer of the CEO of Gama and his achievements down the years so no reason to get out now.Don't know the other parties involved but not enough in it for me to get cold feet, although MM'ers must have though Christmas came early with this news.