CTT grew sales 20% y-o-y organically (ABGSCe 20%), supported by ~80% organic growth in aftermarket (‘AM’, -12% vs. ABGSCe) sales and increasing retrofits. However, growth decelerated q-o-q (+5%), mainly due to lower AM sales as the pandemic held back the recovery in air travel. Adj. EBIT improved materially and reached 19% margins (ABGSCe 30%), where the lower AM share (~60% vs. ABGSCe 70%) was the main deviation from our assumptions. For Q1’22, we forecast sales of SEK 44m (+35% y-o-y org, +4% q-o-q), where lower AM sales q-o-q will be offset by flat OEM sales and a material pick-up in private jet sales. This compares to CTT’s guidance of SEK 42-47m. For FY’22, we expect OEM sales to remain subdued as a result of B787 deliveries resuming in Q2’22e, before production rates begin to improve in H2’22. In addition, we now expect 2022 sales to arrive ~30% below 2019 levels (+70% y-o-y organically), mainly due to a slower recovery in AM sales (~50% y-o-y).
Potential remains for CTT to surpass 2019 levels in 2023e
We lower our sales and EBIT assumptions for 2022e by 15% and 16%, respectively, as a result of a slower recovery in OEM/AM sales. However, we believe recent indications and guidance on production rates in combination with attractive potential from the retrofit and private jet segments support our 2023e assumptions. Thus, we lower 2023e EBIT by 5%, due to a slightly lower AM share. For 2022e-2025e, we forecast a ~30% EBIT CAGR (11% CAGR 2019-2025e).
Significant earnings growth also beyond the pandemic
We reiterate our view that CTT should be able to deliver >20% EBIT growth in 2022e-2025e from: 1) highly profitable AM sales, 2) recovering aircraft production rates and 3) the attractive private jet market. By 2025, we forecast sales of ~SEK 620m (11% org CAGR ’19-‘25e), an adj. EBIT of ~SEK 210m (11% CAGR), 34% margins
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