CTT Systems: Operational quality bodes well for 2023 - ABG
36% org growth, 21% adj. EBIT beat on strong AM sales
27% adj. EBIT CAGR '22-'25e on >30% margins
20-13x EBIT '23e-'25e, ~40-50% ROCE, net cash
Putting inventory and copycat fears aside
CTT started 2023 in strong fashion, as the company put fears over inventory adjustments and a threat from a 'copycat' competitor within the Aftermarket (AM) channel aside and grew sales 36% organically (ABGSCe 31%). AM sales were stable q-o-q, but grew ~25% y-o-y organically, while total system sales (OEM, VIP, retrofit) continued to recover and grew ~70% organically. The CEO was optimistic that sales should continue to grow sequentially due to 1) increasing production rates among OEMs, 2) successful sales efforts in the AM channel, 3) a good level of aircraft utilisation and 4) higher sales to VIP/private jets. We therefore expect Q2 sales of SEK 77m (vs. guidance of 75-80m), up ~30% organically, before accelerating to ~35-40% organic growth in Q3-Q4. The accretive impact from higher AM sales led to continued strong profitability (34% adj. EBIT margins vs. ABGSCe 31%), and we expect CTT to maintain an average margin of ~40% during the remainder of 2023 on the back of strong AM sales.
Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ctt-systems/Equity-research/2023/5/ctt-systems---operational-quality-bodes-well-for-2023/
