Air Partner (AIR) has upgraded short-term profit guidance and continues its longer-term strategy to build a world-class global aviation services group. Although the broking market brings inherent volatility, the group is international, broadly based and diversified, with a tendency to add more stable income flows from its newer Consulting & Training business. Cash-rich, it is well-placed to add and grow complementary businesses.
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Air Partner |
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26 February 2018 |
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Air Partner (AIR) has upgraded short-term profit guidance and continues its longer-term strategy to build a world-class global aviation services group. Although the broking market brings inherent volatility, the group is international, broadly based and diversified, with a tendency to add more stable income flows from its newer Consulting & Training business. Cash-rich, it is well-placed to add and grow complementary businesses.
Strong second half trading
AIR has upgraded guidance for FY18, now expecting PBT of at least £6.4m, an 8% upgrade to market consensus, and year-on-year growth of 25%. Cash generation remains strong with net cash more than doubling at H118 y-o-y to £10.6m.
Broking performing well
In H1 all lines progressed. Commercial Jets won significant sports contracts, now serving 35 football clubs, and saw strong growth from European tour operations, its extended German automotive contract and airline business. Private Jets grew US clients 70%, JetCard renewals rose 24% and investment in staff flattened profit. H2 benefited from hurricane relief with strong performance in the US and in freight.
Tailwinds for Consulting & Training division
SafeSkys, acquired in September, has been integrated and is performing in line with expectations. This is a leading environmental and air traffic control services provider with expertise in avoiding bird strikes and potential to expand into, for example, drone safety. Baines Simmons, acquired in 2015, has added significant safety and training contracts.
Managed for long-term growth
AIR’s business is driven by a mix of factors including the global economy, geopolitical developments and natural events. Underlying indicators are positive, with IATA projecting passenger traffic to almost double to 7.2 billion from 2016 to 2035. 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
There are no direct peers, but consensus FY18e P/E of 15.8x, while at a premium to the FTSE All-Share Industrials Y1 index (13.8x) and the FTSE All-Share Leisure index (13.9x), is undemanding given its strategic opportunities and the 4% yield.
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Recent 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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Research: Energy & Resources
Hellenic Petroleum reported Q4 adjusted EBITDA of €170m, a 20.9% decrease y-o-y, 7.7% below our Q417 estimates. This reduction was primarily due to lower benchmark margins partly offset by strong operational performance with refining utilisation at 111% (input over nominal capacity), exports (+12%) and a 14% increase in domestic marketing net sales driven by aviation and bunkering. FY17 adjusted EBITDA growth was strong at +14% with record production (15Mt) and sales (16.1Mt). Our last published valuation, using a mix of 2018e P/E, EV/EBITDA and DCF metrics, stands at €9.3/share.