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AerSale Corporation
ASLE Details
AerSale Corporation (NASDAQ: ASLE) is a diversified global leader in aviation aftermarket products and services. Its operating segments include 1) Asset Management Solutions (AMS), which deals in the sales and leasing of aircraft, engines, and dissembled spare parts to passenger and cargo airlines and Original Equipment Manufacturers (OEMs), and 2) Tech Ops, which offers the sale of engineered solutions, aircraft modification, and maintenance, repair, and overhaul (MRO) services.
Q2FY21 Results: The company reported an uptick of 102.67% in total revenue to USD 91.92 million (including USD 42.7 million realized from the sales of three aircraft, one airframe, and two engines) in Q2FY21 (ended June 30, 2021) compared to USD 45.36 million in Q2FY20. The net income for Q2FY21 was USD 16.55 million vs. a net loss of USD 7.94 million reported in Q2FY20. The company exited the quarter with a cash balance of USD 41.81 million and no outstanding debt.
Key Risks: ASLE operates in the highly regulated commercial aviation industry. Hence, the products and services offered by the company are required to meet the required standards of airworthiness set up by the regulatory agencies before they can be marketed or place into service. If these standards are not met, or if more stringent governmental regulations are implemented, it may adversely impact the company's financials.
Outlook: For FY21, ASLE forecasts its revenue to be in the range of USD 340 million – USD 360 million, with adjusted EBITDA ranging between USD 60 million and USD 70 million. This guidance is based on higher passenger-to-freighter (P2F) conversions, strong demand for MRO services at the airports, and the leftover benefits from acquiring 24 aircraft Boeing 757 fleet.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation
(Analysis by Kalkine Group)
ASLE Daily Technical Chart (Source: REFINITIV)
Stock Recommendation: ASLE's stock price surged 68.69% in the past twelve months and is currently at the higher end of the 52-week range of USD 8.68 to USD 18.35. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 84.99, indicating an overbought zone. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 14.46. Considering the significant uptick in the stock price in the past twelve months, we believe the strong business fundamentals are sufficiently reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 17.25, up 17.27% as of September 27, 2021, 1:18 PM ET.
* All forecasted figures and Industry Information have been taken from REFINITIV.
* The reference data in this report has been partly sourced from REFINITIV.
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Past performance is not a reliable indicator of future performance.
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