Firan Technology: Buy, Sell or Hold?

Beacon Securities analyst Russell Stanley says Firan Technology Group’s (Firan Technology Group Stock Quote, Chart, News, Analysts, Financials TSX:FTG) new aerospace facility in India should eventually support about $20-million in annual revenue.

In a June 30 update, Stanley reiterated his “Buy” rating and $26.00 target.

Firan has opened a new aerospace facility in Hyderabad focused on the design and manufacturing of cockpit and avionics products.

The site gives Firan low-cost manufacturing capacity for Western markets while also establishing a local base in India, aligning with the country’s “Made in India” policy. Stanley said India is the third-largest addressable defence market globally, behind the United States and Europe.

The facility still needs to add and train staff, obtain industry certifications and secure customer qualifications. Stanley expects near-term volumes to be modest, likely starting with work reallocated from other Firan aerospace sites to help qualify the facility with customers and build production experience.

The analyst said the site should eventually support about $20-million in annual revenue, with further upside from an option on adjacent land that could support a circuits facility.

Stanley is looking for Q2 revenue of $50.9-million, Adjusted EBITDA of $8.0-million and EPS of 12 cents, below consensus at $52.4-million, $9.1-million and 16 cents, respectively. He said Firan’s Q2 bookings, book-to-bill and backlog will also be key figures after Q1 bookings rose 17% year-over-year to $60-million, with backlog up 11% to $158-million.

Stanley also pointed to recent European acquisitions by printed circuit board peer TTM Technologies as validation of demand in Europe, which is also a focus for Firan.

Commercial aircraft demand remains strong, with combined Airbus and Boeing deliveries expected to rise 10% this year and 13% next year. Stanley said both companies have backlogs of nine to 10 years.

He also said defence demand remains supportive, with major defence companies expected to increase capital spending by 39% on a dollar-weighted basis, more than four times the 9% compound annual growth rate seen from 2021 to 2025.

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