* Accretive AM sales +26% y-o-y...
* ...while OEM delivery is pushed out
* 23/17x EBIT '26e-'27e, ~25/30% ROCE
AM activity high, OEM deliveries pushed out
CTT's Q3 sales improved y-o-y (+3.5%), of which +5% was organic vs. ABGSCe +1% and FactSet consensus at +1%. Order intake was strong at SEK 128m vs. 48m in Q3'25 and 64m in Q2'26. OEM revenues grew organically for the 10th quarter in a row, albeit at a lower rate than in Q2, as ~SEK 6m worth of deliveries were pushed to Q4. A350 humidifier content should reach two or more per aircraft from YE'26 into early ‘27 (slightly below one historically), adding to volume growth from higher build rates. Boeing is stabilising the 787 at eight per month before moving to 10 (a ramp that is running late), while Airbus targets 12 A350s per month in 2028.
'27-'28e EBIT lowered following changed VIP assumptions
Following a change of analyst, we lower '27e-'28e EBIT by 23-26%, primarily due to lower Private Jet sales assumptions (sales of 24-29m '27e-'28e). We continue to expect a return to earnings growth in FY26 and raise '26e EBIT by 6% following the hiked Q4 guidance, with the CEO stating that Q4 revenue is expected to exceed Q3 revenue. We maintain that the visibility from increased aircraft production, higher content per aircraft, resilient air travel, and a growing installed base should support solid earnings growth ahead. This should in turn drive a ~28% organic sales CAGR and a ~41% adj. EBIT CAGR in '25-'28e.
Long-term double-digit growth potential
Despite the Q3 earnings miss vs. our estimates, the higher AM guidance confirms that spares demand has normalised, while '27e growth should be driven by OEM (increased content & production), continued expansion of the margin-accretive AM business as well as a VIP recovery. This should drive long-term double-digit earnings growth and ~25% margins, while the share is trading at 23/17x EBIT '26e/'27e, offering 3-5% div. yields and ~25-30% ROCE.