* External headwinds delay earnings recovery until 2026e * '25e-'27e EBIT down 27-3%; 18% EBIT CAGR '24-'27e * 19-13x EBIT '26e-'27e, ~40-50% ROCE, net cash 2025 to be a challenging year... The fact that the aerospace industry is gradually getting its supply chain in order, and that OEMs are now clearly increasing production rates, unfortunately had little impact on CTT's near-term earnings. Q3 sales was roughly in the middle of CTT's own guidance, but we fear that CTT will see fairly stable sales into Q4 due to FX headwinds and inventory destocking. What is clear, however, is the strong growth potential going into 2026 – something that was also emphasised by management during the conference call. Starting in Q1'26, we expect normalised inventory levels among distributors, increased production rates, normalised lead times and higher content per aircraft to allow CTT to almost double system sales vs. 2024 and grow by ~50-30% in 2027e-28e. In addition, the installed base continued to grow in 2025, which should support >20% growth in aftermarket sales during '26e. With growth turning positive again, we expect the scalability of the business model to allow CTT to offset FX headwinds and return to >30% EBIT margins (19% '25e). ...but increased confidence in 2026 recovery We lower '25e EBIT by 27% due to lower AM sales and FX, and '26e-'27e EBIT by 3%. From 2026e, the combination of accelerated OEM sales, increased customer wins within both VIP and retrofits, and a recovering aftermarket business should drive ~50-40% organic sales growth and ~130-50% EBIT growth (18% adj. EBIT CAGR '24-'27e). Multi-year double-digit growth potential The core strengths of CTT remain: the company benefits from a near-monopolistic market position, strong demand, and its margin-accretive AM business. This should drive long-term double-digit earnings growth, while the share is now trading at 43/19/13x EBIT '25e-'27e (22x L10Y), offers 3-6% dividend yields '25e-'27e (>90% payout), and ~20-50% ROCE.
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