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Good OEM+AM activity partly offset by VIPCTT's Q2 sales declined y-o-y, but by less than we feared (-4% organically vs. ABGSCe -10%). OEM revenues grew organically for the ninth quarter in a row and by ~120% y-o-y in Q2, further supporting the combination of increased production rates (next step-up expected in Q1'27) and higher CTT content per aircraft. Although we expect OEM sales to remain flat in H2'26 vs. H1'26, growth will continue y-o-y. In addition, distributor inventories have normalised, the installed base continues to grow and flight traffic has been resilient, so we expect CTT's aftermarket sales to reverse the negative trend seen since mid-2024 and return to organic growth in Q3. Private jet sales remained low, which will affect 2026 sales but grow again in 2027. Overall, we are optimistic towards CTT's ability to enter a longer period of growth in both sales and earnings. For Q3, we forecast 1% organic growth but ~40% EBIT growth, while Q4 organic sales growth of 24% should support an almost threefold increase in EBIT y-o-y. Return to earnings growth in Q3'26eWe lower '26e-'27e EBIT by 3% due to lower Private Jet sales. We believe the visibility from increased aircraft production, higher content per aircraft, resilient air travel, and a growing installed base should support solid earnings. This should in turn drive a ~35% organic sales CAGR and a ~55% EBIT CAGR in '25-'28e. Multi-year double-digit growth potentialDespite seeing tougher headwinds than we had previously anticipated, CTT's core strengths remain: the company benefits from a near-monopolistic position, strong demand, and its margin-accretive AM business. This should drive long-term double-digit earnings growth and ~25-30% margins, while the share is trading at 21-11x EBIT '26e-'27e (23x L10Y), offering 3-6% div. yields and ~25-40% ROCE. |