Increase in wealth, and investments for health and cost-cutting. Global commercial aircraft fleet is projected to grow at a 3.6% CAGR between 2017- 2037 due to a wealthier population. The low-cost airline market has in the past ten years grown with a CAGR of 5% and constitute 31% of the market today. Spending on the well-being of passengers and crew is increasing. This provides a large-scale growth opportunity if CTT can penetrates the market further.

Humidification orders to Boeing 777X and OEM will drive growth in coming years. Initial provisions in 2019 will partly cover loss from Boeings decision not to order more dehumidifiers. However, dehumidifiers increased with 16%, the product segments largest challenge is to penetrate narrow-body sales and become a catalogue standard.

Aftermarket sales increased with 31% during 2018 which decreases the cyclicality of the business. Sales increase mainly due to an increase in pad sales consumables driven by humidifiers. Total accumulated aftermarket value for one humidifier is estimated to be four times as large as the original sales value. As a player in an underlying cyclical market, the aftermarket lowers cyclicality risks and provides a stable source of recurring revenue with high margins.

Large potential but not without risks. The largest risks are CTT’s dependency on Boeing and an OEM customer which account for 50% and 21% of total revenues. Their investments depend on their investment will and value of CTTs products. CTTs products must meet quality requirements and regulations.

Analysts: Agnes Landehag & Daniel Javadinejad