Liberum resumes coverage on Air Partner with 'buy' rating

Air Partner's continued broking development, supported by selective recruitment and complemented by the addition of new more stable income streams in consulting and training led the broker to resume coverage on its client with a 'buy' recommendation and a 155p target price.

On 3 April, the global aviation services group revealed that it had discovered a "historic accounting issue" during its year-end process, leading management to immediately order a thorough independent investigation. The outcome of which was the identification of a £4.4m cumulative overstatement of profits since 2010/11.

Analyst Gerald Khoo said that while Air Partner's recent "accounting issue" was "disappointing", and required him to rebase his forecast, he felt it had not impacted growth or cash generation.

Liberum, which is house broker of the AIM-listed company, cut its earnings per share forecasts by 6% for 2019 and 5% for 2020 to reflect the lower starting point after adjusting for the overstatement of profits but, in underlying terms, its estimates were little changed.

"We consider Air Partner's valuation to be attractive given its growth outlook and the potential for the group to continue to reposition itself towards aviation safety consulting and training, and higher quality earnings. Cash generation remains strong, supporting ongoing investment in the business and an attractive and growing dividend stream, while still providing headroom for further acquisitions," said Khoo.