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 fadi@popecompany.com.

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).

FLYHT Aerospace Could Benefit From More Plane Tracking – BNN: Clarus Analyst

This morning on Business Day, a popular show on Canada’s Business News Network (BNN), Eyal Ofir, Technology Analyst for Clarus Securities discussed FLYHT Aerospace.

Mr. Ofir covers FLYHT and gives it a SPECULATIVE BUY rating with a $1.10 price target.

To view the segment, please click here  (FLYHT is discussed at the 5:40 mark.)

FLYHT Conference Call & Global Update

FLYHT CEO Bill Tempany covered a broad range of topics in yesterday’s (May 14th) first quarter conference call with a strong emphasis on the status of key business initiatives such as China and L-3 Communications-Airbus as well as several key conferences that FLY representatives will be attending in the near-term.

In re-capping first quarter results, he noted that the organization remains focused on achieving the break-even point in 2014. In the quarter FLYHT generated $1.34 million in revenue; which represents a decrease of 21.5% over the same period last year. However, Q1 customer deposits were $1.30 million, an increase of 100.2% over the first quarter of 2013 and unearned revenue was $1.36 million, also a solid increase over last year.

In relation to FLY’s revenue model, Mr. Tempany expressed that it is important to understand the below points:

  • When a customer makes an order, the customer gives FLYHT a deposit.
  • Then when FLYHT delivers the order, it registers as “Unearned Revenue.”
  • When the unit is installed, and activated the sale them moves into AFIRS UpTime Sales.
  • Then if the airplane is in service, FLY generates monthly AFIRS UpTime Usage fees.

Mr. Tempany also spent considerable amount of time talking about the latest announcement from Inmarsat, as there were a series of questions on a recent announcement from the satellite company. It stated that it is now going to offer customers free real time data streaming, which speaks to the controversy surrounding the disappearance of Malaysian Flight 370.

He said that he believes this offer of free data streaming doesn’t affect FLYHT. Flight-following is just one small piece of the technology that FLYHT provides, which is first and foremost designed to save airlines money and increase operating efficiency. That functionality, though important, isn‘t driving the sales of FLYHT‘s AFIRS units. For example: China’s mandate is for satellite communications, or satellite phones. Inmarsat does offer satellite communications, however the system is more expensive than AFIRS and there a major dead zones, particularly over the poles.

Global Maxfin Analyst Joe MacKay sent some notes from his attendance at yesterday’s ICAO (International Civil Aviation Organization) press conference on the offer of “free basic” airline tracking.

“ICAO indicated during its press conference that it was “thankful” to Inmarsat for their offer, but at the end of the day, the Inmarsat proposal “probably does not get us where we want to be, and we told them that today.” ICAO is putting together a task force(based on 20 member states) that will review and make recommendations to ICAO by September (FLYHT is a member). They are working under a best practices methodology which means that members can be complaint based on what is best for their circumstances (i.e some members do not fly over water as much as others).

To listen to an archive of today‘s conference call, please click here

A Technology Insight on FLYHT Aerospace Drives A Positive Market Response

FLY stock moved to the positive side this morning after coming under recent pressure with much of the uptick attributable to an article posted in Technology Investment News. The article is called “Real Time Black Box Technology Takes Flight” and cites Portfolio Manager and Founder of Roadmap Capital, Hugh Cleland.

Mr. Cleland in his April letter to his fund’s investors went into great detail as to why FLYHT technology has the “go-to” technology. In the piece Mr. Cleland states “recent events (the disappearance of Malaysian Airline flight 370) have reinforced my expectation that FLY will be in the $1-$3 range within 3 years [200%-600% higher than current valuation].

Key highlights from the article:

  • Current “Black Box Technology” is pre-internet – so vulnerable to communications mishaps that it’s like attaching a message to a carrier pigeon.
  • (FLYHT) has developed an emergency data streaming technology called “FLYHTStream”. This technology sends critical data to ground-based operations using the Iridium satellite network through Iridium Communications.
  • Inmarsat’s (ISAT-LSE) recent offer to transmit GPS location data every 15 minutes for free is not expected to compete with FLY’s instantaneous stream of aviation data points including: location, altitude, airspeed, pitch, roll, yaw, engine performance metrics and airframe indicators.
  • Since January 2014 FLYHT has seen analyst coverage initiated by Clarus Securities, Byron Capital Markets, Salman Partners and Global Capital.
  • “We are initiating coverage with a SPECULATIVE BUY recommendation and $1.10 target price,” states the Clarus report, “We estimate that the opportunity in China could generate ~$24-57 million in hardware revenue over the next three years, while incremental recurring annual revenue could be as high as $11 million”.
  • The Salman Partners report forecasts “strong revenue and earnings growth in 2014 and 2015”. It issued a SPECULATIVE BUY recommendation and a $0.85 target price [double its current share price].
  • “We are initiating coverage of FLYHT with a STRONG BUY rating,” states the Global Capital Report, “and a 12-month target price of $1.00.”
  • “Global movements catalyzed by the disappearance of Malaysian Flight 370 mean that the $2-$5 range for FLYHT is now quite possible on a 2-3 year basis,” states Cleland, “Shorter-term, I will be surprised if we are not in the $1-$2 range by the end of 2014.”

To view the full article, please click here.

CEMATRIX Corporation Announces $1.1 million Of New Contracts

Calgary, Alberta – May 9, 2014: CEMATRIX Corporation (TSXV: CVX) (the “Corporation” or the “Company” or “CEMATRIX”) is pleased to announce that its wholly owned subsidiary, CEMATRIX (Canada) Inc. has received signed orders for oil sands and infrastructure projects in the amount of $1.1 million in aggregate, bringing this year’s total contracted work to $4.3 million.

“A significant portion of these new contracts relates to an Oil Sand project that we continue to do work on,” stated Jeff Kendrick, CEMATRIX President and CEO. This new order is continued confirmation of our forecast of a return to more significant revenues from the Oils Sands and Refinery market in 2014.

CEMATRIX is an Alberta corporation with its head offices in Calgary, Alberta. The Corporation, through its wholly owned subsidiary, is a manufacturer and supplier of technologically advanced cellular concrete products with applications in a variety of markets, including oil and gas construction and infrastructure construction. Cellular concrete provides a cost and labour saving solution as a replacement for rigid and other insulating materials in frost-susceptible or permafrost conditions.  Cellular concrete is also used in void filling situations and as a replacement for granular fills and weak or  unstable soils.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

FOR FURTHER INFORMATION PLEASE CONTACT:

Jeff Kendrick
CEMATRIX CORPORATION
President and Chief executive Officer
(403) 219 0484
Jeff Walker

The Howard Group Inc.
Vice President
(403) 221-0915
jeff@howardgroupinc.com

 

Forward-looking information: This news release contains certain information that is forward looking and is subject to important risks and uncertainties (such statements are usually accompanied by words such as “anticipate”, expect”, “would’ or other similar words). Forward looking statements in this document are intended to provide CEMATRIX security holders and potential investors with information regarding CEMATRIX and its subsidiaries’ future financial and operations plans and outlook. All forward looking statements reflect CEMATRIX’s beliefs and assumptions based on information available at the time the statements were made. Readers are cautioned not to place undue reliance on this forward looking information. CEMATRIX undertakes no obligation to update or revise forward looking information except as required by law. For additional information on the assumptions made and the risks and uncertainties which may cause actual results to differ from the anticipated results, refer the CEMATRIX’s Management Discussion and Analysis dated May 8, 2014 under CEMATRIX’s profile on SEDAR at www.sedar.com and other reports filed by CEMATRIX with Canadian securities regulators.

Global Maxfin Initiates Coverage On FLYHT: Analyst Count Continues to Grow

Toronto based Global Maxfin Special Situations Analyst Joe MacKay has initiated coverage on FLYHT Aerospace with a Strong Buy and a $1 target price. Key highlights from the report include:

  • FLYHT has developed strategic relationships with L-3/Airbus, NetJets, Datang, Mobile/COMAC, SKYBLUE Technology development (SKYBLUE).
  • The number of patents in place and the complex and costly certification process create high barriers to entry.
  • Forecasted revenue of $13.9M and $26.6M in 2014E and 2015E, respectively,
  • EBITDA of $0.2M and 5.8M for 2014E and 2015E, respectively and EPS breakeven in 2014E and $0.03 for 2015E.

Upcoming catalysts include:

  • Material sales to L-3/Airbus,
  • Further progress with SKYBLUE in implementing China’s SATCOM mandate, and the production of the AFJ21.

He adds, “We are also looking for updates on FLYHT expanding its products to additional businesses and commercial aircraft OEMs. With the disappearance of Malaysia Airlines Flight 370, we will be monitoring regulatory developments with respect to the streaming of black box data.”

The report is titled “The Connected Aircraft” and was distributed to Global Maxfin clients and is available online, click here.  Joe MacKay can be reached at 647.776.1750 or by email atjoem@globalmci.com.

Global Maxfin coverage adds to a growing list of firms covering FLYHT. Others include Byron Capital (Strong Buy – $1.25 Target), Clarus Securities (Spec Buy – $1.10 Target) and Salmon Partners.

About Global Maxfin Capital Inc.

Global Maxfin Capital Inc. (GMCI) is a Toronto-based full service investment dealer providing merger and acquisition advisory, capital raising service to middle market and emerging growth companies in the technology, telecommunications & industrial sectors in Canada.

http://www.globalmci.com/

 

FLYHT: Update On The Team Visit To China

During the company’s last conference call on April 15th, FLYHT CEO Bill Tempany acknowledged that a team was heading over to China to discuss streaming and the status of the roll out of the mandated Satellite Communications program. We followed up with FLYHT about how the trip went and here’s what they said:

Multifunctional Control Display Unit onboard the aircraft during the flight test

For five days last week, Jeff Brunner, FLYHT’s VP of Certification Engineering and China Operations, and Michael Fang, the VP of China Operations were in China setting-up and participating in a flight test, for the AFIRS 228S onboard a customer’s aircraft. Jeff was on the flight test as a delegate under FLYHT’s Design Approval Organization status with Transport Canada, as he is certified.

When asked, Mr. Brunner expressed that “a cool” experience for him was calling FLYHT President, Matt Bradley and Kent Jacobs, Technical Director, Advanced Applications while in the midst of the flight test from an AFIRS enabled satellite phone. The two were on Vancouver Island and took the call on their AFIRS enabled satellite phone.

Mr. Brunner said, “I have to admit that, being more of a witness than one who lived and breathed the 228’s development, I wasn’t quite prepared for the emotional rush that I experienced when I made the first 228S call to Matt and Kent from the airplane, half way around the world from Chengdu, China to Vancouver Island, then again when the wheels left the ground and once more when they touched down after a wholly successful test flight.”

Qionglai Mountain range which separates Sichuan Province from Tibet

FLYHT is currently in the process of adding the AFIRS 228S to the A320 Supplemental Type Certificate that it holds for the AFIRS 228 product line in China. The successful test flight that Mr. Brunner participated in was a very large step towards securing this certification. In December 2013, Airbus delivered its 1,000th A320 into China.

Of note, FLYHTStream™ the company’s emergency blackbox data-streaming functionality has not been ordered yet by any customers in China. However, according to Bill Tempany the FLYHT team is working on it.