Below extracts from the placing prospectus of Feb 2018 - the DD case is ongoing and there is a fairly lengthy list of other claims. Some are in the process of being settled out of court and appear not to amount to much. For an AIM company with these 'known unknowns' there will be wariness from the institutional investors until more clarity and certainty that there's nothing else to come out of the woodwork.
The remaining proceedings fall into two categories, the first involves proceedings by the Company to recover long-standing trade receivables that amount to approximately US$5.5 million. The Company has made adequate provisions or holds security against these claims and as a result the Board does not expect any further provisions will be required. In addition, based on legal advice, the Board considers the proceedings to recover these receivables are likely to be successful.
The second involves a number of proceedings brought against the Company in which the claimants seek to recover damages for alleged contractual breaches which amount to approximately US$15.3 million. Based on a detailed analysis of the claims and legal advice, the Board believes that these claims are speculative and/or overlapping and the Company continues to vigorously defend them.
By the time all these proceedings, some of which are with the same counterparties, are determined or settled, the Board expects the overall awards and settlements to result in a cash inflow to the Company.
A summary of such legal proceedings is as follows:
Litigation involving Dustin Dryden and/or entities associated with him
The Group is involved in various legal proceedings with Mr Dustin Dryden, a former executive director of the Group who resigned on 30 September 2015, and companies owned by, or associated with, him.
The Group has issued proceedings in the High Court in England against Volare Aviation Limited seeking to recover unpaid amounts for maintenance and other work undertaken by the Group on two aircraft (the Volare Aircraft) for an aggregate amount of £432,855. Separately Skye Holdings Limited, Offshore Jets Limited and Dustin Dryden (together the Claimants) have issued proceedings in the High Court in England against the Group for amounts in respect of: (a) the sale of aircraft parts by the Group to the Claimants which the Claimants allege should have been accompanied by certain certification documents; (b) an alleged failure of the Group to deliver certain parts agreed to be sold to the Claimants; (c) unpaid rent in respect of a house let by the Group from the Claimants for crew accommodation; (d) a promissory note issued by Dustin Dryden in favour of the Company to underwrite certain amounts due to the Group from third party debtors; (e) remuneration alleged to be payable to Dustin Dryden; and (f) losses alleged to have been suffered as a result of unreasonable delay and deficiencies in the works performed on the Volare Aircraft. The aggregate amount claimed by the Claimants is £6,071,505. Based on its legal advice, the Board believes that these claims either very materially exaggerate the Claimants' loss and/or are without substance or merit and/or are speculative/opportunistic. The Group is therefore defending these claims vigorously and is counterclaiming for: (a) US$256,868 in respect of outstanding amounts under a loan account from the Group to Dustin Dryden; and (b) unpaid operating and maintenance costs owed by the Claimants to the Group in the sum of £204,167. A hearing in relation to all of these proceedings has been scheduled for June 2018.
Legacy claims arising from arrangements prior to the 2015 Merger
The Group is involved in a number of claims arising out of arrangements entered into by the Hangar 8 Group Companies prior to the 2015 Merger. All of these arise from the manner in which the Hangar 8 Group Companies conducted their commercial relationships prior to the 2015 Merger comprising the following:
Given that GMAA have a longstanding and successful FBO at Sharjah airport, this report from Sharjah reads well given the expansion, increased number of passengers etc (with a brief name check for GMAA):
"H.E Sheikh Faisal bin Sauod Al Qassimi, Director of Sharjah Airport Authority, spoke and presented a video which revealed the final shape of Sharjah International Airport after the expansion. The program was followed by the segment £Journey to the Top£, which included a video that featured the airport£s prominent figures and showcased the significant achievements during the past year and during the first quarter of 2018. An LED interactive show unveiled the airport£s new logo and identity, prior to the event£s conclusion, which honored the authority employees and strategic partners."
"H.E Sheikh Faisal bin Sauod Al Qassimi, Director of Sharjah Airport Authority.....reviewed SIA£s most prominent achievements during the past year, emphasizing the number of passengers who traveled through SIA in 2017 increased to 11.4 million, while the airport recorded 76 thousand takeoff and landing movements, a success, in light of the regional and global challenges facing the aviation sector. He also pointed out that SIA benefited from its geographical location and proximity to many seaports in raising air traffic."
According to the Wikipedia entry for Gama Aviation the outstanding legal case involving Dustin Dryden is due to be heard in June.
Was wondering if this action and also the alleged Credit Suisse claim was the cause of the recent volatility and the fact the sp can't break out - despite the good news that Gretel keeps updating us with on a regular basis..... ?
Anybody care to update us punters on the current situation, without breaking any Sub Judice rules.
Gama Aviation Europe adds Bombardier Global 6000 to its managed fleet.
European Air team add Bombardier Global 6000 management contract after competitive bid. The aircraft represents the third Global 6000 to enter the fleet since the start of the year.
Farnborough, 11th May 2018 Gama Aviation, the global business aviation services company, is pleased to announce the addition of a Bombardier Global 6000 to its European fleet. The announcement follows the recent introduction of two Global 6000s into the Asia fleet.
Gama Aviations ability to support the aircraft locally and internationally were amongst the defining factors in the clients final decision. Although primarily for private use, the aircraft will be available on a limited basis for charter out of Farnborough, representing one of the newest Global 6000s within the UK charter fleet.
Mark Gascoigne, Managing Director, Europe Air said: Im delighted that our new client selected us after a hard-fought process. We offered a simple solution, that combines our high level of local client service with our ability to leverage our unique global scale, breadth and depth to support the aircraft wherever and whenever the owner flies.
We wrote to investors at the end of February 2018 outlining our assessment of Gamas newly announced placing (this text is copied in the appendix for reference). Downing participated in this placing, contributing over £3.2 million across client funds. The shares were placed at 245p, a 7.5% discount to the price around the roadshow. As a result, Downing client funds now own 6.4% of the equity and Gama comprises 9.8% of the Trust.
Since the placing, Gama has announced a positive set of full year results for 2017. We discuss these in greater detail from page seven."
n the lead up to reporting results, we noted strong performance from Gamas US joint venture partner, Gama Aviation Signature Aircraft Management, a new contract win, and a number of new additions to the fleet in the US and Asia.
Richard Kearsey also joined the Board from the Close Brothers Aviation division to head up M&A at Gama. Throughout his 27 years in aviation financing with Close, Richard has likely had direct or indirect experience with most operators in the industry and therefore makes a strong addition to the business.
The full year results were positive, with $14 million of free cash flow generated and growth in both the Air and Ground divisions. We like the contracted nature of the Air business where Gama earns income through management fees rather than a margin on the sale of consumables, such as fuel. This was evident in the Asia division where there was a decline in revenue, as two aircrafts flew very little in the period (therefore generating less revenue on pass through costs), but gross profits increased as Gama earned more in management fees through fleet growth.
We think that this demonstrates the resilience of the model as even if assets arent flying they are still generating drop through profit. Once signed into the fleet these assets also tend to be fairly sticky.
The story is similar on the higher margin Ground business where regulatory drivers mandate maintenance based on flying hours or calendar days, whichever comes first. This provides good visibility, alongside regulatory cycles which drive additional maintenance work.
2018 will be a pivotal year for the business as management embark on several organic and inorganic growth opportunities. We also hope to see operating margins grow further as the model matures internationally. This sets the stage for 2019 and beyond, from which we expect the business to move to a new level of profitability and cash generation as management deploy the £48 million from Februarys fundraise. We expect that underlying free cash flow could double in this time once these strategic initiatives are fully implemented. For more detail on the recent strategic developments, please see the appendix to this letter."
Downing have issued their April newsletter for their Strategic Micro Cap Investment Trust. There's loads of great info about GMAA, but the Appendix is particularly worth reading, as it's Downing's full investor note on GMAA dated 23 February 2018:
"On 9 February, Gama Aviation announced a proposed placing to raise £48 million to accelerate growth and take them closer to their strategic aim of becoming the global leader in business aviation services.
We believe that the business already has a compelling investment rationale.
Revenue visibility and quality earnings (70% of gross profits are contracted, and a further 20% which could be deemed recurring in nature), cash generative, regulatory barriers to entry, and geographically diverse. In addition, it is run by a capable and ambitious management team, the same one who founded it around 35 years ago and who, post this fundraise, will retain over a 20% shareholding.
Gama is a business aviation services company providing aircraft management and maintenance services to a global fleet of aviation assets. It also operates prestigious special missions contracts such as the Scottish Air Ambulance, which it has managed since 1991, and the MoD Shadow programme, managed since 2008, amongst others.
The proceeds from the share issue are intended to provide both organic and inorganic growth capital. Significantly, an affiliate of Gamas existing partner in Hong Kong (Hutchison Whampoa), Hutchison Capital Holdings Limited, will take a large and strategic stake in the business with a £32.7 million commitment which will buy them 21% of Gamas enlarged equity. We think that this is significant a multi-billion-dollar Chinese infrastructure conglomerate realising Gamas growth potential.
The first portion of capital will be used to buy out Hutchison and Gamas existing joint venture in Hong Kong. This is a highly strategic region with high quality business aviation assets large transcontinental jets which typically generate $2-2.5 million of revenue p.a. each. Considering that Gamas operating profit margin target is 5% on the aircraft management side, that they already manage a handful of jets in Asia, and that Hong Kong alone has a fleet of over 120 jets which they can target, we believe that this is a compelling purchase which has great potential to grow earnings.
Hutchisons other business aviation interest in Hong Kong, a 20% shareholding in China Aviation Services Ltd (CASL), will also be purchased by Gama. CASLs long standing business is in providing passenger jet heavy maintenance at Hong Kong International airport, but in late 2017 Gama and CASL announced a partnership aiming to grow the business aviation maintenance side where both CASL and Gama see great potential. This is significant as there has historically been no business aviation heavy maintenance capability in Hong Kong, so owners of that 120+ strong fleet must reposition their aircraft elsewhere at potentially great expense and inconvenience. Management guide towards 20% operating margins in the maintenance business over the long term and we believe that revenues here could grow to around $15-20 million. Additionally, we believe that start-up risk is reduced as Gama are plugging into CASLs existing infrastructure and will even use some of CASLs surplus engineering labour, where appropriate.
The next regions earmarked for investment are the US and Middle East. Since we invested back in January 2017, we have pushed for management to build out high margin, heavy maintenance capabilities in the US. What they currently have are over 30 mobile units engineers in vans which drive around airfields carrying out lower margin light maintenance. The higher margins come from intensive, heavy maintenance work where Gama currently have no capability in the US. They will invest $10 million to construct and fit-out two hangars,
At Mello on Thursday, Judith MacKenzie, manager of the Downing Strategic Micro Cap Investment Trust, gave a presentation in which she heavily featured GMAA as one of the top holdings.
She pointed out particularly strongly that GMAA was completely misunderstood, and had recently been marked down simply because it was in the same sector as Air Partner following the latter's warning, whereas in fact GMAA shared very few characteristics with AIR and was a much more exciting, more reliable and less cyclical investment than AIR or other sector comparators.
I also saw GMAA's CEO present to a packed room and was impressed. I thought he came across well - quietly confident and thorough.
Hopefully all this will attract further interest given the cheap fundamentals and global leadership prospects.
Gama Aviation Hutchison (Hong Kong) recently announced it will be the exclusive General Sales Agent in Asia for business jet maintenance services offered by China Aircraft Services Ltd. (CASL) in Hong Kong.
It is offering fixed price base maintenance packages for up to and including 3C/24 month checks for the Gulfstream G350/450, G500/G550 and G650/650ER types and the Bombardier Global BD-700 series. The deals also cover regional AOG (aircraft on ground) events, battery servicing and cleaning.
CASL has FAA and Cayman approvals for the Gulfstream G350/450, G500/G550 and G650/650ER types and the Bombardier Global BD-700 series, the primary types operated in the region. Approvals for Bermuda and Hong Kong CAD are planned.
Marwan Khalek, CEO of Gama Aviation (Booth H1514) noted that the collaboration marks a new milestone for the company in the region. In addition, the MRO offering will save many owners and crews the inconvenience, cost and unnecessary engine and airframe hours of flying to alternate service facilities. Hong Kong has the capability and we are proud to represent this through our unique collaboration, he said.
Added CASL CEO Angus Cheung: This is a historic year for CASL as we add further capability to our strong commercial aviation maintenance platform. Were very excited with this compelling offer to business jet owners in the region."
"Pride Flight Associates Aligns With Gama Aviation Signature
Posted: Monday, April 23, 2018 2:24 PM
Beverly Hills-based Pride Flight Associates (www.prideflighht.com) last Wednesday announced its affiliation with Gama Aviation Signature, operator of one of the worlds largest fleets of chartered business jets situated in more than 30 locations around the globe.
Aviation consultant Roger W. Behrstock, CEO of Pride Flight, stated: Our affiliation with Gama affords us the ability to grow our business by better serving the requirements of our diverse and expanding clientele. This brings us the new availability of utilizing its more than 200 superior aircraft, plus top flight management and maintenance.
"Gama Adds Global 6000 to Asia Fleet
April 18, 2018, 5:43 PM
Gama Aviation (Booth H1514) announced at ABACE 2018 that it has added a second Bombardier Global 6000 to its Asia fleet, two months after the first Global 6000 based in the region joined the companys rolls of managed aircraft. Gama cited its ability to support the aircraft locally and internationally, in particular flights within Europe and the U.S., as defining factors in the clients choice of management firms.
Few management companies can think global and deliver local in the way that we can, said Sergio Oliveira e Silva, general manager, Asia. Consequently, we are witnessing strong interest in our offer when clients wish to maximize the performance of their aircraft.
"Gama Eyes Greater China Progress From Hong Kong Base
by Ian Sheppard
April 15, 2018, 9:00 PM
Gama Aviation (Booth H1514) has reported another strong year of growth as the business aviation specialists operations in the U.S., Asia, and the Middle East all ticked up, with the U.S. performing the strongest. In Asia, Gama Aviation acquired Hutchison Whampoas 50 percent stake of its Hong Kong-based joint venture, with Hutchison instead becoming a strategic investor in the Gama Aviation group by taking a 20 percent stake.
The group itself now also holds a 20 percent stake in Hong Kong Chek Lap Kok International Airport-based MRO provider CASL. Were very well placed in the Asia market, co-founder and CEO Marwan Khalek told AIN. Weve decided to use Hong Kong as our main base while in a holding pattern waiting to see what happens in Mainland China.
In the Middle East, revenue grew by 20.5 percent, to $23.5 million, and the division was profitable for the first time, returning $0.5 million. In October, Gama Aviation bought out the Jet Sets 51 percent stake in its Middle East ground division as part of its planned development in the region.
After the companys 2017 results were released on March 19, Khalek said Gama is looking to bolster its European operations and become less UK-centric. The company, which is currently listed on the UKs Alternative Investment Market (AIM), recorded 2017 revenues of $207.4 million, up 5.8 percent, with underlying profit of $18.7 million.
It has now laid the foundation for the next steps of development and growth, raising £48 million (approximately $67 million) in February. Of this, $10 million has been earmarked for investment in two maintenance facilities in the U.S. (one on the East Coast and one on the West); $10 million for developing its Sharjah, UAE business aviation center; and the rest for acquisitions in the Europe air and ground divisions and the Middle East air division. Khalek said the European division Needs scale and needs to be more European.
In the U.S., the new division created through the merger of its U.S. operations with the BBA aircraft management business (Landmark), rebranded as Gama Aviation Signature, in which Gama Aviation has a 24.5 percent stake, saw significant growth resulting in its U.S. air-related activities increasing in revenue by 35 percent, to $518 million. This was also fueled by the continued growth of our Wheels Up contract, said the company. It added, The integration of the BBA business is delivering the envisaged benefits: adding complementary West Coast coverage to the existing East Coast business, diversifying the client base, providing the ability to cross-sell maintenance services into Gama Aviations wholly owned U.S. ground business, and delivering cost synergies.
Bouncing today after a ridiculous fall over the last few days.
The only reason I can see for this crazy markdown is a supposed commonality with AIR in the same sector, given that AIR has lost 40% of its m/cap after a dodgy RNS .
Which is ridiculous, as AIR are largely dependent on charter revenues and have had internal accounting problems, whilst GMAA have high recurring and non-discretionary revenues and much lower cyclical charter revenues. Plus piggybacking on the likes of Wheels Up for growth.
C'est la vie - that's what makes a market. I assume some PIs have also been stopped out by now, thus exacerbating the fall.
GMAA can rise just as quickly as it falls. With stable markets it should return to 250p-260p as quickly as it fell.
The results just out on 19th March had a very confident outlook:
Based on our performance to date and contract visibility, the Board is confident in the strength of the Group's operations and believes the Group is well placed to deliver its strategic objectives and achieve its expectations for the current year."
Given that GMAA are now on a current year P/E barely above 10 - even before the likely acquisitions coming this year - I continue to believe there's substantial upside.
Next month's trading update will hopefully reflect the positive outlook from the results:
Based on our performance to date and contract visibility, the Board is confident in the strength of the Group's operations and believes the Group is well placed to deliver its strategic objectives and achieve its expectations for the current year."
Here's Simon Thompson's full tip for GMAA - "priced on 12.5 times this years likely earnings, dropping to only nine times 2019 EPS estimates" says it all, and that's before any likely earnings-enhancing acquisitions:
"Gama cashed up for bolt-on deals
I had an informative results call with Marwan Khalek, chief executive of Aim-traded Gama Aviation (GMAA:257p), an operator of privately-owned jet aircraft and one that has just delivered a near 25 per cent uplift in full-year underlying pre-tax profit to $17.1m (£12.2m) on revenue (including associates) up by 38 per cent to $615m.
The performance was fuelled by 66 per cent growth in revenue to $388m in its buoyant US air operation, which is reaping the benefits of the fleet joint venture with BBA Aviation (BBA) and delivered a 50 per cent plus hike in operating profit to $9.1m. There should be more upside to come as the US air business exploits organic market growth and focuses on leveraging the inbuilt opportunity [from the JV], one reason why Gama invested heavily in its sales force in the final quarter of 2017, the benefits from which will be seen this year. Divisional operating margins of 2.4 per cent are half Mr Kwaleks target of 5 per cent and he sees scope for a one percentage point improvement each year. Thats worth noting.
As anticipated, a much better margin improvement on the back of cost savings and exiting legacy contracts meant that Gamas European air division more than doubled operating profit to $4.5m on revenue of $91.8m. The European ground division delivered decent growth, too. Interestingly, Mr Kwalek sees scope to make accretive bolt-on acquisitions for both European businesses and, with $22m funds available from a recent £48m placing, the board has firepower to do so.
Importantly, shareholders are reaping the benefits of almost $14m of free cash flow generated last year as the dividend per share was hiked by almost 6 per cent to 2.75p. Moreover, expect the progressive payout policy to continue as analysts at brokerage WH Ireland predict a 27 per cent increase in Gamas pre-tax profit to $21.8m this year, rising to $33.1m in 2019. The hefty profit increase reflects both organic growth and contributions from investments made using the placing proceeds which I outlined last month when the shares were around the current level (Running the slide rule, 19 Feb 2018).
Gamas shares are priced on 12.5 times this years likely earnings, dropping to only nine times 2019 EPS estimates, a rating out of sync with the anticipated earnings growth and I maintain my 325p target price. Buy."
"Gama Aviation Releases 2017 Results, Underlying Profits Up 28%
by Ian Sheppard
March 19, 2018, 9:49 AM
Gama Aviation experienced a strong year of growth in 2017 as the business aviation specialists operations in the U.S., Asia, and the Middle East all ticked up. The U.S. performed the strongest, partly on the back of its contract with Wheels Up (which now has 12 bases) and the Gama Aviation Signature joint venture, which was created on Jan.1, 2017. While profit in Europe proved elusive in the year, the group is looking to bolster that side of its business and become less UK-centric, ﻿co-founder and CEO Marwan Khalek told AIN.
Of the £48 million (around $67 million) raised in an equity placing last month, $10 million has been earmarked for investment in two maintenance facilities in the U.S. (one on the East Coast and one on the West); $10 million for developing its Sharjah, UAE business aviation center; and the rest for acquisitions in the Europe air and ground divisions and the Middle East air division. Khalek said the European division needs scale and needs to be more European.
The company, which is listed on the UKs Alternative Investment Market, recorded 2017 revenues of $207.4 million, up 5.8 percent, with underlying profit of $18.7 million. In the U.S. the new division created through the merger of its U.S. operations with the BBA aircraft management business (Landmark), rebranded as Gama Aviation Signature. Gama Aviation has a 24.5 percent stake in the venture, whichsaw significant growth. As a result, revenues for the the company's U.S. air-related activities increased by 35 percent, to $518 million. This was also fueled by the continued growth of our Wheels Up contract, said the company. It added, The integration of the BBA business is delivering the envisaged benefits: adding complementary West Coast coverage to the existing East Coast business, diversifying the client base, providing the ability to cross-sell maintenance services into Gama Aviations wholly owned U.S. ground business, and delivering cost synergies.
In the Middle East, revenue grew by 20.5 percent, to $23.5 million, and the division was profitable for the first time, returning $0.5 million. In October, Gama Aviation bought out Jet Sets 51 percent stake in its Middle East ground division, seeking "a strong foundation for our planned development in the region.
In Asia Gama Aviation acquired Hutchison Whampoas 50 percent stake of its Hong Kong-based joint venture, with Hutchison, instead, becoming a strategic investor in the Gama Aviation group by taking a 20 percent stake. The group itself now also holds a 20 percent stake in Hong Kong Chek Lap Kok International Airport-based MRO provider CASL. Were very well placed in the Asia market weve decided to use Hong Kong as our main base, while in a holding pattern waiting to see what happens in Mainland China.
WH Ireland have retained their Buy and 370p target.
They have 31.6c EPS for last year, with $17.1m PBT, which they summarise as "broadly in line with expectations", i.e slightly below, due to a "slightly higher effective tax rate in the year" and higher investment in the US Air sales force which should pay dividends in this and later years.
Given the placing dilution they now go for 29c EPS this year, rising fast to 41.2c next year. If GMAA make acquisitions as planned then of course these forecast could increase quickly.
As the manager of the the MI Downing UK Micro-Cap Growth fund said last week:
It is a great business that has grown to the next stage, is not well known but is a tuck away job for us.
Good results this morning as expected, with operating profit up over 28%, debt down 30% or so to only $13m, and in particular a bullish outlook for 2018:
"Current trading in line with management expectations; company well placed to achieve its expectations for the current year"
The current year forecast of 30c EPS should soon be increased significantly through acquisitions, which are well flagged in the narrative:
"· Acquisitions made in 2016 delivering at or above expectations
· Pipeline of acquisition targets identified
· Management teams and structures in place to support future growth and acquisitions"
It's worth noting GMAA's statement today that Gama Aviation Signature "is the largest aircraft management business in the US and has significant growth prospects."
The CEO's statement sums up the confidence here:
"Marwan Khalek, Chief Executive of Gama Aviation said:
"We are pleased to report financial results for 2017 in line with expectations. In particular, we have increased our operating margins and delivered improved operating cash flow.
Strategically this is an exciting time for Gama Aviation, having recently completed our successful £48 million fund raising. This will allow us to deliver significant growth and scale across all geographies and service lines, enabling us to make further value enhancing acquisitions from within our fragmented market and will help us to fulfil our ambition of becoming the global leader in business aviation services.
In US Air, following the BBA aircraft management business merger, we are now the market leader in US business aviation management. This offers us cross-selling opportunities into our US Ground division. We will leverage customer relationships across our national network and invest in base facilities to increase the scale and scope of services.
Europe Air is positioned for sustainable growth and we continue to build our offering in Europe Ground. The acquisitions in Europe have been successful and have added significant value.
Recent corporate developments by us in the Middle East and Asia, together with the proposed construction of a business aviation centre in Sharjah will accelerate growth. With Hutchison as a strategic investor, the addition of two experienced non-executive board directors and the strengthened management teams across the regions, we are well positioned for growth in 2018 and beyond."
"Judith Mackenzies three best value stock ideas on AIM
15 March 2018
The manager of MI Downing UK Micro-Cap Growth highlights three interesting value opportunities in the AIM market at present."
Next up is GAMA Aviation, the fifth largest holding in the portfolio with a 4.92 per cent weighting.
Despite having aviation in the name, it is more of a services company than a travel company, providing services to both private and public service aircrafts.
If you happen to own a private jet you have to house it somewhere perhaps in a hanger but also every three months or after X number of hours in flight you have to have it maintained, Mackenzie said.
As well as this, an individual would need to hire a crew and pilot as they are unlikely to have their own on staff.
GAMA Aviation therefore provides all the ancillaries around such flights, charging for the crew plus around 8 per cent on contracts that are typically for three-to-five-years without taking on the fuel risks, the manager said.
As the firm does not own the planes and is not in charge of the flights, it is more like a quasi-support services business despite sitting in the aviation sector.
We bought our first stock around 10 months ago but we said to them that to operate in more countries they need to do it through joint ventures, she said.
We knew it would happen at some stage but we were a bit surprised about how quickly it did happen.
Indeed, last year the company announced a large deal with Hutchison China to expand its services into China and the wider Asia market, announcing a £48m rights issue in February this year.
That is symptomatic of a growth and value company. These little companies break out and it is now going to be twice the market cap of it was when we bought in but it is still on 6x P/E, Mackenzie said.
It is a great business that has grown to the next stage, is not well known but is a tuck away job for us.
I got hold of the full text of Simon Thompson's recent tip, as follows:
"I clearly wasnt the only one running the slide rule over Aim-traded Gama Aviation (GMAA:258p), an operator of privately-owned jet aircraft, when I rated the shares a buy after the company issued a positive pre-close trading update ahead of results on Monday, 19 March 2018 (Primed for gains, 29 Jan 2018).
Gama has just announced a placing of 19.5m shares at 245p each to raise £48m of new funds to ramp up its growth plans. Two-thirds of the new equity is being purchased by an affiliate of the mighty Hutchinson Whampoa (China), a Hong Kong-based conglomerate operating across a diverse number of sectors including the provision of aircraft maintenance and logistic services. Hutchinson will own 21 per cent of the enlarged share capital of 63.5m shares.
The fundraising makes commercial and strategic sense. Around $19.8m (£14.2m) of the capital will be used to acquire Hutchinsons Hong Kong aviation interests, including a 20 per cent stake in China Aircraft Services, a company founded in 1995 and one of only three operators that provide maintenance, repair and overhaul aviation services at Hong Kong International Airport. The $16m being paid for that stake implies a value of $80m for the equity, hardly a punchy valuation for a business that made pre-tax profits of $7.8m in its last financial year and has net assets of $72m. More importantly, it gives Gama access to markets that otherwise would have been difficult to access, and in a less capital intensive way, too.
It also makes sense for Gama to deploy $10m on expanding hangar capacity and tooling and equipment at its fast-growing operations on the East and West coast of the US. The company operates from 14 locations across the country and manages a fleet of 200 aircraft, but growth is being held back by capacity constraints, an issue the new capital addresses, as well as providing cross-selling opportunities on the maintenance side of the business. Strategically, its a smart call to allocate $5m as seed capital to develop a new $45m aviation centre at Sharjah International Airport, given capacity constraints at Dubai International Airport. Its not only a lower cost base, but is geographically well located, thereby offering a platform for expansion in the Middle East.
In the near term, the placing will be dilutive to EPS, which is why analyst John Cummins at broking house WH Ireland expects EPS to dip from 32.9¢ to 30¢ this year, even though pre-tax profits are forecast to rise 29 per cent to $22.6m on revenues up 18 per cent to $691m. The payoff will be seen in 2019 when he predicts a 50 per cent hike in pre-tax profits to $33.1m on revenues of $758m to deliver EPS of 41.2¢, or almost 30p, implying the shares are being priced on a forward PE ratio of 8.5. Its not hard to understand why chief executive Marwan Khalek is investing £625,000 of his own money to purchase 255,000 shares in the placing. I continue to rate Gamas shares a buy and reiterate my 325p target price. Buy."
Gama Aviation Signature adds four new large cabin aircraft to US aircraft management fleet.
SHELTON, CT March 6, 2018 Gama Aviation Signature, the largest aircraft management company in the United States, announced today that it is expanding its managed aircraft fleet with the addition of four large cabin business jets a Challenger 350, a Gulfstream 550 and two Gulfstream IV-SP aircraft. Gama Aviation Signatures growing fleet continues to offer a wide variety of aircraft types to satisfy all client needs. The company currently manages over 200 aircraft in the United States and over 250 worldwide.
The new Gulfstream IV-SP additions are the ideal intercontinental-range business jets. Each cabin measures 45.1 feet long by 7.3 feet wide by 6.1 feet tall, making it spacious and comfortable to accommodate up to 13 passengers. Providing the ideal choice for business or leisure travel, each G-IVSP is equipped with Wi-Fi connection and the latest in-flight technologies for passengers to remain relaxed yet productive. One of the new Gulfstream IV-SPs is currently based at Miami Opa-Locka Executive Airport (OPF) and is already available for immediate charter. The second G-IVSP will call Teterboro Airport (TEB) home and will be available for charter at the end of this month.
These new Gulfstream IV-SPs mark the 28th and 29th Gulfstream jet to Gama Aviation Signatures US aircraft management fleet. The new Challenger 350 and Gulfstream 550 mark the 2nd Challenger 350 and the 9th Gulfstream 550 respectively.
We are pleased to offer our clients more options for their intermediate and long range missions, said KC Ihlefeld, Senior Vice President of Aircraft Management. These aircraft are perfect additions to our US charter fleet of heavy, midsized and light jets. We expect the aircraft to be in high demand and support as well as contribute to Gama Aviation Signatures fast-paced US charter business.
"After raising more than $100 million in funding, Wheels Up, a membership-based private aviation company, has begun the expansion of its sales and marketing campaign....
....Jamie Jaffe, senior vice president of marketing at Wheels Up, said the company has earned about $300 million in annual revenue and added more than 5,000 members since 2013. About 80 percent of those members are individuals and 20 percent are corporate.
During last years National Business Aviation Association conference in Las Vegas, Dichter said the company expects membership to reach 10,000 by 2020. I think we can be a $5-10 billion company, he said. Theres no reason by 2025 into 2030 we shouldnt have 25,000 or 30,000 members. We should be every year taking more airplanes than we took the year before.
In October, Wheels Up announced it had closed an equity-based fundraising round of $117.5 million. The funds will be used for a number of growth initiatives, including the purchase of additional aircraft and expansion of sales and marketing."
"On his appointment Richard Kearsey, Director of Corporate Development commented: "Gama Aviation has the structure, financial means and shareholder backing to capture the opportunity that exists within the business aviation sector. I'm delighted to join the company and look forward to the Company's development in the years ahead."
Gama Aviation Europe wins a two year West Africa transport contract with a comprehensive Challenger 604 solution incorporating its Air & Ground services.
Farnborough, UK, 2nd March 2018 Gama Aviation Plc, the global business aviation services company, is pleased to announce it has won a competitive tender to supply air & ground services to support a major oil companys management transportation requirement.
The contract award is for two years with a further two-year option.
Mark Gascoigne, Managing Director, Europe commented: We are delighted to have extended our relationship with this client winning a hard-fought tender process. By focusing on the end clients needs, we have been able to create a solution that delivers the right mix of security, safety, resilience and value using a combination of our air and ground assets.
The contract offers a prime aircraft in the ever-versatile Bombardier Challenger 604 with a back-up fleet aircraft being supplied on an as required basis. Line and AOG maintenance is provided in country with base maintenance taking place at Gama Aviations Oxford facility which specialises in Bombardier Challenger 601 / 604 / 605 aircraft.
Scott Corbett, Head of Jet maintenance, Europe commented: We are well positioned to support this aircraft both down-route and through its contracted lifecycle via our Oxford base. However I also anticipate, according to the aircrafts mission profile, that we also will draw upon our teams in Nice and Sharjah all of whom have support capabilities that we can draw upon. We believe this, alongside our experience with the type, was a major factor in the clients decision to award the work to us.
Gama Aviation adds Bombardier Global 6000 to aircraft management fleet in Asia.
Hong Kong, 27th February 2018 Gama Aviation, is pleased to announce the addition of a Bombardier Global 6000 to its aircraft management fleet in Asia.
Following a competitive process, Gama Aviations ability to support the aircraft locally and international were amongst the defining factors in the clients final decision. The addition of the Global 6000 follows the recent addition of a Gulfstream G550 to the fleet, which also required global support given its mission profile.
Sergio Oliveira e Silva, General Manager, Asia said: I am delighted with the fast start we have had to the year. Our new client wanted a high-quality team who could fully support their mission wherever they were. With our local, regional and international resources, strong working relationship with Bombardier and deep experience with the Bombardier Global series of aircraft, we deliver just that. Few aircraft management companies in Asia can think global and deliver local in the way that we can; consequently, we are witnessing strong interest in our offer when clients wish to maximising the performance of their aircraft.
"Underlying operating profit in Flight Support increased by 12.0% to $329.4 million (2016: $294.0 million), driven by continued strong underlying operational performance in Signature Flight Support and an $11.6 million contribution from acquisitions. Underlying operating profit includes our Signature TECHNICAir and our aircraft management and charter business which is accounted for as a joint venture. On an organic basis, adjusting for acquisitions ($11.6 million), FX ($0.6 million) and disposals ($7.8 million), underlying operating profit increased by 11.3%."
"Signature Flight Support's locations delivered another strong performance in a good growth environment, as we started to capture the benefits of our strong and customer-relevant network."
"Signature is well positioned to focus on optimising its unique and high quality global network of FBOs and line maintenance locations, through the provision of a broader range of B&GA services to our extensive customer base and enhancing network performance to accelerate value creation. The unique Signature network has the unmatched ability to satisfy the needs of our customers at many more locations that they want to fly to, supporting anticipated continued outperformance in 2018 and beyond.
In 2017 Signature expanded its affiliate FBO programme, Signature Select®. It signed an extended licence agreement with Fly Across at Toluca International Airport in Mexico, just a 30-minute drive from Santa Fe, the country's financial and business district. This location increases the Signature Select® network to 19 locations globally and we continue to look for further opportunities to expand this proposition.
Signature has continued to invest in its current network, with the successful opening of its newly constructed FBO, with premium hangar space to satisfy the growing tenant demand, at Boeing Field, Seattle which completed in June 2017. It also secured a new strategic lease at Washington Dulles International Airport."
Gama Aviation Asia delivers first Gulfstream G650/650ER engineering course in Hong Kong.
Hong Kong, 27th February 2018 Gama Aviation Plc, the global business aviation services company, is pleased to announce the completion of the first of its theory and practical training courses run in-conjunction with Global Jet Services and China Aircraft Services Limited (CASL) for the Gulfstream G650/G650ER.
Eleven engineers from four local MROs attended the course for seven weeks receiving B1 / B2 training with formal approvals from Hong Kong CAD, EASA, GCAA and the FAA.
J D McHenry, President, CEO, Global Jet Services, Inc. commented: This most recent class was an excellent example of how the continued partnership of Gama Aviation Asia and GJS will successfully support a global business aviation maintenance market. The class concluded with awarding a large group of students from multiple geographic regions with their respective certificates required by Hong Kong CAD, EASA, GCAA or FAA. They were all served at this central site provided by Gama Aviation. The combined talents, expertise, and flexibility demonstrated by this alignment of quality training providers are proof of a highly effective maintenance training solution, available to a diverse audience with specific requirements.
Sergio Oliveira e Silva, General Manager, Asia commented: This G650/650ER engineering course is the first of its kind in Hong Kong that combines the skills of our team, CASLs comprehensive business jet maintenance approvals and the talents of Global Jet Services instructors. Running this very well attended course in Hong Kong saved local companies thousands of dollars in travel and accommodation costs, removed the inconvenience of having valuable resources in different time zones and allowed the engineers to return home to their families at the end of the day. Based on the success of this G650/650ER engineering course we will be running further Gulfstream and Bombardier courses in 2018.
"Private jets chartered for as little as $500
February 24 2018
After the financial crash of 2008 the writer Tom Wolfe imagined the dismay of bankers and chief executives forced to give up their private jets and move through the clogged intestines of commercial airports.
A decade later executives are flying privately once more. Yet there are also signs that some of the great unwashed multitude are joining them. Tumbling prices for second-hand private jets have pushed many owners to charter their aircraft rather than sell at a loss.
Companies have sprung up selling seats on Gulfstreams and Bombardiers for not much more than they might pay on Delta Airlines. Industry observers have recorded a 10 per cent increase in charters and prices as low as $500.
Bob Seidel, who runs a jet charter company called Alerion, said that since 2000 the resale value of some jets had dropped from $32 million to $4 million.
He thought that American television might have helped too. Shows like The Bachelor, where they are taking private jets everywhere, had helped to popularise the idea of private jet travel, he said.
Among his customers he counts a cat that flew to London on a Gulfstream jet, sent by a woman whose daughter had gone to university there. Her daughter missed the cat, he said. It was the only passenger on the plane.
Simon Thompson of the IC has just published this afternoon a Buy tip update on GMAA, which should bring in more buying interest.
A couple of quotes - imo WH Ireland's 370p target is nearer the mark, but 325p would be a good start:
"The fundraising makes commercial and strategic sense. Around $19.8m (£14.2m) of the capital will be used to acquire Hutchinsons Hong Kong aviation interests, including a 20 per cent stake in China Aircraft Services, a company founded in 1995 and one of only three operators that provide maintenance, repair and overhaul aviation services at Hong Kong International Airport. The $16m being paid for that stake implies a value of $80m for the equity, hardly a punchy valuation for a business that made pre-tax profits of $7.8m in its last financial year and has net assets of $72m."
"In the near term, the placing will be dilutive to EPS, which is why analyst John Cummins at broking house WH Ireland expects EPS to dip from 32.9¢ to 30¢ this year, even though pre-tax profits are forecast to rise 29 per cent to $22.6m on revenues up 18 per cent to $691m. The payoff will be seen in 2019 when he predicts a 50 per cent hike in pre-tax profits to $33.1m on revenues of $758m to deliver EPS of 41.2¢, or almost 30p, implying the shares are being priced on a forward PE ratio of 8.5. Its not hard to understand why chief executive Marwan Khalek is investing £625,000 of his own money to purchase 255,000 shares in the placing. I continue to rate Gamas shares a buy and reiterate my 325p target price"
Thanks - here's the complete tip from Questor FYI. Some very positive commentary from the fund manager at Downing:
Daily Telegraph Business section 14/2/2018 :
" Update : Gama Aviation .
Gama Aviation , tipped at 193.5p in August last year , has announced plans to raise £48M by selling new shares . Gama's existing partner in Hong Kong , Hutchinson Whampoa , has committed £ 32.7M for 21pc of Gama's enlarged equity .
" This is a coup for Gama , giving it the financial firepower to take the company to the next level " , said Nick Hawthorn of Downing , who holds shares in the group . " Since we invested , management have done everything they said they would . It's only a matter of time before the true potential of this business is realised . The shares continue to look cheap at only 8.8 times 2019 earnings . We believe that they deserve to be rated at least in line with peers at 12.5 times earnings , which would imply a share price of 370p " .
GMAA meets Giles Hargreave's rules for such growth stock investing per the article:
Positive earnings-per-share (EPS) that have been growing by more than 10% compounded over three and five years.
Return on Capital of more than 12%.
Net Margins are increasing year-on-year.
Positive relative price strength.
A constituent of the FTSE SmallCap or AIM All-Share index.
Must admit that GMAA has managed to hold up better than many other stocks during the recent bot attacks. However 370 maybe a dizzy height.
Will be very happy to be up around 300 after the interims next month.
Tipped as follows by the IC's Simon Thompson - hopefully more buying to come tomorrow:
"Gama in the ascent
Shares in Aim-traded Gama Aviation (GMAA:260p), an operator of privately owned jet aircraft, have reacted positively to a pre-close trading update ahead of results on Monday, 19 March 2018. I expect the share price to continue to make headway towards the 325p target price I set out at the time of the interims ('Riding earnings momentum', 6 September 2017).
Analyst John Cummins at broking house WH Ireland expects revenues to have climbed by over a third to $586m in 2017, buoyed by significant growth in Gamas US air division following the Landmark fleet joint venture with BBA Aviation (BBA), and in its US ground handling business, too. As expected Gamas European air division has produced a far better margin improvement on the back of cost savings. As a result, pre-tax profits are forecast to rise by 28 per cent to $17.5m and deliver EPS of 32.9¢. The strong operational progress is set to continue in the new financial year especially as the US economy remains buoyant, suggesting that Mr Cummins EPS estimate of 36¢ is well supported. On this basis, Gamas shares are rated on 10 times earnings estimates.
One reason for the modest rating is that Gama is involved in legal proceedings relating to its legacy Hangar 8 business brought by its former chief executive Dustin Dryden who resigned in September 2015. In a separate case, the company is trying to recover a long standing trade receivable on which it holds adequate security. The board expect the net effect of these proceedings to lead to a net cash inflow to the company. I am unconcerned.
More importantly, with net debt reduced by almost a third to $13m year-on-year, and the trading outlook upbeat, I would expect a hike on last years dividend of 2.6p a share and see potential for further earnings-accretive bolt-on acquisitions. Buy."
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