Good afternoon,
I've been following AQZ for a while now and i find it to be a very interesting business. I'm keen on further understanding the buiness and it's competitive landscape. So if i may, i'd love to share some thoughts and questions on some areas of the business and would love to hear back fellow holder's opinion on the those views.
I'm seeing a business of:
- Superior quality compared to other companies within the aviation sector (REX/QAN); Margins attest to that.
- High quality management team who steered this ship and created a lot of value along the way. 20s% CAGR in the last 5 years? That's strong.
- A solid growth runway for the following 3-5 years. 200m capex just invested, at a 10/12/15% ROIC on that, super interesting.
- Dominates a niche market with little competition.
All in all a high quality biz w high quality management and walking straight into strong growth. You'd just love to hear it.
On the competition side,
I can only see Cobham and Airnorth being a direct competitors. QAN and REX are out there but they operate in different market segments so i don't consider them direct competitors. Plus, i think the difference in margins reflect those differences. Does this make sense? Do you agree with the idea that AQZ operates within a niche market and goes up against little competition?
Based on fleet size, AQZ is way larger than Cobham/Airnorth. On top of that, AQZ delivers 95% on-time performance which they say it sets them apart from the rest. This leads me to think again, there's little competition coming in from Airnorth/Cobham. That being said, i wonder how much of an edge is there really to that metric?Are there any insights as to the industry average on-time performance? are there any insights as to what valuation these other businesses trade at? Would it be fair to think cobham/airnorth could be takeover target for AQZ further down the track?
On the top line,
I value highly having various revenue streams and do not mind the over reliance on contracts (60% of rev) as they are long-term provide a lot of benefits for the business. Higher predicability and significnatly less risk. What i'm uncertain about is the relative impacts on costs and revenue that each revenue segment provides. I do understand that it difers from a segment to the other, logically. However i wonder if there are insights as to which segments contributes more/less to margins?
Thanks everybody for your time,
Cheers, FullBoom
(20min delay)