CTT Systems - ABGSC Investor Day: the recovery continues
Feedback from ABGSC Investor Day… …presented by CEO Torbjörn Johansson 18-14x EV/EBIT ’22-‘23e vs. L5Y avg. of 24x Vaccine roll-out already having a positive effect on air traffic Today, we hosted a presentation with CTT Systems’ CEO Torbjörn Johansson at our ABGSC Investor Day. In the short-term, Mr.
Johansson reiterated the Q2 sales guidance range of SEK 35-40m (vs. 50m Q2’20), which would be a sequential increase vs. Q1’21, driven by q-o-q growth in both OEM, Aftermarket and VIP sales.
Key for future aftermarket demand is the recovery in flight hours (now at 60% of pre-COVID levels for the B787). Mr. Johansson conveyed a positive outlook where flight traffic in both China and North America had recovered to 70% of pre-COVID levels, primarily on domestic routes.
However, Europe is still lagging behind, but Mr. Johansson believed that a continued vaccine roll-out would have a fairly quick impact on recovering flight traffic. 1) VIP, 2) B787 retrofits, 3) A350/B777X humidification Although underlying OEM production rates are expected to return towards 2019 levels first after 2023, Mr.
Johansson delivered an optimistic outlook on CTT’s potential to grow in the private jet segment. As we have highlighted earlier, this could potentially be a SEK 200m market in annual sales (100 aircraft), where CTT looks well-positioned to deliver a high penetration rate to both Airbus and Bombardier (c. 40-70 aircraft per year).
Second, CTT continues to believe in the potential to retrofit the existing B787 fleet (c. 1,000 aircraft) with humidifiers in the business class area. Finally, Mr.
Johansson was optimistic in CTT’s potential to achieve a high penetration rate on the B777X over time, as he noted that there has been increased discussions regarding air quality. 18-14x EV/EBIT ‘22e-‘23e, 40% ROCE, 35% EBIT margins Several airliners are still seeing severe financial challenges, but we believe that the overall airline market will continue to improve as the vac.
