MDA Space Ltd T.MDA

Alternate Symbol(s): MDALF

Industrials Aerospace & Defense

MDA Space Ltd, formerly MDA Ltd, is a global space company. The Company is a robotics, satellite systems and Geo intelligence provider. It provides communications satellites and earth and space observation. It is also involved in space exploration and infrastructure. Its software, AURORA, is a digital satellite product line providing critical new solutions to operators. AURORA technology enables constellations to extend communication networks to every corner of the globe with digital automation, and robotics. Its communications satellites include a complete range of modular digital products and components for space-based communication solutions coupled with advanced manufacturing capable of producing two satellites a day. It owns and operates RADARSAT-2 earth observation satellite. Its earth observation services include analytics solutions that give customers information and insights from environmental monitoring, disaster management, maritime domain awareness and security to mining.

TSX:MDA - Post by User

MDA Space Ltd

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Post by Possibleidiot01on Aug 09, 2024 4:05pm

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Post# 36172077

David Fawcett - Linkedin

: —' , !

Let's set the record straight: the big aerospace and defense companies are growing revenue at a steady mid-single-digit pace and are trading at around 15x EV/EBITDA. Meanwhile, MDA is projecting 30% revenue growth not just for this year, but consistently for the next five years—and it's trading at just 7x EV/EBITDA. This appears to be mispriced and presents a highly compelling investment opportunity.

Yet, the street seems fixated on cash flow, overlooking MDA’s robust growth potential. For the past three consecutive conference calls, 80-90% of analyst questions have zeroed in on working capital movements and cash flow ratios relative to growth capex. Sure, these are necessary questions, but the real story here is growth—not cash flow. For the love of God, it's time to refocus and dig into the validity of the growth!

When a CEO tells us they plan to grow 30% annually for the next five years, and the company is trading at a mere 7x EV/EBITDA, we categorize this as a "if this is true, this is a great opportunity.” Our research and due diligence are then focused on validating this growth trajectory, and after many calls with management, competitors, and clients, we believe the data backs it up. The growth was further reaffirmed in the quarter with the increased guidance implying nearly 30% in 2024, after growing 26% in 2023.

We’ve previously shared our thoughts on MDA’s growth prospects, so we won’t dive deep into that again here. But let's be clear: the story is not about this year's working capital movements. If MDA’s growth narrative plays out as projected, EBITDA could triple over the next five years, and the valuation multiple should also rise. That translates to a potential fivefold increase in stock price. That’s the real story.

It’s time for the street to ask the right questions and start recognizing the forest for the trees. MDA's growth potential is the headline, not cash flow minutiae.

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