A strong report. CTT delivered sales of SEK 49m (+13% vs. ABGSCe 44m), +17% q-o-q and +42% y-o-y organically (ABGSCe 35%), driven by strong sales in the OEM and Aftermarket (AM) channels while private jet sales were deferred later into 2022. EBIT reached SEK 14m (+50% vs. ABGSCe 9m), for a margin of 28% (ABGSCe 21%, 2% in Q1’21) as aftermarket revenues accounted for ~75% of sales (ABGSCe 58%). Run-rate AM revenues are now back to 2019 levels. For Q2, CTT guides for revenues of SEK 50-55m (up 33-47% y-o-y, mid-point +4% vs. ABGSCe 50m), driven by higher private jet sales but partly offset by lower AM revenues following an “unexpectedly strong” Q1. For the full-year, CTT expects the underlying market to improve significantly, supported by higher private jet deliveries, a continued AM recovery but where certain OEM sales will likely remain low until 2023. In addition, CTT states that Boeing has prolonged B777X deliveries from 2023 to 2025.
Estimate changes
We believe FactSet consensus EBIT estimates could likely come up by mid single-digits as a strong Q1 could be offset by partially lower H2 revenues. However, the prevailing USD/SEK rate will provide a notable positive support as well (usually a 1:2.5 or 1:3 impact on earnings).
Final thoughts, valuation at 27-18x EV/EBIT ‘22e-‘23e
A strong report as the recovery continues within the North American and European segments. The stock has fared better than the broader index (+8% vs. OMXSGI -2% L1M) and is trading at (pre-Q1) 27-18x EV/EBIT ‘22e-‘23e. However, we would still expect a positive reaction on the day following a solid start to the year.
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