Haitong International released a research report maintaining an "Outperform" rating on Cirrus (02507). Based on expectations of improved shipments and profitability following product upgrades, the firm forecasts the company's revenue for 2025-2027 to reach $1.394/1.674/1.951 billion (previously $1.394/1.634/1.904 billion), with corresponding net profits of $159/183/204 million ($141/176/206 million). Considering the limited forward visibility of the company's order book and the low suitability of a DCF valuation, Haitong switched to a PE multiple valuation method. Based on the projected 2026 EPS, it assigned an 18x PE multiple, raising the target price to HK$70.20. Haitong International's key views are as follows:
The density of Cirrus Aircraft's service and training network, combined with its user-friendly products, forms the company's moat. During its research, Haitong visited general aviation airports around US cities such as Los Angeles and Houston, and called upon authorized service centers and certified training centers for Cirrus Aircraft in several US cities. Service response times were fast; although pilot certification costs are relatively high and the number of candidates is limited, maintenance demand and sales personnel feedback speeds show significant advantages over peers. The company currently has approximately 260 service points globally, 193 of which are authorized service centers, covering most major US regions. Four company-owned service centers are located in Florida, Texas, Minnesota, and Tennessee. For training, besides the 143 certified training centers, the company also has over 400 individual instructors to meet customer needs. In terms of recognition, safety, avionics systems, and ease of operation are highlights where Cirrus Aircraft better meets end-customer needs compared to competitors.
Cirrus Aircraft is expected to deliver approximately 800 aircraft in 2025, with new orders around 600 units. The firm is relatively optimistic about the company's full-year performance, forecasting deliveries of 800 aircraft. This includes 694 deliveries of the SR2X series (a year-on-year increase of approximately 10%) and 106 deliveries of the Vision Jet (a year-on-year increase of approximately 4%). Due to the increasing proportion of the new G7+ model in shipments, the average selling price for the SR2X series is expected to rise to approximately $1.19 million, while the Vision Jet's price sees a slight increase to an average of $3.45 million. New models are also driving an improvement in profit margins. The firm expects the company's overall gross profit margin and net profit margin for 2025 to increase by 0.9 and 1.1 percentage points year-on-year respectively, with a full-year net profit of approximately $156 million. Regarding new orders, full-year new orders are forecast to be around 600 units, a slight increase year-on-year.
On the trading front, index companies are expected to announce new adjustment lists in mid-to-late February. For the company, as of the end of 2025, it meets the requirements of index companies on metrics such as market capitalization, trading volume, and turnover rate.
Risk warnings include risks associated with fluctuations in raw material prices; risks of supply chain disruptions; risks of intensifying market competition; risks related to changes in customer demand and preferences; and risks of policy implementation falling short of expectations.