CTT Systems: AM setback postpones acceleration - ABG

We expect two more quarters before a return to growth
'25e-'26e EBIT down 19-7%; 26% CAGR '24-'27e
21-12x EBIT '25e-'27e, ~40-50% ROCE, net cash


AM correction greater than feared, normalised mid-'25e

Although Q4 finished on a solid note for CTT (1% org. sales vs. ABGSCe +1%, 41% EBIT margin vs. ABGSCe 31%) with 6% EBIT growth, inventory adjustments in the aftermarket ('AM') channel persisted longer than management previously believed, which will result in a lower starting point for 2025. However, this is not competition-related, and we expect inventory corrections to be concluded in Q2'25, while the installed base continues to grow at a solid rate. Thus, with production rates at OEMs increasing, and VIP/private jet deliveries also picking up in an encouraging way, we expect CTT to return to clear earnings growth from Q3'25e (>70%), but that lower AM sales and the resulting negative mix will drive a short-term sales decline of 31-1% in Q1-Q2'25e. On a positive note, 2025 looks set to be the year when system sales should drastically increase on the back of: 1) increased production rates, 2) increased penetration, 3) contract wins among VIP/private jets, and 4) long-awaited retrofit orders.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ctt-systems/Equity-research/2025/2/ctt-systems---am-setback-postpones-acceleration/