Avation (LON:AVAP) issued their prelims this morning for year ending 30 June 2018. At first reading there are no surprises, other than being stuck with an ATR!

Avation are the only traditional aircraft leasing company listed on the LSE. Having said that, compared to other aircraft leasing companies around the world, both private and listed, they are very very small, which I see as being an advantage.

As an investment Avation will not be everyone's cup of tea. It's a 'dull' business for the average investor. It's also a very long term business. What they are doing now per aircraft may not have a substantial effect for 10 years. They do Sale and Leasebacks with airlines and err that's it. Even their investor presentations are simplified to the point of being, well, too simple! There is a lot going on under the hood though.

Headline numbers have an EPS marginally ahead of forecast, Cost of debt down and a huge increase in fleet assets and a useful increase of 12% in NAV.

The reason to invest in Avation is an expected share price moving in tandem with the net asset value of the company (which primarily means the aircraft fleet). Because the company is tiny compared to its peers it can grow the fleet very quickly and therefore, to my mind, should have a premium rating. The downside pressure is the lower ROE compared to their rivals.

Last year the company had 35 aircraft in service, split almost 50:50 between ATR turbo-prop aircraft and narrow bodied Airbus aircraft. The fleet valuation ('carrying value of aircraft') was $744m. This year they have added a two ATR's, B777, A330 and two A220's (formerly known as Bombardier CS300's). This brought the fleet valuation up to $1.030billion (+38%). It also appears they failed to position the another ATR that was planned to be in service in Taiwan.

This resulted in a NAV of $3.21/share NAV last year as opposed to $3.64/share today. In sterling terms NAV is reported at 276p and the share price at CoB was 227p or P/NTAV of 0.82. Historically a consistent ratio for Avation but really too low considering fleet assets increased by 38% and revenue increased by 16%.

There are a few items that I think investors need to keep an eye on when reviewing Avation:

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