TSX:EIF - Post Discussion
Post by
retiredcf on Sep 28, 2023 11:25am
More RBC
September 28, 2023
Exchange Income Corporation
Investor Day announcement highlights "demand is outstripping capacity" in Northern air operations
TSX: EIF | CAD 44.74 | Outperform | Price Target CAD 71.00
Sentiment: Positive
Our view: EIF today press released that it is hosting an Investor Day in October. Key from the release however was commentary that the company's Northern air operations have continued to experience higher demand and that "demand has outstripped [the company's] available capacity". We view this as an important positive as recent weakness in EIF shares in our view is the result of concerns surrounding peak passenger travel demand and the potential impact to airlines when demand normalizes. Today's announcement supports our view that EIF's Aviation segment is performing well and is more resilient (vs. peers) reflecting the segment’s revenue mix with medevac, freight, maritime surveillance, in addition to passenger, as all providing meaningful diversification. Moreover, our view is that the passenger business has a much more inelastic demand profile versus a typical airline as people traveling from Northern Communities are often doing so for essential services, such as time-sensitive / emergency medical appointments; a view reinforced by today's press release. That said, we expect EIF's Aviation segment to hold up well in coming quarters, and would view continued strong results, in addition to a solid 2024 guide, as important catalysts for the shares.
What happened? EIF today press released that they are hosting an Investor Day on October 10 and October 11. Interesting from the release though was commentary that:
• "[EIF's] other Northern air operations have continued to experience higher demand driven by increasing population in the north, continuous need for medical travel and the ongoing need to provide essential passenger and freight movements. Demand has outstripped our available capacity and as a result, we have recently expanded our fleets at Calm Air, Perimeter Aviation, and Custom Helicopters to be able to provide these critical services".
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