Gama Aviation Share Discussion Threads

[corrientes] 04/4/2018 16:10

Oh crikey - yet more good news.

I hope the super optimist isn't a bear in disguise.

[rivaldo] 04/4/2018 13:29

News - I think the following is the most relevant:



"Scott McVicar, Managing Director, Europe Ground commented: “Oxford has had an amazing 2017, growing its volume of repeat business and increasing its capability. This project was particularly pleasing as it combined all of our capabilities at Oxford allowing timelines to be streamlined and the aircraft returned to service without delay.”

Gama Aviation’s Oxford Airport facilities represent the European operations centre of excellence for business jet maintenance. Line and Base maintenance approvals cover the Bombardier Challenger 604/5, Challenger 850 and Global series, Cessna Citation XLS and Mustangs and the Hawker series across a wide variety of registries including EASA, FAA and Isle of Man."

[corrientes] 04/4/2018 13:16

In this case it seems the share price is reacting to the story ; unfortunately in the wrong direction !

I'll stick with it,but until these economies of scale are bedded down,which could take a long time, and economic wars don't help,I see little change in the medium term. As an investor here,of course I'll be happy to be proved wrong.

[roddiemac2] 04/4/2018 10:43

corrientes,

Surely if a share price always kept up with the story and reflected the value, then we as investors would have little chance to profit.

[corrientes] 04/4/2018 09:54

roddiemac2 - and that's just what it is ; a story until proven otherwise, FOR SHAREHOLDERSm that is.

[rivaldo] 04/4/2018 09:42

Cheers roddiemac2. We all know GMAA is a relatively illiquid stock, and small volumes can have a disproportionate effect - up or down.

Given that GMAA are now on a current year P/E barely above 10 - even before the likely acquisitions coming this year - I continue to believe there's substantial upside.

Next month's trading update will hopefully reflect the positive outlook from the results:

"Outlook

Based on our performance to date and contract visibility, the Board is confident in the strength of the Group's operations and believes the Group is well placed to deliver its strategic objectives and achieve its expectations for the current year."

[roddiemac2] 03/4/2018 19:01

rivaldo is doing the sensible thing : concentrating on the story.

With the end of the financial year this week, some selling is understandable , with some investors taking a profit and others a loss. There is nothing unusual about this.

[corrientes] 03/4/2018 17:11

Would you call today's action yet another bit of 'good news' Rivaldo ?

[rivaldo] 26/3/2018 12:26

Another good summary of the results:



"Gama Aviation's revenues rise as expansion continues
21 March, 2018
SOURCE: Flight International

Gama Aviation recorded a hike in revenues and operating profit in 2017 – mainly as a result of a robust performance from its US division – and is anticipating continued growth in 2018 and beyond as it seeks to become “the global leader in business aviation services”.

etc"

[rivaldo] 22/3/2018 08:59

Here's Simon Thompson's tip for GMAA - "priced on 12.5 times this year’s likely earnings, dropping to only nine times 2019 EPS estimates" says it all, and that's before any likely earnings-enhancing acquisitions:

"Gama cashed up for bolt-on deals

I had an informative results call with Marwan Khalek, chief executive of Aim-traded Gama Aviation (GMAA:257p), an operator of privately-owned jet aircraft and one that has just delivered a near 25 per cent uplift in full-year underlying pre-tax profit to $17.1m (£12.2m) on revenue (including associates) up by 38 per cent to $615m.

The performance was fuelled by 66 per cent growth in revenue to $388m in its buoyant US air operation, which is reaping the benefits of the fleet joint venture with BBA Aviation (BBA) and delivered a 50 per cent plus hike in operating profit to $9.1m. There should be more upside to come as the US air business “exploits organic market growth and focuses on leveraging the inbuilt opportunity [from the JV]”, one reason why Gama invested heavily in its sales force in the final quarter of 2017, the benefits from which will be seen this year. Divisional operating margins of 2.4 per cent are half Mr Kwalek’s target of 5 per cent and he sees scope for a “one percentage point improvement each year”. That’s worth noting.

As anticipated, a much better margin improvement on the back of cost savings and exiting legacy contracts meant that Gama’s European air division more than doubled operating profit to $4.5m on revenue of $91.8m. The European ground division delivered decent growth, too. Interestingly, Mr Kwalek sees scope to make accretive bolt-on acquisitions for both European businesses and, with $22m funds available from a recent £48m placing, the board has firepower to do so.

Importantly, shareholders are reaping the benefits of almost $14m of free cash flow generated last year as the dividend per share was hiked by almost 6 per cent to 2.75p. Moreover, expect the progressive payout policy to continue as analysts at brokerage WH Ireland predict a 27 per cent increase in Gama’s pre-tax profit to $21.8m this year, rising to $33.1m in 2019. The hefty profit increase reflects both organic growth and contributions from investments made using the placing proceeds which I outlined last month when the shares were around the current level (‘Running the slide rule’, 19 Feb 2018).

Gama’s shares are priced on 12.5 times this year’s likely earnings, dropping to only nine times 2019 EPS estimates, a rating out of sync with the anticipated earnings growth and I maintain my 325p target price. Buy."

[paleje] 21/3/2018 14:42

ST reiterated his 325p buy advice today not that is means much with current market sentiment.

[rivaldo] 20/3/2018 13:55

Good summary of the results, with some interesting new comments from the CEO:



"Gama Aviation Releases 2017 Results, Underlying Profits Up 28%
by Ian Sheppard
March 19, 2018, 9:49 AM

Gama Aviation experienced a strong year of growth in 2017 as the business aviation specialist’s operations in the U.S., Asia, and the Middle East all ticked up. The U.S. performed the strongest, partly on the back of its contract with Wheels Up (which now has 12 bases) and the Gama Aviation Signature joint venture, which was created on Jan.1, 2017. While profit in Europe proved elusive in the year, the group is looking to bolster that side of its business and become less UK-centric, co-founder and CEO Marwan Khalek told AIN.

Of the £48 million (around $67 million) raised in an equity placing last month, $10 million has been earmarked for investment in two maintenance facilities in the U.S. (one on the East Coast and one on the West); $10 million for developing its Sharjah, UAE business aviation center; and the rest for “acquisitions in the Europe air and ground divisions and the Middle East air division.” Khalek said the European division “needs scale and needs to be more European.”

The company, which is listed on the UK’s Alternative Investment Market, recorded 2017 revenues of $207.4 million, up 5.8 percent, with underlying profit of $18.7 million. In the U.S. the new division created through the merger of its U.S. operations with the BBA aircraft management business (Landmark), rebranded as Gama Aviation Signature. Gama Aviation has a 24.5 percent stake in the venture, whichsaw “significant growth.” As a result, revenues for the the company's U.S. air-related activities increased by 35 percent, to $518 million. This was also fueled by the “continued growth of our Wheels Up contract,” said the company. It added, “The integration of the BBA business is delivering the envisaged benefits: adding complementary West Coast coverage to the existing East Coast business, diversifying the client base, providing the ability to cross-sell maintenance services into Gama Aviation’s wholly owned U.S. ground business, and delivering cost synergies.”

In the Middle East, revenue grew by 20.5 percent, to $23.5 million, and the division was “profitable for the first time,” returning $0.5 million. In October, Gama Aviation bought out Jet Set’s 51 percent stake in its Middle East ground division, seeking "a strong foundation for our planned development in the region.”

In Asia Gama Aviation acquired Hutchison Whampoa’s 50 percent stake of its Hong Kong-based joint venture, with Hutchison, instead, becoming a strategic investor in the Gama Aviation group by taking a 20 percent stake. The group itself now also holds a 20 percent stake in Hong Kong Chek Lap Kok International Airport-based MRO provider CASL. “We’re very well placed in the Asia market…we’ve decided to use Hong Kong as our main base, while in a holding pattern waiting to see what happens in Mainland China.”

[roddiemac2] 19/3/2018 12:55

The " market" is not commonly rational , especially in the short term. It is our job to exploit this . On occasion this requires great patience. Having bought these in my ISA between Nov 2013 and March 2016 ( mostly at above today`s price ), I doubled my holding between July 2016 and Nov 2016 at an average of 146.9p because I still believed in the story. Currently, there is no reason to doubt the company`s ability to grow into their targeted areas. If they achieve their aims, the market will catch up at some point. Negative sentiment towards airlines may be spilling over here , but GMAA is not to be confused with those businesses.

[igoe104] 19/3/2018 11:40

Totally agree, Rivaldo. lets get this share price over £5 then we can start talking about big Divi increases.

[rivaldo] 19/3/2018 10:41

Fine. There's no need for you to moan any more. Come back in 18 months and then we'll discuss what's happened in the intervening period :o))

[corrientes] 19/3/2018 10:27

Manyana,manyana. The Market has had long enough to recognise the potential here. We'll see if this so-called growth and economy of scale, translates into a much better share price and a decent return for shareholders. I am very doubtful.

[rivaldo] 19/3/2018 09:56

I'm perfectly happy with the dividend. I'd much rather see the cash pile invested into further growth and acquisitions - as has already been happening and will now accelerate.

Which could lead to a doubling of the share price from here over the next year or two in stable conditions as the market begins to recognise GMAA rather than a few extra pounds from dividends.

[rivaldo] 19/3/2018 09:17

WH Ireland have retained their Buy and 370p target.

They have 31.6c EPS for last year, with $17.1m PBT, which they summarise as "broadly in line with expectations", i.e slightly below, due to a "slightly higher effective tax rate in the year" and higher investment in the US Air sales force which should pay dividends in this and later years.

Given the placing dilution they now go for 29c EPS this year, rising fast to 41.2c next year. If GMAA make acquisitions as planned then of course these forecast could increase quickly.

As the manager of the the MI Downing UK Micro-Cap Growth fund said last week:

“It is a great business that has grown to the next stage, is not well known but is a tuck away job for us.”

[corrientes] 19/3/2018 08:58

All this good news Rivaldo ?

[rivaldo] 19/3/2018 08:04

Glawsiain, reading through the narrative I suspect the correct measure to use is the "Continuing total operating profit", which came in at $17.855m - well ahead of forecasts.

I'll try to get WHI's note, which will probably be the only way to confirm precisely the extent of the PBT beat and the differential in EPS (possibly tax-affected).

I assume that GMAA's EPS for this year and beyond will be very healthily affected by Trump's tax cuts.

[glawsiain] 19/3/2018 07:41

Expectations beaten?

John Cummins at WH Ireland had "pre-tax profits are forecast to rise by 28 per cent to $17.5m and deliver EPS of 32.9¢"

Looks like gama achieved Pbt of $18.7m which is comfortably ahead. But EPS came in at 31.6¢ - slightly below.

Either way, debt is down and company is heading in the right direction

[rivaldo] 19/3/2018 07:28

Good results this morning as expected, with operating profit up over 28%, debt down 30% or so to only $13m, and in particular a bullish outlook for 2018:

"Current trading in line with management expectations; company well placed to achieve its expectations for the current year"

The current year forecast of 30c EPS should soon be increased significantly through acquisitions, which are well flagged in the narrative:

"· Acquisitions made in 2016 delivering at or above expectations
· Pipeline of acquisition targets identified
· Management teams and structures in place to support future growth and acquisitions"

It's worth noting GMAA's statement today that Gama Aviation Signature "is the largest aircraft management business in the US and has significant growth prospects."

The CEO's statement sums up the confidence here:

"Marwan Khalek, Chief Executive of Gama Aviation said:

"We are pleased to report financial results for 2017 in line with expectations. In particular, we have increased our operating margins and delivered improved operating cash flow.

Strategically this is an exciting time for Gama Aviation, having recently completed our successful £48 million fund raising. This will allow us to deliver significant growth and scale across all geographies and service lines, enabling us to make further value enhancing acquisitions from within our fragmented market and will help us to fulfil our ambition of becoming the global leader in business aviation services.

In US Air, following the BBA aircraft management business merger, we are now the market leader in US business aviation management. This offers us cross-selling opportunities into our US Ground division. We will leverage customer relationships across our national network and invest in base facilities to increase the scale and scope of services.

Europe Air is positioned for sustainable growth and we continue to build our offering in Europe Ground. The acquisitions in Europe have been successful and have added significant value.

Recent corporate developments by us in the Middle East and Asia, together with the proposed construction of a business aviation centre in Sharjah will accelerate growth. With Hutchison as a strategic investor, the addition of two experienced non-executive board directors and the strengthened management teams across the regions, we are well positioned for growth in 2018 and beyond."

[corrientes] 18/3/2018 10:54

I hope there is some real positive progress concerning the law suits, and then we can really move on.

[mobtheplod] 16/3/2018 11:36

Thanks for that Rivoldo, I think it is only a matter of time before the wider market catches on.