Take a very skilled management team and give them more than four
times the assets to work with and very good things might happen. That's a
quick summary of what I believe will happen now that AerCap Holdings (NYSE:AER) has closed its acquisition of AIG's (NYSE:AIG)
huge ILFC aircraft leasing business. AerCap is now hugely leveraged to
the global commercial airline sector, with a large in-the-money order
book and the potential to generate substantial cash not only from core
leasing activities, but also more effective receivables collection and
significant aircraft sales.
But how much do you want to pay for
this? I'm comfortable with the general idea that the substantially
larger asset base at AerCap and the fundamental changes in the global
airline business (particularly growth in emerging markets) renders
historical multiples moot. At a 1.25x premium to estimated 2015 book
value I believe these shares are undervalued, but I wouldn't completely
ignore the risk that commercial aerospace companies are building toward
oversupply.
Please read more here:
After A Transformative Deal, Can AerCap Holdings Climb Higher?
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