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.

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.

FLYHT Achieves Major Milestone With Millionth Flight

On the tailwinds of recent media attention, FLYHT recently announced that clients have flown one million flights using their Automated Flight Information Reporting System (AFIRS). “The steady growth is exciting,” noted CEO Bill Tempany. In addition to this increased usage, the company is adding value with additional services that have been well received by customers. In particular the Fuel Initiative Reporting System Tracker (FIRST), which helps airlines optimize their fuel efficiency has received very positive feedback.

To view the news release, please click here.

The growth of FLYHT has not gone unnoticed. A recent Cantech Letter article written by Nick Waddell highlights a recent buy recommendation published by Clarus Securities. The letter highlights an anticipated 103% upside from its current trading range and one year target of $1.10 and attributes the target to FLYHT having access to the Airbus supply chain (OEM and retrofit), strong entry to China and a worldwide concern for improved in flight communications.

To view the CanTech article click here.

Byron on FLYHT: Expect Accelerated Adoption Driven by Regulation Change

This morning Byron Capital Markets Analyst, Dev Bhangui issued an update on FLYHT to clients. In the report Mr. Bhangui reiterates his STRONG BUY recommendation and target price of $1.25 per share.

Click here to view the report.

FLYHT Conference Call & First Air News

After market close today, FLYHT hosted its year end conference call. The call came after the company released its year end numbers which was highlighted by its revenue growing by 23% to over $8 million. Also of significance was a decrease in cash used in operating activities by over 36%.
Bill Tempany, CEO of FLYHT handled the call and provided a high level overview of the company’s achievements based on its objectives over the past year. Here’s how the company did:
Drive a substantially higher valuation through accelerated revenue growth and profitability
  • Successfully increased revenues by 23.7% over the previous year.
Major Airbus operator for fleet retrofit 2013 and begin shipping from Airbus factory by late 2013
  • Began shipping units in December 2013 and January 2014.
Build on strategic relationships to accelerate growth
  • China: Continued to ship units to airlines in the country. Partnered to provide products to AVIC and COMAC. Agreement established to install AFIRS on the ARJ21 fleet.
  • NetJets Transportes Aereos SA (“NetJets”): Installations on 10 aircraft complete in Q2 2013. Continue to work with NetJets to advance the program.
  • Nigeria: Continued flight tracking and safety management system dashboard Nigerian Civil Aviation Authority (“NCAA”) Director General being replaced before program will resume in high gear.
Protect our markets by providing superior technology and service
  • Expanded our STC list.
  • Launched the Dragon.
Become cash flow positive in 2013
  • Did not achieve cash flow positive by the end of 2013; however according to Mr. Tempany’s comments on the conference call, “This was a result of not receiving expected payment from Chinese orders by the end of the year. Some payments were however received in the first quarter.”
 Other key points from the conference call:
  • FLYHT is sending a team over to China to discuss data streaming and status of roll out of mandated Satellite Communication program, which specifies every commercial aircraft in China is to be equipped with a Sat Com solution by the end of 2017.
  • Three clients applied and received a discount from insurance providers because of having AFIRS™ installed on the airlines’ aircraft.
  • Currently talking to 50 – 70 airlines about installing AFIRS on their fleet.
  • FLYHT also announced earlier today that First Air is the first airline to proactively add FLYHT’s FLYHTStream™ capability to its entire fleet. FLYHTStream is a service provided by the AFIRS technology that automatically triggers, real-time and live black box streaming in an emergency situation. In the news release the VP of Flight Operations at First Air stated, “Financially, AFIRS has paid for itself by saving First Air tens of thousands of dollars in flight management expenses, and FLYHTStream is only an incremental cost that is incurred when triggered, making the solution very cost effective.” Click here to view the First Air news release.
 To listen to an archived version of the conference call, please click here.