CTT Systems: ABGSC Investor Days feedback - ABG

Penetration improves further, private jet deal possible in H2'24
OEM to drive ~20-30% EBIT growth in 2024e-2025e
29-19x EBIT '24e-'26e, >40% ROCE, net cash


Continued optimism in increased production and penetration

Today, we hosted CTT's CEO Henrik Höjer and CFO Markus Berg at ABGSC's Investor Days. On OEM, the CEO was confident that sales should in the upcoming years close the gap to 2019 levels due to 1) more aircraft produced as the B787's and A350's production rates increase from 5 and 6 per month currently to 10 by 2025/2026, 2) sales to the B777X from early 2025 and 3) higher penetration. The latter would be mainly on the A350 as CTT already has high penetration (we believe >90%) on the B787 and good penetration rates among launch customers on the B777X. Thus, we expect OEM revenues to be roughly in line with 2019 levels by 2025e, before strong order books (1,900 B787+A350) and higher penetration should drive >20% annual growth in OEM from 2026e. The potential to retrofit humidifiers on board the B787 (roughly 1,000 aircraft) remains attractive, but Mr. Höjer believed this was likely a long-term opportunity rather than a near-term growth driver.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ctt-systems/Equity-research/2024/5/ctt-systems---abgsc-investor-days-feedback/