Air Partner (AIR) is on a journey of transformation, with a clear, long-term strategy to become a world-class global aviation services group. While AIR’s market includes some inherent volatility, the group is international, broadly based and diversified – increasingly so as the younger Consulting & Training business scales up. Cash-rich, it is well-placed both to add and grow complementary businesses.
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Air Partner |
Better to travel
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Travel & leisure |
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29 September 2017 |
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Air Partner (AIR) is on a journey of transformation, with a clear, long-term strategy to become a world-class global aviation services group. While AIR’s market includes some inherent volatility, the group is international, broadly based and diversified – increasingly so as the younger Consulting & Training business scales up. Cash-rich, it is well-placed both to add and grow complementary businesses.
Strong H1 results
AIR reported a strong first half with underlying PBT of £4.1m, up 34% y-o-y, on gross profit up 12% to £18.1m. Net cash strengthened further, up 104% at £10.6m. Management signals that full-year expectations should be met (we suspect they may be exceeded) and the interim dividend has been raised by 6.2% to 1.7p.
Both divisions progressing
Within the Broking division, Commercial Jets has won significant sports contracts, now serving 35 football clubs, and saw strong growth from European tour operations, the extension of its German automotive contract and work for airlines. In Private Jets, US clients increased 70%, and JetCard renewals were up 24%, although key customers reduced spend and profit was flat on investment in staff. The Consulting & Training division performed solidly with encouraging potential for H2. Baines Simmons, acquired in 2015, has added significant safety and training contracts. The move to reach a more equal balance (the division is currently c 14% of gross profit) continues, with the £3.0m acquisition of SafeSkys, a leading environmental and air traffic control services provider with particular expertise on avoiding bird strikes and the potential to expand into, for example, drone safety.
A long-term growth market
AIR’s global charter business is driven by a mix of factors connected with the global economy, geopolitical developments and natural events. Underlying indicators are positive, with IATA predicting passenger traffic to increase to 7.2 billion in 2035, a near doubling of the 3.8 billion passengers in 2016. AIR’s market includes volatile elements, but the business is managed for the long term, with an active strategy of alignment to the needs of the global customer base
Valuation: Undemanding given the opportunity
There are no direct peers, but the FY18e P/E of 16.7x compares well with the FTSE All-Share Industrials year 1 index at 14.0x and the FTSE All-Share Leisure index at 13.0x, given its strategic opportunities combined with the c 4% yield.
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Consensus estimates
Source: Company, Bloomberg |
EDISON QUICKVIEWS ARE NORMALLY ONE OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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Disclaimer
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Disclaimer
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German Startups Group (GSG) returned to its profitable path, with four exits, one partial disposal and several upward revaluations of key portfolio holdings recognised in H117. The successful IPO of Delivery Hero further supported results and will assist liquidity in H217. Management recently announced a cost savings initiative, while the general partner decided to forfeit one percentage point of its management fee. The joint effect of these actions should bring cost savings of €0.72m pa from H217, according to management. GSG’s shares trade at a 27% discount to NAV.