CTT Systems: Strong finish, slightly slower start to 2024 - ABG

21% org. growth, 52% EBIT growth, but stable sales into Q1
22% adj. EBIT CAGR '23-'26e on >30% margins
24-15x EBIT '24e-'26e, 40-55% ROCE, net cash


52% EBIT growth, OEM ramping up

CTT returned to sequential sales growth in Q4 (+10%), driven by a strong aftermarket (AM, +26% y-o-y, 84% of sales) while system sales declined 6% y-o-y due to lower VIP, which yielded 21% org. sales growth y-o-y (ABGSCe 18%). Due to good mix, the EBIT margin reached 39% (ABGSCe 36%), and earnings grew 52% y-o-y. We expect Q1 sales to stabilise q-o-q (+2%), and grow 10-18% org. y-o-y in H1, before the ramp-up in OEM sales should yield 53-57% growth in H2 as production rates are still below 2019 levels, while order books at both Boeing and Airbus are growing. However, mix will normalise and hold back EBIT growth somewhat, which combined with tougher comparables should yield EBIT growth of +24% in Q1, but -12% in Q2, and +33% in H2. VIP and Retrofit opportunities are promising, but will likely materialise first in 2025.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ctt-systems/Equity-research/2024/2/ctt-systems---strong-finish-slightly-slower-start-to-2024/