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№ 108 11 filings · 2021-06-01 → 2026-04-28

DP AIRCRAFT I LIMITED

DPA
Industrial Goods and Services Market cap $38m Overall fit 130 /1000

Zero AI-receiver exposure (asset is two specific Boeing 787-8s on operating lease), contractually-fixed cash flows give essentially no operating leverage to revenue upside, and despite trading at a modest discount to NAV the structure carries binary 2026 refinancing risk and a going concern material uncertainty. Wholly outside the investor's strategy.

Fair value range $0.10–$0.16 Mid case · $33m
Absolute upside -13.3% vs current market cap
Conviction 3/5 confidence in fair call
Supports the call
  • Independent aircraft appraisals provide $120-146m asset value vs $85m net debt
  • LOT 12-year follow-on lease (~$168m aggregate) gives contracted cash flow visibility to 2038
  • Clean, well-disclosed single-asset structure with detailed asset manager reporting
Limits the call
  • Binary refinancing risk in Q4 2026 (KPMG flags material uncertainty going concern)
  • Residual aircraft values 12+ years forward (2038) are genuinely speculative
Methodology

Adjusted NAV anchored, DCF cross-check on LOT lease cash flows

In one line · bull case

30% discount to adjusted NAV with hard B787 asset backing and a contracted 12-year LOT follow-on lease, if and only if the 2026 DekaBank balloon refinances successfully.

In one line · biggest risk

Binary refinancing risk in Q4 2026: failure to refinance the $85m DekaBank balloon would force aircraft sales into a thin secondary market, with potential capital loss for equity holders.

Drivers
AI beneficiary 2 /100
Aircraft leasing fund with zero AI value-chain exposure; not a beneficiary in any sense.
Operating leverage 10 /100
Lease rents contractually fixed and pledged to lenders; incremental revenue is impossible by structure.
Earnings vs expectations 50 /100
No guidance or consensus exists; reported volatility is non-cash IFRS-driven; not enough data — anchored at 50.
Growth momentum 30 /100
Run-off vehicle; no growth — leases are fixed and aircraft are depreciating.
Moat 15 /100
No moat — owns two depreciating aircraft assets with no franchise value.
Earnings quality 45 /100
Cash conversion mixed due to large IFRS straight-lining and loan modification adjustments masking underlying contracted cash.
Management quality 55 /100
Board successfully negotiated Thai restructure and LOT follow-on lease, but reliance on serial dilutive equity taps at deep NAV discounts limits the score.
Cyclicality 75 /100
Aircraft values and lease rates are deeply cyclical with global aviation demand and OEM supply.
Leverage 75 /100
Net debt ~$85m vs ~$48m equity; ~3.5x debt/EBITDA equivalent on contracted rentals.
Value-trap signals · 5
  • Dividends suspended since April 2020 with no realistic prospect during remaining Thai lease
  • Repeated dilutive equity taps at heavy discounts to NAV to fund ongoing opex
  • Service-provider fee deferrals required for going concern (KPMG material uncertainty)
  • Single-counterparty / single-asset-class exposure
  • Articles-mandated liquidity proposal by June 2026 — structurally a wind-down vehicle

DP Aircraft I Limited (DPA) — Investment Research Note

Executive summary

DPA is a Guernsey-incorporated single-asset closed-end fund whose sole purpose is to own, lease and ultimately sell two Boeing 787-8 aircraft currently on lease to Thai Airways (until Oct/Dec 2026) and then to LOT Polish Airlines under a 12-year follow-on lease (commencing Oct/Dec 2026, ~$168m aggregate rent). Operating trajectory across 2020-2025 has been: Covid collapse → Thai lease restructure to PBH then fixed reduced rentals → modest profitability returning in 2024 ($4.5m PAT, EPS $0.019) → successful execution of LOT follow-on lease in March 2025, materially de-risking residual value. The single most important point for valuation today is whether the Group can refinance the $85m DekaBank balloon that matures alongside the Thai lease in Q4 2026 — without that, the LOT cash flows are unreachable for equity holders.

Fair value estimate

  • Fair value range: $0.10 – $0.16 per share, implying market cap of $26m – $41m
  • Methodology: Hybrid NAV + DCF cross-check. NAV anchor: adjusted NAV per share was $0.1623 at 31 Dec 2024 2025-04 annual report, stripping out the IFRS straight-lining lease asset. Aircraft were independently appraised at full-life market value of $59.9m–$72.8m each (i.e. $120m–$146m total) vs $123.7m carrying value — within the appraisal band but at the upper end.
  • DCF cross-check: LOT lease delivers ~$14m/year average gross rentals over 12 years from end-2026. After ~$1.5m annual opex, ~$4-5m interest on a refinanced $70m balloon, and amortisation, ~$8m/year is potentially distributable to equity, plus a 24-year-old residual aircraft value at end of LOT lease (2038). Discounted at 12% (reflecting micro-cap, single-counterparty, refinance risk), this supports the upper end of the range.
  • Vs current $29.2m market cap (≈$0.114/share): Midpoint $0.13 implies ~+14% upside; high case implies ~+40%; low case ~-12%.

Sector context

  • Sector classification: Industrial Goods and Services (specialist aircraft leasing fund). Technically more akin to an alternative investment vehicle than an operating industrial.
  • This is a single-asset, levered, run-off vehicle — quality is well below typical sector peers. There is no growth profile, no diversification, no operating business in the conventional sense.
  • Closest listed peers: Doric Nimrod Air One/Two/Three, Amedeo Air Four Plus (all LSE-listed aircraft leasing funds with similar structures and rehabilitation/refinance dynamics). DPA is among the smallest and most concentrated.

Investment thesis (3 bullets)

  1. LOT follow-on lease materially de-risks residual value. The 12-year LOT contract worth ~$168m in aggregate rentals provides a contracted forward cash flow visible to 2038, and increases marketability of the aircraft per the asset manager 2025-04 annual report, Chairman's Statement. Boeing 787 secondary market remains tight with constrained new-build production.
  2. Discount to adjusted NAV with hard asset backing. Trades at ~30% discount to adjusted NAV of $0.162. Two independent appraisers value the aircraft full-life at $120-146m vs $85m net debt, providing tangible equity coverage even on stressed asset assumptions 2025-04 annual report, note 3.
  3. Capital structure now contractually aligned with lease cash flows. Post-Feb 2023 Loan Agreement amendments, $475k of each aircraft's $510k monthly rent flows to lenders and $35k retained for opex — eliminating cash burn ambiguity while leases perform 2025-04 annual report, summary.

Key risks (3 bullets)

  1. Refinancing risk in Q4 2026 is the binary outcome. $69.5m balloon comes due alongside Thai lease expiry; LOT cash flows don't start until late 2026. The Group must successfully refinance or sell into the LOT lease to deliver any equity value 2025-04 annual report, refinancing risk.
  2. Material uncertainty going concern qualification persists. KPMG flagged a material uncertainty in both 2023 and 2024 audits; Company is dependent on continued service-provider fee deferrals and successful $1m equity taps to fund opex 2025-04 annual report, KPMG audit opinion.
  3. Thai handover risk in Q4 2026. Aircraft must be returned in full-life condition; one engine bottleneck/grounding already showed how supply-chain issues affect operations. Any return condition shortfall directly hits equity given LOT lease commencement requirements 2025-04 annual report, principal risks.

Operating leverage

DPA has structurally constrained operating leverage because the lease contracts are fixed and contractually pledged to lenders. Of the $510k/month/aircraft Thai rent, $475k is restricted to debt service and only $35k flows to Company opex contribution 2025-04 annual report, summary. Fixed costs (directors, asset manager, broker, audit, admin) run ~$1m-1.5m/year against a fixed maximum of $840k retained from rentals — i.e. the structure is contractually loss-making at the corporate level absent fee deferrals. Under the new LOT lease, the rental envelope expands meaningfully ($14m/year combined gross vs $12.2m current Thai) and post-refinance the equity cash flow could expand significantly, but there is no scale-driven gross margin uplift available — incremental revenue is fixed contractually. Operating leverage to revenue surprise is essentially zero because contract rents are fixed.

Value-trap signals

  • Dividends suspended since April 2020 with explicit board guidance that there is "no realistic prospect" of shareholder distributions during the remaining Thai lease period 2025-04 annual report, distribution policy.
  • Repeated equity raises at heavy discounts to NAV to fund ongoing opex ($0.025/share in 2022 raising $750k; $0.06/share in Nov 2024 raising $1m) — dilutive and indicates inadequate operating cash to cover overhead.
  • Service-provider fee deferrals required to sustain going concern; broker, asset manager and director fees have been accumulated rather than paid in cash.
  • Single-counterparty / single-asset-class exposure with a lessee (Thai Airways) only recently exited from rehabilitation, and lender concentration with DekaBank.
  • Run-off vehicle by design — Articles require a liquidity proposal meeting by June 2026; this is not a going concern in the traditional sense, but a wind-down play.

Earnings vs. expectations

The Company does not issue earnings guidance or have analyst consensus coverage in the conventional sense. Reviewing results across the filings: FY2021 was a heavy loss ($21.9m, driven by Norwegian receivership write-offs and ECLs); FY2022 returned to profit ($7.7m) on residual variable rent; FY2023 reported a $2.5m loss largely from a non-cash IFRS loan modification adjustment ($5m); FY2024 returned to a $4.5m profit as the modification adjustment unwound. The pattern is one of accounting volatility driven by IFRS treatment of lease modifications and ECL provisions, not operational beats or misses — underlying contracted cash rent has been received in full and on time from Thai since the January 2023 reset.

Conviction

Conviction: 3 (moderate).

Anchors: (i) Hard asset backing with two independent appraisals giving a clear $120-146m valuation range vs $85m debt; (ii) contracted LOT cash flows are firm out to 2038, providing a forward valuation anchor; (iii) clean, well-disclosed financials with detailed asset manager reports.

Limits: (i) Outcome is binary on the 2026 refinancing — without it equity is exposed to forced-sale aircraft values; (ii) residual aircraft value 12 years forward (2038, when aircraft are 24 years old) is genuinely speculative and material to the DCF; (iii) KPMG's repeated material-uncertainty going concern flag and dependence on equity taps signals fragility.

Filings consulted · 12

Every document the LLM read for this note. Click any row to open the source.

  1. 2026-04-28Annual Report And Accounts2026-04-28_9540439_annual-report-and-accounts.md0.95
  2. 2025-10-06Notice OF Agm2025-10-06_9151473_notice-of-agm.md0.26
  3. 2025-04-25Annual Report And Accounts2025-04-25_8845579_annual-report-and-accounts.md0.62
  4. 2024-10-25Notice OF Agm2024-10-25_8510168_notice-of-agm.md0.20
  5. 2024-09-30Half Year Report2024-09-30_8448074_half-year-report.md0.58
  6. 2024-04-26Annual Report And Accounts2024-04-26_8158272_annual-report-and-accounts.md0.43
  7. 2023-09-20Half Year Report2023-09-20_7765929_half-year-report.md0.41
  8. 2023-09-19Result OF Agm2023-09-19_7765165_result-of-agm.md0.14
  9. 2023-04-28Annual Report And Accounts2023-04-28_7395_annual-report-and-accounts.md0.24
  10. 2022-07-29Result OF Agm2022-07-29_6954159_result-of-agm.md0.07
  11. 2021-07-01Result OF Agm2021-07-01_6504062_result-of-agm.md0.07
  12. 2021-06-01Notice OF Agm2021-06-01_6564628_notice-of-agm.md0.07

This research note was authored by a large language model after reading 11 regulatory filings published between 2021-06-01 and 2026-04-28. Each citation refers to a specific RNS announcement in the underlying data set. The note is an opinion, not advice. Do your own work before risking capital.