FLYHT Aerospace Solutions (TSX-V:FLY, StockForum), a Calgary-based global designer, developer and service provider to the aerospace sector, announced today that global investment banking firm, Byron Capital Markets, put out a “strong buy” recommendation for FLYHT in a January 23, 2014 initial research report.
Byron Capital, which specializes in covering metals, mining, oil & gas, alternative energy, healthcare and technology, stated that FLYHT rests at a marked revenue inflection point in 2014 with multiple events seen to act as catalysts in both the near and mid term.
According to the news release, Byron's report shows that Airbus presently has a backlog of 1,600 planes to be cleared in three years and executives at FLYHT look to secure 25% of all new Airbus aircraft for its technology installation.
The report pointed out that FLYHT is positively positioned in the strict regulatory environment of their sector as the company possesses patents or patent-pending on all company products and presently holds 40 approved Supplemental Type Certificates for aftermarket electronic device installation (“STC”) with another 13 pending or in progress.
China's civil aviation administration (“CAAC”) recently crafted new policy stipulating that 50% of all Chinese commercial transport aircraft have to be equipped with satellite communications systems by 2015, with 100% of the country's commercial transport fleet expected to be modified by 2017. Byron feels that FLYHT's technology fits like a glove into the Asian aerospace market.
FLYHT announced the sale of 12 AFIRS 228S to L-3 Aviation Recorders, a top provider of commercial and military avionics on January 22. The sale included a product line of configurable voice and data recorders, collision avoidance systems and processors.
Mike Smith, President of L-3, commented, “L-3 is extremely pleased to work with a strong partner like FLYHT in offering its extensive worldwide airline and OEM customer base a solution for emerging ACARS and SATCOM requirements.”
Smith went on, “In conjunction with an onboard L-3 flight recorder, FLYHT has already demonstrated FDR data and aircraft position streaming on in-service aircraft.”
President and CEO of FLYHT, Bill Tempany, added “This milestone delivery of AFIRS is the culmination of 15 years of dedicated efforts.”
According to Byron's report, “Rising accident statistics in recent years are forcing U.S. and EU regulators to implement next-generation navigation mandates by 2015.”
The report also stated that with high oil prices, paper thin margins and consolidations, carriers are searching for optimal flight routes, operational efficiencies and better asset management tools.
Byron Capital also complimented FLYHT's business model as it bills up front for the AFIRS installation fee which in turn, generates recurring revenue with each hour of flight.
Byron explained that FLYHT targets carriers directly for retrofits, but utilizes “big brother” channels for its forward fit or factory installed business and confirmed that the company earns a royalty on every plane rolling out of an OEM factory with recurring monthly revenue.
In a recent Technica Pro News article, it was predicted that in the next five years, real time data communications will be standard on all new planes.
The report went on to sum up, “With a superior growth profile compared to its peers and strong strategic partnerships, we see considerable upside potential for FLY beyond 2014.”
Then concluded, “Investors can expect additional upside in the medium term through potential acquisition interest from larger players like Rockwell, L-3 or Honeywell, all of which operate as FLY partners or co-vendors. We are therefore initiating coverage with a “Strong Buy” recommendation and a $1.25 price target.”
FLYHT was in the news recently when the company delivered its AFIRS(TM) 228S units to L-3 Aviation Recorders on schedule.
Shares rose 14.61% on the news to $0.51 per share.
Currently there are 157.3m outstanding shares with a market cap of $80.2 million.