Wednesday, 28 May 2014

Pope & Company Initiates Coverage On FLYHT – BUY With A $1.05 Target


Fadi Benjamin from Toronto based, Pope & Company has become the fifth analyst to initiate coverage of FLYHT Aerospace, with a BUY rating and a target price of $1.05.

The key points in the report titled “FLYHT VECTORING FOR GROWTH” are as follows:

  • Immense market size:  A sizable and growing market of 20,310 airplanes in service, and 35,280  airplanes to be delivered in the next 20 years. 
  • Differentiated/Purpose-Built: FLYHT’s technology is unrivalled by flight data gathering systems, in‐flight  entertainment, or passenger connectivity focused solutions.
  • Value Creating To End Customer: Our analysis supports US$150,000 of direct cost savings per year per airplane from fuel management, maintenance rationalization , and accurate time focus only on program wins and moderate contribution from the sales force.  Applying this to Southwest Airlines’ fleet, net savings could contribute over US$60MM to the bottom line in 2013.
  • Growth Catalysts: Our conservative assessment is based on realizing revenues from three  programs: SkyBlue (218 aircraft), Datang (415 aircraft), and an L‐ partnership with Airbus.  Significant upside potential exists from new program wins, a partnership with a Boeing  approved  factory  supplier,  and  supportive  direct  sales  into  other  airlines. 
  • Valuation: Our valuation is based on a 5‐year DCF analysis using a discount rate of 10%  and a terminal value growth rate of 3.9%, in‐line with industry peer projections. Our target  price corresponds to an EV/EBITDA multiple of 14.8x on projected FY2016.  
  • Investment  Recommendation:  We  rate  FLY  a  BUY  for  its  exceptional  growth  profile, differentiated product, and market size. In our opinion, FLYHT is ahead of its competition,  and presents  a  unique  and  sought  after  solution. 

For a copy of the Pope & Company research report on FLYHT please contact Fadi Benjamin at 416-588-9397 or by email at

About Pope & Company
Pope & Company Limited is an independent full service financial services firm founded in 1962. Our long established history as one of the oldest member firms on the Toronto Stock Exchange allows us to take a unique and measured view of the markets. We provide institutional services through our Capital Markets division and individual services through our Asset Management division.

We have a proven track record of identifying undervalued opportunities. We are active in the trading of equities, syndicated bank debt, corporate bonds as well as certain distressed debt situations. We combine best-in-class corporate advice with our proprietary sources of institutional debt and equity capital. In addition we have in-house mergers, acquisitions advisory and capital structuring expertise. By consolidating advice and access, we offer our clients innovative capital markets solutions individually tailored to their requirements. 

Pope & Company is employee owned, enabling us to take an unbiased and concrete approach to client relationships while avoiding the conflicts encountered by many large investment banks. Pope is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and The Canadian Investor Protection Fund (CIPF).

Shares Issued: 142.5 million
Fully Diluted: 182.1 million