Exchange Income Corp T.EIF

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

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. Its 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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Post by retiredcfon Jan 25, 2023 10:22am

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Post# 35244983

RBC

January 24, 2023

Exchange Income Corporation

Connecting The Dots: EIF flash read-through – RTX/GE results positive read-through for R1

TSX: EIF | CAD 55.17 | Outperform | Price Target CAD 59.00

Sentiment: Positive

Our take. GE and RTX both reported Q4 results this morning, a positive read-through for EIF in our view. The results not only suggest Sales and Service revenue at Regional One remained robust in Q4; but also that the 2023 outlook is solid, with RTX and GE guiding between low to high-teen growth in 2023. Furthermore, RTX expects high-single-digit sales growth on a CAGR basis over the next several years - suggesting potential upside to our out-year estimates. Overall, we view this as a positive for Regional One, and as an important offset to weak Leasing revenue, which we expect to remain under pressure in 2023 due to a pilot shortage in Europe. EIF remains on RBC's Canadian Small Cap Conviction List, and we remain constructive on the shares at today's levels.

What happened? Raytheon and GE reported Q4 results this week. See below for further details as it pertains to EIF.

RTX's Pratt & Whitney segment reported Q4 sales up +10% y/y. The increase in sales was driven by a +37% increase in commercial OE and an +11% increase in commercial aftermarket which more than offset a -2% decrease in military sales. Management expects full year sales to be up low to mid-teens versus prior year in 2023, and for high-single-digit sales growth on a CAGR basis over the next several years.
GE's Aerospace segment reported Q4 revenues up +25% y/y driven by continued growth in Commercial Services from higher internal shop visits and strong external spare part sales. GE also expects 2023 full year organic revenue to grow mid-to-high teens.