Alliance Aviation will acquire a further 16 Embraer E190 aircraft for $85m, expanding the company’s fleet to 73 aircraft (from 57), once fully deployed in FY23. Morgans calculates the acquisition has been completed at an attractive earnings (EBITDA) multiple.
The broker believes the extent of the fleet expansion provides a strong indication of the company’s planned activity levels across its network over the next two to three years.
Given a strong track record, Morgans expects plans are well advanced in progressing opportunities to utilise the new capacity.
The Add rating is maintained and the target price is increased to $5 from $4.40.
Sector: Transportation.
Target price is $5.00.Current Price is $4.04. Difference: $0.96 – (brackets indicate current price is over target). If AQZ meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges – negative figures indicate an expected loss).
