Air Partner – undervalued £43m group, has £18m net cash, is on six times earnings
In about a month or so we will see the Trading Update for the year to end January 2021 for this tiny but global aviation services group.
Did well out of the virus
It is one of the few companies to have done well from the Covid-19 crisis.
The current year saw a strong first half to the end of July but could well have been enduring a weaker second half. Even so its brokers reckon that this £43m company will have made some £10.5m profits for the year.
Strong cash position
What is more, it boasts an impressively strong £18m net cash position, which will be handy as extra working capital to support its large customer programmes and invest in organic growth opportunities.
Established almost sixty years ago, Air Partner (LON:AIR), is an aviation services group that operates globally providing aircraft charter and aviation safety and security solutions to industry, commerce, governments and private individuals, across civil and military organisations.
Freighting PPE was positive, will vaccines be similar
It did very well out of organising evacuation and repatriation flights in the early days of the pandemic. In fact, it played a key role sourcing freight aircraft supply for PPE cargo movements generating record profits across the UK, the US, Germany and Turkey.
It is possible that the group could be starting to see a pick-up again in its logistical support operations and services as any of the various Coronavirus vaccines need to be shifted geographically.
Global operator in both Charter and Safety
The Gatwick Airport-based group has two main operating divisions: Air Partner Charter; and Air Partner Safety and Security. On a global basis it has some 16 locations from which it operates 24/7, employing over 400 aviation professionals.
The Air Partner division comprises Group Charter, Private Jets, Freight and its Specialist Services.
The Group Charter company charters large airliners to move groups of any size.
The Private Jets operation offers the company's unique pre-paid JetCard scheme and on-demand charter for up to 19 people.
Its Freight side charters aircraft of every size to fly almost any cargo anywhere, at any time.
Specialist Services comprises Air Partner's other aviation services that complement its Charter business: Remarketing, ACMI, scheduled group travel, tour operations, air evacuation and flight operations.
The Safety and Security division takes in Baines Simmons, Redline Assured Security and Managed Services.
The Baines Simmons operation offers aviation safety management and fatigue risk management.
Its Redline Assured Security delivers government-standard security training, consultancy and solutions to regulated, high value and high threat environments.
While its Managed Services side offers wildlife hazard management and aircraft registry services.
The company, which is the only UK publicly listed air charter broker and aviation safety and security consultancy.
It has some 63.6m shares in issue.
The larger shareholders include Schroder Investment Management (11.57%), Hargreaves Lansdown Stockbrokers (10.20%), Amati Global Investors (8.23%), Tellworth Investments (8.21%), Premier Miton Investors (7.45%), Interactive Investor (6.20%), Lord Lee of Trafford (4.72%), Barclays Smart Investor (3.93%) and Jarvis Investment Management (2.94%).
Current year estimates
Corporate broker N+1 Singer has estimated that in the year to end January 2021 the group will have generated net fee income of £42.1m (£34.2m) and made adjusted pre-tax profits of £10.5m (£4.2m), worth some 12.2p (6.3p) in earnings per share.
Shares were 49% higher four months ago
Admittedly we have no idea just how long this pandemic will carry on and just how much it will impact Air Partner’s future prospects.
However, at only 69p the group’s shares, which in the July of this year were standing at 103p, look to me to be a very appealing gamble ahead of its Trading Update in January.
I now set a Target Price of 89p on the shares.