Top member reports
Consensus community valuation
$0.900
Average Intrinsic Value
36.4%
Undervalued by
Active Member Straws
#Overview
Added 4 months ago

PTB provides aircraft engine maintenance, repair and overhaul (MRO) on long term contracts, as well as aircraft leasing & finance and also parts sales.

It's focused on prop-engine aircraft with less than 25 seats. 80% of customers are outside of tourism, with no single client representing more than 15% of revenues

Aircraft leasing is the growth engine, as new leases include MRO contracts. Leases are typically for 5-8 years.

MRO contracts are based on hours flown, NOT passenger numbers. To date (24/3) the company says it has not been impacted by mandated shutdowns (most customers are still in the air), and the business is classed as one that provides essential services.

Recently acquired US based Prime Turbines: an engine maintenance, repair and overhaul business with 3 workshops in the US.  It doubles workshop capacity, increases margin capture (as they no longer need to outsource US based work), gives FAA/EASA approval and therefore massively expands addressable market. It will increase revenues by approx 78% on a pro-forma basis.

It has around $31m in debt, which represents about 37% of equity or ~2x pro-forma EBITDA

Post acquisition, total share count should be ~125.5m. 

Founder led, with strong inside ownership.

Shares have lost over 50% since the start of the coronavirus crisis, but this looks like  big overreaction given the nature of the business. A good update from the company on the virus impact here.

I need to do more research, but this looks interesting.

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#Overview
Last edited 3 weeks ago

I'm going to restate what a few others have already mentioned, though I'd like to emphasize the different parts of the business a bit.

In my opinion, PTB is one of few high quality businesses in the micro-cap space. Providing maintenance, repairs and selling of engines, specializing in PT6A & TPE331 which are established through long-term contracts with international clients. 

The USA division is a similar model to the Brisbane business, providing engine repairs, and overhauls in the North American market. Likely to be an area of growth. Operations based in Miami, Florida.

The company also leases (typically) long-term  engines and aircrafts, a key strategic growth strategy over the coming years. "Pacific Turbine Leasing fits in with other core business as it allows for cross selling of parts and maintenance of engines under engine management plans." These contracts have high retention rates and offer consistent earnings.

International Air Parts (IAP) is a subsidary based in NSW, predominately an aircraft spare parts business. IAP plays a major role supporting customers in the Pacific Turbine Lease customers.

Revenue streams are diverse and stable through these long-term contracts, naturally resistant to economic downturns. Growth is likely to be in the leasing and USA divisions. Management has made quality acquisitions and successfully executing growth strategies, many members having decent ownership of the company. Quality business, though personally not exactly sure what a fair price is.

 

 

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#Financials
Added 3 months ago

PTB Group Limited (ASX:PTB) (“PTB”) wishes to advise that it has completed the sale and lease back of 3 test cell facilities acquired as part of the purchase of Prime Turbines, LLC. This Japanese Yen based facility will add US$2.3m (AU$3.8m) to the Group’s cash balances. PTB has also negotiated a US$2m (AU$3.3m) increase in the facilities available from the Commonwealth Bank. In line with this, the Group’s existing USD facilities, that were due to mature in October 2020, were extended to April 2023 on improved terms. Together, these transactions provide a significant boost to PTB’s overall cash position allowing the businesses to operate effectively and take advantage of opportunities as they arise in the current and near-term economic climate. PTB continues to trade ahead of budget and has a solid pipeline of engines in work with inputs continuing for both USA and Australian shops.

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##covid
Added 2 months ago

Still looking for companies caught up in the sell off, I can't figure where this business will be impacted so I'm strapped in for a ride.

Significant buying on market recently 

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