claude reins
20 Feb 2015
Re: Addendum to Paul Scott SCVR yesterday Thanks for that. I would be interested to have a contact for the Fin Dir because I believe he has failed the shareholders in this report and I would like to add my comments. especially after our long discussion at Mello Derby in November. I also agree with you about the brokers and PR people. The company chose to reduce the brokers form 2 to 1 recently, and so the focus must fall heavily on Irelands for this. Sole broker - apparently no or pathetic input into the interpretation of the figures.Overall, strong hold on the basis of the additional information.
janebolacha
20 Feb 2015
Addendum to Paul Scott SCVR yesterday "UPDATE - I've just had a call from Richard Wolanski, Avation's FD. He's read my article, and wanted to respond to the points I raised, so I'm happy to relay the gist of the conversation here.I asked how he felt about my criticism, and he said that he totally "takes it on the chin", and takes responsibility for today's announcement not adequately explaining the numbers. They will try harder next time. Although as I pointed out, it's the job of their broker & PR people to ensure the results are presented well, so they should share the blame.- 5 new planes were delivered near the end of H1, so the H1 P&L did not see much benefit from that. However, H2 will benefit, thus we should see a stronger H2 than H1. Annualised turnover is currently running at about $60m p.a. - i.e. H2 should see turnover of about $30m, with a corresponding benefit to profitability vs H1.- admin costs rose faster than turnover - overheads tend to be increased in steps (e.g. additional staff), which happened this H1.- the reduction in average cost of borrowing to 4.6% is a big benefit that he didn't adequately emphasise in the results. On $350m debt, just a 1% saving is $3.5m p.a. over several years - so very significant.- depreciating the aircraft faster from 1 Jul 2014.- a further 40% growth in the fleet is planned in the next 12 months, so a similar impact will happen, with the P&L benefit flowing through in the first full half year that the new planes are leased out.My (revised!) opinion - I'm a lot happier that this doesn't appear to be a big profit miss after all, although I'll be interested to see what the house broker's next set of figures look like. It wouldn't surprise me if they are trimmed back a little, but that's just my hunch.I took a bit of a flyer (geddit?!) this morning buying some shares at 130p, but am more relaxed now that this was probably a sound decision."- See more at: [link]
claude reins
19 Feb 2015
Re: First impressions All the positive comments are well founded. One of the really irritating things to me is that the Chairman puts as one of his highlights a - to me - disappointing EPS figure, and cant be bothered to explain it, to put a positive light on it. It was lower than the same period last year, and I guess that investors thought that the growth should have led to a higher not a lower figure - unless it was explained away in a convincing manner, which it wasn't! The summary just seemed lazy to me, and I guess investors will often take the figures at first sight, and vote with their feet. We had a 5% drop for no apparent reason a few days ago (maybe because the two sales wins were conditional), and now a further fall which was as much as 12% down earlier today.Their chief financial guy was touting their wares before Xmas here in the UK. I met him at Mello in November in Derby, listened to a good presentation then had a long chat with him afterwards. They only have a small team of around 15 headcount, and Chatfield spends most of his time jetting around talking to potential leasers. According to his financial guy, he knows everyone in the business.The financial guy was clearly trying to attract some bigger investors, maybe some of the fund managers. Don't think he managed to do that. He felt that if he could then that would drive the price substantially higher. Maybe they need to move up a notch in size, profits and earnings before that is going to happen. They certainly have improved their borrowing rates; they have good calls on new supplies of a very versatile aircraft; they are well located, particularly for the Asian market, and also for good tax rates, in Singapore.They should do well. Lets hope that 2015 is the time. I am a continuing holder.
janebolacha
19 Feb 2015
Paul Scott: Small Cap Value Report on AVAP [link] is the reference (from March 2014) to "hidden value" referred to in my second comment to this report: ‘Hidden Value’:Based on this approach Avation has potential ‘hidden value’ in its committed / firm aircraft deliveries, options and purchase rights. # Aircraft ‘Hidden Value’ (US$m) Per Share Equivalent (p)Committed / Firm 12 17.2 21.4Purchase Options 10 14.3 17.8Purchase Rights 17 24.4 30.3Total 39 55.9 c.70pNote: Assumes that Avation can secure a constant US$1.43m profit per aircraft in the event of a sale.In the aircraft industry it is not always clear what precisely an option or purchase right will cover. Traditionally, an option is the right to purchase additional aircraft at the same price and terms negotiated in the original contract, with an inflation escalation built in. The purchase options secure a manufacturing slot for Avation and typically requires a non-refundable option deposit to secure each option position.Purchase Rights are generally less firm than an option, but would grant Avation the right to purchase additional aircraft. A purchase right is an option that the manufacturer (ATR) adds to the deal to enable Avation to acquire more at the same price – similar to an option, but without the commitment of potential delivery time frames. In short, the purchase rights are an agreed framework for future orders but without a definite slot. For this reason, the 17 purchase rights are also included above as they represent a potential source of ‘hidden value’.In summary, the current estimated underlying net asset value for Avation is: c. Per Share (p) c. Total Per Share (p)Net Asset Value (excluding minority interest) 106.3 106.3‘Hidden Value’ Committed Aircraft Deliveries Plus: 21.4 127.7 Purchase Options Plus: 17.8 145.6 Purchase Rights Plus: 30.3 c.176pote: For simplicity this ignores discounting & timing effects of potential future profits from a sale of these aircraft.On this approach the estimated underlying asset value for Avation is c.176p. Based on the current share price of 108.5p this represents a premium of around 62% or alternatively the current share price represents a discount of about 38% to the underlying net asset value.How realisable is this hidden value? Avation has already proven that the ATR 72-600 aircraft can be readily sold to third-parties & agreed ahead of actual delivery, ATR recently concluded the Singapore Airshow with a further 48 orders, GE Capital Aviation Services (GECAS), one of the world’s largest aircraft leasing companies has also been ordering this aircraft. In short, there appears to be robust demand for this particular regional aircraft. This is also covered in further detail later in the note.- See more at: [link] See more at: [link] IMHO, DYOR.
catsick
19 Feb 2015
Re: First impressions Yup I added a few this morning on the pullback , results are decent and the full year comparisons should see the benefit of aircraft sales in both so a comparison that will show improvementReducing interest costs as they now have by around 20% is going to give a huge boost to a company with 350 mio usd of interest bearing debt , This company trades much cheaper than its peers despite being well run and there is good opportunity as they grow to squeeze out more interest margin gainsI find it odd also that the shares were whacked back when the airline industry was worried about planes over the ukraine being shot down but when the price of jet fuel halves which has to be the biggest possible boost to an industry nobody really cares, if the price of jet fuel stays low, the book of planes on order will become a huge asset !
janebolacha
19 Feb 2015
Re: First impressions There's a lot more in the RNS and a lot more that can be found out about AVAP that, imo, makes this, at a PER of below 6, a good investment at these prices.There was a profit on aircraft sales (two aircraft to Myanmar) of US$ 1.4m in H1/14 (see Note 5 to the accounts). There was no such sale in the first hale of this financial year. However, the conditional sale of two aircraft in 2015 has been announced (RNS 13.02.2015). These sales may be in the current financial year or in the next. This is "lumpy" income and can distort the underlying picture, as it has this time.The average financing cost, the largest cash operating expense, has been reduced from 5.5% pa to 4.6% pa, that is comparing at 31.12.2014 to a year earlier. Some of this improvement occurred very late in 2014 and the benefit will not be reflected in these results just announced.The fleet of aircraft is now being depreciated over 25 years, rather than 30 years as previously (see RNS 20.10.14), which will have affected the depreciation charge.The average age of the fleet is about nine years and the average length of present leases a little over six years.The corporation tax charge is now fixed at 10% under a scheme in Singapore to foster the growth of avation businesses in that country.The Thomas Cook deal (see RNS 20.10.2014) for Airbus aircraft will boost the size of the fleet by, I reckon, 20%+ but these aircraft will not be delivered until 2016.The previous reliance on Virgin Australia is being very much reduced with Air India Regional, Uni Air and Thomas Cook all coming on board. In any case, VA has just announced much improved results.The Chairman has a 17.5% stake and his interests seem to be very much aligned with those of shareholders.All IMHO, DYOR.
lambrini girl
19 Feb 2015
Re: First impressions 125..104..67...careful chaps
IOMINVESTCOM
19 Feb 2015
Re: First impressions totally agree with comments & sentiment. Still a holder.
a madase
19 Feb 2015
First impressions Not a lot of that extra revenue hitting the bottom line is there?Admin and 'other' expenses soaking it up.I don't currently have a position here but I've made a few bob holding short-term in the past. I'll wait and see what happens over the next few weeks or so. There could be an opportunity here but they really need to concentrate on bringing their costs down.
janebolacha
13 Feb 2015
Conditional sale of two aircraft This ought to generate a nice extra profit:[link]
janebolacha
12 Feb 2015
Comment on Asian aircraft finance market [link]
janebolacha
08 Feb 2015
Thomas Cook A nice story here but also one para about TCG taking delivery of more Airbus A321 in 2015.I wonder whether they might be under an AVAP leasing contract?[link]
catsick
05 Feb 2015
crash ... looks like Avap have some atr 72 out to uni air in Taiwan , I thought when I saw the news of the atr 72 crashing into the river yesterday it might be one of theirs but it looks like it is another local airline Trans asia that uses the same type of plane, there are about 1,200 of them in service over the world but by coincidence trans asia also crashed one 6 months ago
janebolacha
01 Feb 2015
Investec Australia report on aircraft leasing A report containing loads of "meat" on the aircraft leasing sector:[link]
janebolacha
01 Feb 2015
Deliveries of ATR-72 to Air India Regional Four more ATR-72 aircraft to be delivered to Air India Regional in the next six months,reducing further the potential vulnerability of the reliance on Virgin Australia:[link]
