Re: Avation (AVAP)
Posted: April 9th, 2020, 5:51 am
Hi Reaggedtp,
I have all but abandoned Stockopedia as it does not meet my needs anymore. So AVAP discussions are largely restricted to this quiet corner of the online investing community.
The RNS issued by the company was long overdue. I can understand why, in that until all of March lease and finance revenue income was received (or not) and airline/govt interventions were known that they were not really in a position to say much. Nevertheless they should have said something earlier.
The RNS was pretty much a reflection of my earlier post on the subject. It was interesting in what they left out
How much revenue was actually lost in March
The fact they probably have 4 ATR's on their books yet to be delivered
Asset valuation decrease (Of course there are no appraisers out there to do such an 'audited' evaluation but general comments would have been welcome)
Refinancing
Of course, I do not expect them to say they are unable to rescue aircraft from defaulters although there was a hint of that when they said Expenses would be reduced (aircraft recovery costs are part of admin costs)
We then had Simon Thompson's IC article yesterday which also rescued the share price from a poor start of the day.
The Corporate activity is alive and well albeit on hold. I have never believed the company is up for sale but some type of merger is possible/likely. At these depressed prices I would have thought a management buyout must be on the table. With Management and a major shareholder on board it can be bought for next to nothing.
When the company started out, having a full UK listing was an attractive proposition when they had no serious aircraft on the books. Avation is very different now. They will never in the ordinary course of business come to the equity markets and say, give us a billion dollars to buy some aircraft when the market cap is less than 100m! So what's the point of having a listing?
My biggest concern remains the wide bodied aircraft. If those aircraft come off lease then that's expensive hardware to maintain, just parking fees alone is pricey let alone finance costs, and there are no long term storage facilities available anymore.
COVID-19 will likely be over in a two years. Many airlines flying again in 6 months. They have issued/provided loans to some airlines to enable finance costs to be honoured These could just as easily go bad but I suspect those loans don't amount to much. Even allowing for defaulters and long term storage of those aircraft Avation will be able to get through ok. Valuations will have normalised in a couple of years.
When I model a bad scenario for the fleet I still end up with a valuation well north of the current share price. In an earlier post I suggested waiting 2-3 months after COVID-19 started and I hold on to that timeframe before re-investing because any (likely) poor news around the world relating to the Avation industry will likely affect AVAP share price to the downside.
I have all but abandoned Stockopedia as it does not meet my needs anymore. So AVAP discussions are largely restricted to this quiet corner of the online investing community.
The RNS issued by the company was long overdue. I can understand why, in that until all of March lease and finance revenue income was received (or not) and airline/govt interventions were known that they were not really in a position to say much. Nevertheless they should have said something earlier.
The RNS was pretty much a reflection of my earlier post on the subject. It was interesting in what they left out
How much revenue was actually lost in March
The fact they probably have 4 ATR's on their books yet to be delivered
Asset valuation decrease (Of course there are no appraisers out there to do such an 'audited' evaluation but general comments would have been welcome)
Refinancing
Of course, I do not expect them to say they are unable to rescue aircraft from defaulters although there was a hint of that when they said Expenses would be reduced (aircraft recovery costs are part of admin costs)
We then had Simon Thompson's IC article yesterday which also rescued the share price from a poor start of the day.
The Corporate activity is alive and well albeit on hold. I have never believed the company is up for sale but some type of merger is possible/likely. At these depressed prices I would have thought a management buyout must be on the table. With Management and a major shareholder on board it can be bought for next to nothing.
When the company started out, having a full UK listing was an attractive proposition when they had no serious aircraft on the books. Avation is very different now. They will never in the ordinary course of business come to the equity markets and say, give us a billion dollars to buy some aircraft when the market cap is less than 100m! So what's the point of having a listing?
My biggest concern remains the wide bodied aircraft. If those aircraft come off lease then that's expensive hardware to maintain, just parking fees alone is pricey let alone finance costs, and there are no long term storage facilities available anymore.
COVID-19 will likely be over in a two years. Many airlines flying again in 6 months. They have issued/provided loans to some airlines to enable finance costs to be honoured These could just as easily go bad but I suspect those loans don't amount to much. Even allowing for defaulters and long term storage of those aircraft Avation will be able to get through ok. Valuations will have normalised in a couple of years.
When I model a bad scenario for the fleet I still end up with a valuation well north of the current share price. In an earlier post I suggested waiting 2-3 months after COVID-19 started and I hold on to that timeframe before re-investing because any (likely) poor news around the world relating to the Avation industry will likely affect AVAP share price to the downside.