Thsi si what NBF wrote on July 5 on their research minutes.
Disagree with aviation valuation Valuing an airline/aerospace portfolio like EIF’s at ~4x (roughly the same EV/EBITDAR valuation as Air Canada) is simply too conservative given its relative merits vs. traditional carriers. Roughly half of EIF’s flights are estimated to be funded by governments, it does essential medevac / air ambulance / marine surveillance offerings, it has a large and growing global aerospace segment, significant ground infrastructure throughout its footprint providing a material competitive advantage and essential relationships with First Nations. The short seller arrives at a nil equity value for EIF ex-RegionalOne, but we argue the math is far too punitive. Questioning the integrity of flight count data provided Page 31 of the short report provides a table outlining y/y flight count and cancellations by month since October 2016 for Perimeter, Calm Air and Bearskin from a source called FlightAware. While we cannot validate the integrity of the data, we question its accuracy, as it indicates that May’s flights were down 53% y/y for Perimeter. This appears far too aggressive and we would be surprised if it was accurate… particularly with management appearing to be bullish on Q2 results. Management doing what it can EIF immediately issued a press release outlining three plans to combat the attack, including: 1) rescheduling its Q2 release date from the normal second week of August up to the week of July 24th; 2) reiterating that 2017 results will meet analyst consensus expectations; and 3) potentially accelerating the share buyback beyond the current NCIB (which has been active) after the blackout period ends (began June 30). We think this is the only solution at this stage to defend themselves, and we look forward to seeing Q2 results in a few weeks that we anticipate will help prove that: a) the TTM elevated capex spend is achieving targeted returns; and b) the noisy and predominately 1x factors that weighed on Q4/Q1 results have largely mitigated. Our unchanged $45 target price implies ~7.5x 2018e EV/EBITDA, and we reiterate an Outperform rating.
Did anyone else see $EIFZF report from http://thesubwaytrader.com/?s=EIFZF ? It had some interesting information. Investing day trading. Mitchell's laws of commitology: 1. any simple problem can be made insoluble if enough conferences are held to discuss it.
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