Hangar 8 Share Discussion Threads

[michaelwhight] 02/1/2015 20:18

I have no doubt that the share price will bounce back but I sold at 368p because I was worried that the insti's who get in at 280 will take a quick profit and there would be a fall. I think a number of people are not liking the uncertainty of the situation. Great company with great prospects and I will be in again at some point.

[twirl] 02/1/2015 20:13

Thanks Adam.

If you feel able would welcome a view of your calc's.

I also have a niggle about the 8m placed shares and the normal practice of placees to dump. I have seen nothing to advise that the placees will be restricted in any way.

If anyone is going to Mondays meeting I would be grateful if that Q could be asked.

Notwithstanding I think its a good long term deal.

[rufio90210] 02/1/2015 20:03

Anyone go to the AGM who can update us on anything?

[adamb1978] 02/1/2015 19:32

Hello all

I held HGR8 in both my SIPP and ISA however sold out over the last couple weeks having had the time to run the figures on teh Gama acquisition.

The main reason for selling was simply that I believe the Jun-15 results will show a year on year EPS decrease - I have EPS coming in somewhere around 20p. As a result I took the view that in all probability I would be able to buy back in later in 2015 at a lower price, and am looking for somewhere around 280p to buy back in.

The main reason for the decreasing EPS is that the deal was struck at the same EBITDA multiple however with the greater depreciation charge of Gama, EPS declines. There should be material synergies however as these will barely impact 2015, they cant compensate for the above impact. I need to refine further the 2016 bounce back from what synergies might be likely but currently think they could take EPS back to somewhere in the 22p-25p range.

I might be wrong of course however I bought in in the low 200s and felt that HGR8 trading at 17x current year (at 340p) based on my updated figures would get hammered if the put out 2015 figures showing decreasing EPS.

All the best for those who hold. I might be back in in the next 6-12 months!
Cheers

Adam

[twirl] 02/1/2015 19:25

A 10% drop from £100k worth of shares traded.

Small vols cause big moves both ways.

I don't read anything untoward in todays fall. Much buying from share tips and understandable profit taking.

[gargleblaster] 02/1/2015 18:44

It makes you wonder if something unseen came up at the "unusually timed" agm, which I see took place on New Years eve!!

[macarre] 02/1/2015 17:18

Not a good start of 2015 here. But, this appears to have been a technical correction only (profit taking?) with share price hitting a strong resistance level (£3.77) in last session. Could rebound tomorrow, but imho more likely to happen at £3.09 (worst case £2.90).

[igoe104] 31/12/2014 09:14

More continued good news for hgr8.

Oil price plunge gathers pace.

[twirl] 31/12/2014 08:31

If anyone is going to the meeting on 5th could you ask whether there are any lock in arrangements for the placing shares.

Otherwise the placees tend to get rid quick esp with such a mark up as this.

[rivaldo] 31/12/2014 07:27

A positive article from another web site, if a little odd in not mentioning the GAMA merger at all....happy new year to all HGR8'ers - 2015 should be another good one:

Http: //www.stockopedia.com/content/guruscreens-upgrades-and-downgrades-december-30th-aht-hgr8-89442/

"GuruScreens - upgrades and downgrades - December 30th: AHT; HGR8.
Tuesday, Dec 30 2014 by Alex Naamani 0 comments

Hangar's maiden dividend

Hangar 8 is one of Europe's largest operators of privately owned passenger jet aircraft. It qualified for the Jim Slater Zulu Screen towards the end of November, with a ROCE of 19% and a PEG ratio of 0.4. Indeed, earnings grew by 83% in 2013 and 14% in 2014. Furthermore, earnings are expected to grow by another 70% over the next twelve months.

This growth has been supported by demand for long-range jets. To reflect this change in market demand, Hangar 8 has been changing the mix of its fleet in order to offer a wider range of intercontinental business air travel. Hangar 8's growth has also been supported by acquisitions. The company gained 100% ownership of Oasis Flight Malta Limited this year, which provided an additional Air Operators Certificate and enhanced Hangar's foothold across Europe.

The management team are optimistic about the company's future performance and have therefore recommended paying out a maiden dividend of 2.3p per share for the financial year ending 30 June 2014. This dividend can only be paid if the shareholders approved it at the company's Annual General Meeting of the Company - which will take place on Monday 5th January, 2015 - so keep you eyes peeled."

[gargleblaster] 30/12/2014 11:55

nice one.....

[rivaldo] 30/12/2014 08:55

..and here are those new highs.....

[rivaldo] 29/12/2014 10:20

About to hit new highs here?

Adam, see posts 594 to 598 above - they should give you all the info you need on the forecasts for the new combined group.

[adamb1978] 23/12/2014 15:41

Has anyone on here run the numbers for the combined entity? Am in the process of doing so and therefore interested in cross checking
Cheers

[gargleblaster] 22/12/2014 12:09

cheers for info riv

It seems as though consolidation is definitely the name of the game - the last sentence of your post is telling imho. Also I think it is the type of business where acquisitions are fairly simple to arrange - for example contracts are unaffected by takeovers, staffing levels are low, e.g. Avation only has 14 staff. Also economies of scale gives access to a wider range of aircraft, clients and better lending terms. All seems to add up to me, and I'm strapped into my seatbelt for a pleasant flight in 2015, albeit that there maybe some turbulence on the way!

[rivaldo] 22/12/2014 08:23

The share price certainly took going ex-div last Thursday nicely in its stride!

And this article promises more excitement to come, with more acquisitions etc...



"Gama8 - a global business jet operator with 144 aircraft under management
Published: 20 December 2014 Written by INT821

The merger of Hangar8 and Gama Aviation is a significant one. It will result in a global business jet operator with 144 aircraft under management and revenues of more than £250 million ($400 million) based on 2013 revenues.

The merger of Hangar8 and Gama Aviation is a significant one. It will result in a global business jet operator with 144 aircraft under management and revenues of more than £250 million ($400 million) based on 2013 revenues. The logic behind the merger is sound and there is little geographic overlap.

It is an exciting opportunity for both companies. Since it listed in 2010, Hangar8 has doubled both the number of aircraft it manages and its share price. Gama Aviation could grow just as fast.

But it is not even the start of the beginning of operator consolidation.

After the merger, Gama Aviation’s market share in both the US and Europe will still be under 2%. In fact, if you add together all of the operators in the world which manage 100 aircraft they still account for less than 10% of the fleet. With 75% of US operators and 80% of European operators managing less than five aircraft it is hard to think of any more fragmented global industry.

The most exciting transactions will be the ones Gama does from now on. As a listed company it will have access to capital and as soon as the deal formally closes it will start looking for new acquisitions. As well as growing organically.

Marwan Khalek, Gama’s CEO, says that there is still a place for smaller operators (Gama itself started with one Beech Barron) but he is confident there will be more acquisition opportunities. He adds: “It is becoming a harder market and operators are battle-weary both because of regulations and the market.”"

[rivaldo] 19/12/2014 08:20

Interesting AIM re-admission RNS yesterday from HGR8:



Re-admission will be on 6th January, re-named GAMA Aviation of course.

The new major shareholder list shows the top 12 management and institutional shareholders now own 82% of the shares, so there won't be too many shares floating around. Any good news - and further buying interest on contemplation of the merger - should therefore continue to have a decent effect on the share price

[rivaldo] 18/12/2014 08:59

Excellent post 596 gb.

Interesting that "profits could double over the next three years". That would imply say 45p-50p EPS, which would further suggest a share price between say 750p-1000p.

Very nice indeed

[igoe104] 18/12/2014 08:03

Hangar 8 PLC To Go Ex-Dividend on December 18th (HGR8)

Hangar 8 PLC logoHangar 8 PLC (LON:HGR8) declared a dividend on Friday, November 7th, Analyst Ratings Net reports. Shareholders of record on Thursday, December 18th will be given a dividend of GBX 2.30 ($0.04) per share on Monday, January 19th. This represents a yield of 0.74%. The ex-dividend date of this dividend is Thursday, December 18th. The official announcement can be accessed at this link.

Several analysts have recently commented on the stock. Analysts at Cantor Fitzgerald Europe reiterated a “buy” rating on shares of Hangar 8 PLC in a research note on Monday, December 8th. They now have a GBX 400 ($6.29) price target on the stock.

Shares of Hangar 8 PLC (LON:HGR8) opened at 335.00 on Wednesday. Hangar 8 PLC has a 52 week low of GBX 210.00 and a 52 week high of GBX 375.00. The stock’s 50-day moving average is GBX 324.0 and its 200-day moving average is GBX 287.3.

Hangar 8 plc (LON:HGR8) is a managers and operators of privately owned passenger jet aircraft

[gargleblaster] 18/12/2014 01:28

A proposed reverse takeover of global business aviation services group Gama by Hangar8 (HGR8:AIM) is a faster route to scaling up operations to compete in a growing global market place and has lit a fire under the company’s share price.
If successful, the deal will lead to the newly named Gama Aviation being one of the five largest operators globally in the privately owned passenger jet aircraft space.
Hangar8 is up more than 29% year-to-date as the manager and operator of privately owned passenger jet aircraft has been shifting its strategic focus away from the traditional short-term charter revenues and more towards a dedicated full-service management operation.

A growing range of in-house services is being complemented by new additions to the fleet. This is seeing Hangar 8 make a concerted effort to replace smaller light jets with long-range heavy jets in response to the growing market demand for intercontinental business air travel. The group now has 27 long range heavy and super-heavy aircraft out of a fleet of 47 revenue- generating aircraft overall.
In November total revenues for the year to the end of June came in 26% higher at £65 million. At the same time, gross profit came in 25% higher at £10.3 million. Over the past two years, the group has consistently delivered gross margins at 16% and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the year to June was up 32% at £2.66 million.
House broker Cantor Fitzgerald sees the deal generating strong profit growth and free cash.
The two businesses certainly enjoy a complementary geographical coverage; they have a good operational fit and have been pursuing similar growth strategies built on a profitable and apparently robust business model. Cantor maintains that ‘profits could double over the next three years due to a planned increase in aircraft under management, cross-selling of services, cost synergies, further development of ground operations such as engineering, and growth in Asia through a new strategic partnership.’
That said, the group’s acquisition strategy to date has not been without its setbacks. At the start of 2014, the group entered into discussions to acquire, via a reverse takeover, Air Charter Service Group, another privately owned air charter business. Because the proposed transaction constituted a reverse takeover for the purposes of the AIM Rules, trading in the company’s shares was suspended on 13 February pending either the cessation of discussions or the publication of a re-admission document. In the end, the deal fell through and Hangar8 walked away citing irreconcilable differences between the cultures of the two businesses.

If successful, the Gama deal will see the emergence of a global player and a one-stop shop for specialist services in the private jet segment.

[rivaldo] 17/12/2014 07:34

Great summary from Simon Thompson - thanks for posting twirl, very useful info.

Given basically 25p EPS this year rising to 29p EPS, the current share price does indeed still look cheap imo - the 400p target looks appropriate.

The future looks extremely bright.

[twirl] 16/12/2014 20:52

Simon says

Aim-traded Hangar 8 (HGR8: 330p), one of Europe's largest operators of privately owned jet aircraft, has announced the reverse takeover of Gama Aviation to become one of the largest players in this niche market. Operating in a highly fragmented industry, the combined entity will have 144 aircraft under management, operating from 44 different locations in 15 countries and with a strong presence in North America, UK, Europe, Africa, Middle East and Asia.

Importantly, the deal makes commercial sense, a point that Hangar 8 chief executive Dustin Dryden rightly points out: “Our clients, many with ultra-long range aircraft, require their premier suppliers to be truly international with the ability to supply a full range of private aviation services across the globe.”

The reverse takeover values Gama at £90m (using Hangar 8’s latest share price) and will be satisfied by issuing 27.3m new Hangar 8 shares to the vendors. The company plans to raise £14.2m net of expenses through a placing at 280p a share to pay off a debt facility and provide additional working capital. On completion, Gama shareholders will hold 60 per cent of the enlarged equity and the company, to be renamed Gama Aviation, will have a market capitalisation of £141m. As a stand-alone entity, Hangar 8 has a market value of £31m, so this represents a material change in the business from the one I recommended buying into seven months ago at 225p ('Ready for take-off', 12 May 2014). Subsequently, Hangar 8’s shares hit an all-time high of 375p (‘Wired up for gains’, 11 November 2014). So what are shareholders getting for their money?

Investing for growth

Gama’s strategy has been to replicate its profitable UK business model in new regions. International expansion started in 2008 and will be the major driver of growth: gross profit increased by 50 per cent between 2011 and 2013, reflecting the ongoing capital investment. To give you some idea of the profit potential from Gama, its mature UK business generated a gross profit margin of 24.3 per cent in the first half of 2014. By contrast, gross margins in the less mature US business were 7 per cent. Hangar 8’s own gross profit margins are around 16 per cent. So given the US business accounts for 30 per cent of Gama’s annual revenues of $183m (£117m) – Hangar 8 generated revenues of $105m in its last fiscal year – then if Gama’s margins can be improved then this will have a material impact on profits.

And that’s exactly what is forecast as 2014 is likely to prove an inflection point as Gama’s US business reaches scale with significant built-in, contracted growth for the year ahead and beyond. The enlarged group is also expected to benefit from Gama’s accumulated US tax losses of US$13m, which will be available to offset future profits generated in the US. As a result analyst Robin Byde at brokerage Cantor Fitzgerald pencils in an effective tax rate of 15 per cent for the merged group. Moreover, there should be costs savings by stripping out duplicated overheads. Mr Hyde has conservatively factored in $1m of annual savings.

Of course, the deal is subject to shareholder approval in the first week of January. But it’s easy to see why it will appeal to both parties. Mr Byde reckons the enlarged group will generate pro-forma cash profits of $14.6m (£8.1m) in calendar 2014 on revenues of $291m, but after factoring in the faster growth rate of the Gama business, Mr Hyde expects revenues to ramp up to $334m in fiscal 2015, increasing to $383m in 2016. And with margins improving too, Cantor predict cash profits will jump by half to $21.7m in 2015 and to $24.9m the year after. Deduct from these figures a depreciation and amortisation charge of $1.7m and this translates into pre-tax profits of $20m in 2015, rising to $23.2m in 2016. Based on 43m shares in issue, and factoring in a tax charge of 15 per cent, expect EPS of 40 cents, rising to 46 cents in 2016.

Clearly, the sterling:dollar exchange rate is material and Cantor have used a rate of £1:$1.60 in their calculations, slightly above the current cross rate. This seems sensible as I expect the normalisation of interest rate policy in the US to lead to further strengthening of the greenback, so if anything the currency risk to sterling denominated earnings is to the upside. On this basis, expect EPS of 24.8p in 2015, rising to 28.7p in 2016, which means that Hangar 8’s shares trade on a forward PE ratio of 13.7 – a 10 per cent discount to the FTSE All-share support services average rating - falling to a modest prospective PE ratio of 11.8 in calendar 2016.

Furthermore, after adjusting for Hangar 8’s net funds of £4.6m, and the proceeds of the £14.2m placing, the group will have an ungeared balance sheet and resources available for working capital and investment.

Assessing risk

Of course no investment is without risk, the most obvious being execution risk. There is a risk too that demand for private aviation services may not be as strong as industry forecasts, and specifically in the US where Gama has most exposure to an improving economy.

Analyst estimates are also predicated on the enlarged entity maintaining a high level of recurring revenue (around 80 per cent) which will provide the highly experienced board, and one boasting 225 years of industry experience, with confidence and visibility of future income to enable ongoing investment programmes. This will include a planned new strategic partnership in Asia in the first half of next year, new maintenance bases to be opened under Gama’s fractional ownership, and the addition of new aircraft under management in Europe.

However, after factoring in these risks, I still see the tie-up between the two companies as a sound strategic move and one where there should be upside to the equity. In fact, I believe that Cantor’s price target of 400p is very sensible, equating to a valuation of 14 times prospective earnings for 2016. For a business predicted to grow annual revenues by 15 per cent for the next three financial years, and lift EPS by a third from 24.8p in fiscal 2015 to 33.1p in fiscal 2017, a forward PE ratio in the order of 14 to 15 seems appropriate for calendar 2016. In the circumstances, I am happy to issue a buy recommendation on Hangar 8’s shares and have a target price of 400p.

Simon seems to overlooked the control that the concert party will have through majority shareholding with the possibility of taking it private. Having extinguished a competitor. We will be asked at the AGM to waive the rights we have for the concert party to make a mandatory offer for our shares. Presumably it does not suit the concert party to make an offer at this stage. However Gama has had the opportunity to list in the past but not taken it and the same people will be in charge. There are no statements as far as I can see about intending to raise more capital in future from the listing although capital is being raised to extinguish debt.

[goliard] 16/12/2014 15:18

The most I have ever paid for these was my very recent purchase of £30k worth at 300p just before the takeover RNS. I was a bit worried at the time of the RNS, but having done a bit more research I think there is every reason for the enlarged group to get the share price past 400p in 2015. I am also happy that they are using funds to extinguish debt as that means there should be plenty of scope for a reasonable dividend to be maintained.

I didn't ever intend for an AIM share to become my largest holding, but this isn't far off being that now.

Oil rice is real help in making private jets more competitive and it appears we are in for a long term depressed oil price, which can only help going forward.

[igoe104] 16/12/2014 14:42

The price of Brent crude oil has fallen below $59 a barrel for the first time since May 2009