Exchange Income Corp T.EIF

Alternate Symbol(s): T.EIF.DB.J | T.EIF.DB.K | T.EIF.DB.L | T.EIF.DB.M | EIFZF

Industrials Airlines

Exchange Income Corporation is a Canada-based diversified acquisition-oriented company. The Company operates through two segments: Aerospace & Aviation and Manufacturing. The Aerospace & Aviation segment is comprised of three lines of business: Essential Air Services, Aerospace, and Aircraft Sales & Leasing. Essential Air Services includes both fixed wing and rotary wing operations. Aerospace includes its vertically integrated aerospace offerings that provide customized and integrated special mission aircraft solutions primarily to governments across the globe. Aircraft Sales & Leasing includes aftermarket aircraft, engine and parts sales and aircraft and engine leasing, along with aircraft management services. The Manufacturing segment is comprised of three lines of business: Environmental Access Solutions, Multi-Storey Window Solutions and Precision Manufacturing & Engineering. The Company also focuses on portable hydronic (glycol-based) climate-controlled equipment.

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Exchange Income Corp

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Post by retiredcfon Apr 16, 2024 9:02am

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Post# 35991166

RBC Note

April 16, 2024

RBC ElementsTM: Q1/24 Flight Deck
Q1 Airlines & Aerospace Preview

Our view: In this report, we update our estimates for AC, BBD and CHR noting valuations across our coverage remain at the lower end of their historical ranges. Our Cdn Airlines & Aerospace Heatmap powered by RBC ElementsTM points to mixed leading indicators and strong coincident indicators (see Exhibit 1), with indications of stronger business travel (consistent with US peers), something we are keeping an eye on. Looking ahead, we believe airlines will remain pressured by lower fares and higher costs namely labour, with lower fuel (vs. last year) providing some reprieve. Additionally, our Bizjet Heatmap shows continued positive trends in utilization, used inventory, and wealth creation, which we view as tailwinds for BBD. BBD remains our top pick in airline/aerospace coverage on the back of a solid near-term demand backdrop, which we expect to support a meaningful FCF inflection in 2025. We also flag EIF as being attractively valued, and do not believe an uptick in growth from upcoming air ambulance contracts is appropriately reflected in the shares at current values.

EIF: Q1 estimate unchanged and below consensus; price target remains at $65; maintain Outperform. Our Q1 estimate is unchanged into the quarter at $107MM, below consensus $110MM on lower Manufacturing EBITDA, reflecting the uncertainty surrounding Northern Mat and weak industrial indicators. Our 2024 estimate remains at $624MM, in line with consensus $623MM, in the mid to high range of 2024 guidance for EBITDA of $600–635MM. We continue to value the shares using a blended target multiple of 7.5x, and price target remains at $65.