FTAI Aviation (FTAI), mcap=$23.96, price $23.96 vs $20.00

FTAI pitch:
– Aircraft and engine lessor that has gone through a major transformation from a complex “mess” of assets to a pureplay aviation company.
– On the cusp of seeing substantial growth in its parts & service business and that will translate into a higher multiple.
– Product and services segment is set to contribute half of the profitability vs 15% currently.
– Trades materially below peers. Survived major setbacks of Covid and Russia/Ukraine war with a number of aircraft seized or destroyed.
– Recently spun-out infrastructure assets, which simplified and derisked the FTAI story and improved the balance sheet.
– 6.3% dividend yield limits the downside.

FTAI valuation:
– EBITDA set to grow from $423m in 2022 to $1b in 2026.
– The multiple expected to expand from 9.7x today to 12x.
– Leasing peers trade at 10x ’23 EBITDA and product comps at 15x ’23 EBITDA.

Exp. gain: +350% to $94/share over the next 4 years.

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