Peter Webb, fund manager turned market commentator looks at Avation (AVAP)
Avation, the commercial passenger aircraft company today posted record numbers in the financial period for the 6 months ended 31 albeit headline NAV rose just 4% in Sterling terms to 288p and 1% in US$ to $3.66.
Gross assets expanded 9% to US$ 1.256 billion and the company expects to add another 7 aircraft to the current fleet (41 aircraft; including seven aircraft on finance lease) during its second half to 30 June 2019.
Cost of funds are edging lower as the Company grows in size and can attract more competition for funding. As investors would expect for a business of this type financial leverage is high but normal for the sector (net debt to equity at 3.6x).
Having performed extremely well recently the share price at 287p looks up with events. However, investors sticking in there will take comfort from the quality of management and good history of realising premiums on asset sales. This sector is dominated by larger funders and Avation looks most likely to become part of a larger group once it hits their radar.
