2017 Aerospace & Defense Global Overview

Aerospace & Defense Global Overview 2017 Aerospace & Defense Market Insights General Overview | 2017 Global Reach, Local Presence 19200 Von Karman Ave, Suite 340 Paseo de la Reforma 2620, Despacho 1404 Col. Lomas Member Firm in India Pending Havenlaan 2 Avenue du Port SIS, 8854 B-1080 Brussels <a href="/goto?url=http://www.kbcsecurities.com" target="_blank">www.kbcsecurities.com </a>Irvine, CA 92612 janescapital.com Atlas, Mexico City 11950 <a href="/goto?url=http://www.zimma.com.mx" target="_blank">www.zimma.com.mx </a>8F Cowell Building 140 Sapyeong-daero, Deocho-gu Unit 1907-1908 No. 333 Lanhua Road Shanghai 201204 <a href="/goto?url=http://www.oaklins.com/hfg" target="_blank">www.oaklins.com/hfg </a>Seoul 06577 <a href="/goto?url=http://www.sunp.co.kr" target="_blank">www.sunp.co.kr </a>Engelbrektsplan 1 Stockholm SE-114 34 <a href="/goto?url=http://www.avantus.se" target="_blank">www.avantus.se </a>88, rue El Marrakchi Quartier Hippodrome Casablanca 20100 <a href="/goto?url=http://www.atlascapital.ma" target="_blank">www.atlascapital.ma </a>Kingdom Tower, King Fahad Road, 49th floor ul. Pańska 98, Suite 83 Warsaw 00-837 <a href="/goto?url=http://www.mergers.pl" target="_blank">www.mergers.pl </a>Riyadh 11451 <a href="/goto?url=http://www.swicorp.com" target="_blank">www.swicorp.com </a>Aerospace & Defense Market Insights Country Overview | 2017 Belgium Aerospace & Defense Overview The Belgian aerospace market is primarily comprised of small and medium enterprises (SMEs) producing assemblies, sub-assemblies and components for various aircraft, and offering various maintenance, repair and overhaul (MRO) services. These SMEs focus on advanced, small-batch production capabilities in both metallurgy and composite materials. The overall aerospace and defense (A&D) industry has total revenues of US$3.7 billion, representing a compound annual growth rate (CAGR) of 4.1% since 2010. The A&D industry is expected to grow at a 0.8% CAGR in the near-future, with the industry expected to reach a value of US$3.9 billion by the end of 2019. Recently, civil aerospace has been the Belgian A&D industry’s most lucrative segment, representing over 70% of the industry's total market. Belgium’s defense industry is fully privatized and centered on manufacturing components, subassemblies and small arms rather than full weapon systems and platforms. As a small nation, Belgium cannot maintain a large defense industry based on internal requirements, and instead, relies on external components and subcontractor work on major defense programs. Belgium’s military, similarly to other countries in Europe, is aging. The average soldier is 43 years old and the number of soldiers has declined from 40,000 in 2006 to 32,000 in 2016. Due to this decline, Belgium is streamlining its forces to no longer have a separate army, navy and air force, but rather a unified defense entity with a land, sea and air component served by a joint medical component. Additionally, Belgium has developed the Belgian Soldier Transformation (BEST) program integrating the latest technologies, including smart textiles, enhanced integrated and scalable communication, personal optics and global positioning. Belgian Deal Spotlight: Sonaca to Acquire LMI Aerospace Transaction Highlights Deal Financials Belgian Region Spotlight: Wallonia • The aerospace industry in Wallonia turns over almost US$1.9 billion annually and employs 5,800 people, including 1,400 in the space research sector • On February 16, 2017, LMI Aerospace Inc. Transaction Value: US$432M (Nasdaq:LMIA) agreed to be acquired by Sonaca Equity Value: for US$14/share (representing 52% premium TEV/Sales: over LMI’s closing share price on February 16, TEV/EBITDA: US$192M <ul style="display: flex;"><li style="flex:1">1.2x </li><li style="flex:1">a</li></ul>• The A&D industry was initially funded with state investment. Today, several of Wallonia’s large companies are foreign-controlled • Companies with key investments in the region include SABCA (plant in Charleroi), Safran (subsidiary Techspace Aero), Thales (two businesses in the region) and Sonaca (stateowned, based in Charleroi) 12.5x Wallonia 2017) Announced Date: 02/16/17 • Sonaca Group is a Belgian company known for its capability to produce advanced aerostructures • LMI Aerospace is a leading supplier of structural assemblies, kits and components • The transaction closed on June 27, 2017 <ul style="display: flex;"><li style="flex:1">Select Belgian A&D Transactions </li><li style="flex:1">Select Company Profiles </li></ul><ul style="display: flex;"><li style="flex:1">($ in US millions) </li><li style="flex:1">($ in US millions) </li></ul>TEV / TEV / <ul style="display: flex;"><li style="flex:1">Date </li><li style="flex:1">Target </li><li style="flex:1">Acquirer </li><li style="flex:1">TEV Sales EBITDA </li><li style="flex:1">Company </li><li style="flex:1">Commentary/Investments </li></ul>07/16/17 ADB Safegate 11/07/16 Advanced Circuit Boards 10/10/16 Gatewing <ul style="display: flex;"><li style="flex:1">–</li><li style="flex:1">–</li></ul>– ––The Carlyle Group ••Manufactures high lift devices, complex mechanical assemblies, and functional components for the aerospace industry On February 22, 2017, ASCO signed a long-term contract with Boeing for the production of hard metal and aluminum structural components and assemblies The agreement, valid until 2024, includes both the renewal of existing work on the 737 MAX, 747-8, 777 and 787 platforms, as well as several new packages on the 777X –Edmond de Rothschild, Cabestan Capital <ul style="display: flex;"><li style="flex:1">–</li><li style="flex:1">–</li><li style="flex:1">–</li></ul>Delair-Tech •04/29/16 TCR International 12/21/15 Marlink $200 $437 $21 –4.3x –5.3x –3i Infrastructure Altamir, Apax Partners Teledyne Technologies PARTER Capital Group Axle Holdings •••Manufactures metal and composite structures, servo-systems and sub-assemblies A joint venture between Dassault Group and Fokker Technologies (GKN Group) Focuses on “plug and fly” integrated structures, actuation systems and MRO and upgrades of platforms and equipment 06/05/15 Industrial Control Machines <ul style="display: flex;"><li style="flex:1">–</li><li style="flex:1">–</li></ul>01/21/15 Cassidian Belgium <ul style="display: flex;"><li style="flex:1">–</li><li style="flex:1">–</li></ul>01/08/15 Carat Security Group <ul style="display: flex;"><li style="flex:1">–</li><li style="flex:1">–</li><li style="flex:1">–</li></ul>••Manufactures aerospace structures, such as movable wing leading edges and wing skins, for civil, military and space markets LMI Aerospace (US$432, 2017) – provides structural assemblies, kits and components and design engineering services to the aerospace and defense market 09/29/14 Barco (aerospace and defense display business) $189 $165 $270 1.0x –7.4x –Esterline <ul style="display: flex;"><li style="flex:1">04/24/14 Mecar </li><li style="flex:1">Giat Industries </li></ul><ul style="display: flex;"><li style="flex:1">03/04/13 ADB </li><li style="flex:1">1.3x </li></ul>–PAI Partners Sources: CapIQ, Export.gov, Marketline, GlobeNewswire Stephen Perry Managing Director (949) 769-3323 x302 <a href="mailto:[email protected]" target="_blank">[email protected] </a><ul style="display: flex;"><li style="flex:1">Alyssa Morrisroe </li><li style="flex:1">Ilana Germaine </li></ul>Vice President (949) 769-3323 x308 Manu De Vries Director +32-2-429-22-53 Stefan Goethals Head of Corporate Finance +32-2-429-32-10 Tom Van de Meirssche <ul style="display: flex;"><li style="flex:1">Senior Associate </li><li style="flex:1">Managing Director </li></ul><ul style="display: flex;"><li style="flex:1">(949) 769-3323 x306 </li><li style="flex:1">+32-2-429-32-19 </li></ul><ul style="display: flex;"><li style="flex:1"><a href="mailto:[email protected]" target="_blank">[email protected] </a></li><li style="flex:1"><a href="mailto:[email protected]" target="_blank">[email protected] </a></li><li style="flex:1"><a href="mailto:[email protected]" target="_blank">[email protected] </a></li><li style="flex:1">[email protected] [email protected] </li></ul>Aerospace & Defense Market Insights Country Overview | 2017 China Aerospace & Defense Overview In 2016, the aerospace and defense industry in China continued to grow due to increases in defense spending and changes to the Catalogue of Industries for Guiding Foreign Investment, which expanded the range of approved investment activities of foreign entities into the aviation sector. These changes should allow foreign companies to manufacture small scale aircraft parts, including aircraft engine components and bearings, and drive foreign M&A and direct investment activities. In 2016, China’s defense budget was the second largest in the world, as it rose 6.2% to US$192.0 billion. China’s military expenditure as a percentage of GDP is only 1.9%, which is low compared to other countries like India (2.3%), the US (3.3%) and Russia (5.4%), indicating additional capacity to increase military spending. The President of China, Xi Jinping, reduced armed forces personnel by approximately 13.0% (300,000 people) earlier this year as part of China’s ongoing restructuring to modernize its military with robust cyber warfare and joint operation capabilities. The commercial aerospace sector has also seen rapid growth, and China’s domestic aviation market is expected to become the world’s largest by 2035, surpassing North America and Europe with 1.9 trillion revenue passenger kilometers projected by 2035. Within the next 20 years, 6,810 new aircraft would be required to meet this growing travel demand. Domestic and global demand for travel has caused the country to enter the commercial aircraft manufacturing business itself in order to reduce dependency on Boeing and Airbus. Chinese state-owned aircraft manufacture, COMAC, plans to produce a 158 seat singaisle aircraft, with 570 order commitments received from 23 customers. COMAC believes that its new aircraft, the COMAC C919, has a market potential of nearly US$100 billion, and additionally has entered into a joint venture with UAC in Russia to develop a wide-body jet, the COMAC C929. <ul style="display: flex;"><li style="flex:1">Public Comparable Companies </li><li style="flex:1">COMAC C919 Spotlight </li></ul>($ in US millions) Key Statistics Market Cap <ul style="display: flex;"><li style="flex:1">LTM </li><li style="flex:1">TEV / LTM LTM EBITDA </li></ul>Margin 2.8% <ul style="display: flex;"><li style="flex:1">TEV </li><li style="flex:1">Revenue EBITDA </li></ul>First Flight May 5th 2017 <ul style="display: flex;"><li style="flex:1">AVIC Aircraft </li><li style="flex:1">$7,141 $6,726 </li></ul>$6,917 $9,234 $3,863 $4,378 $3,683 $5,708 $3,552 $3,204 $3,724 $3,249 $1,005 $5,275 $1,767 $1,731 NM Boeing 737 Airbus A320 Competition AECC Aviation Power China Avionics Systems AviChina 22.5x 24.0x 10.9x 25.6x 23.6x 21.3x 12.4% 13.5% 9.7% 6.8% 8.1% 8.9% • The COMAC C919 is a 158 seat, narrow-body twinjet airliner developed by Chinese aerospace manufacturer COMAC Current Order Count 570 orders 23 buyers Avicopter <ul style="display: flex;"><li style="flex:1">• Multinationals have played </li><li style="flex:1">a</li><li style="flex:1">large role in the </li></ul>List Price US$50 million 2,000 units China Aerospace Times E $3,031 $3,431 development of the C919, with GE supplying engines and avionics and Honeywell supplying navigation equipment and fly-by-wire controls Mean Estimated Sales (20 years) Trading metrics as of 6/6/17. Valuation multiples based on LTM financial data as of 3/31/17 <ul style="display: flex;"><li style="flex:1">Select Recent Chinese Acquisitions of Western A&D Firms </li><li style="flex:1">Select Company Profiles </li></ul>Commentary/Investments <ul style="display: flex;"><li style="flex:1">($ in US millions) </li><li style="flex:1">($ in US millions) </li></ul>TEV / TEV / <ul style="display: flex;"><li style="flex:1">TEV Sales EBITDA </li><li style="flex:1">Date </li><li style="flex:1">Target </li><li style="flex:1">Acquirer </li><li style="flex:1">Company </li><li style="flex:1">Financials </li></ul>11/16/16 Gardner Aerospace 10/04/16 Airwork Holdings 07/15/16 SR Technics Switzerland 04/11/16 Gategroup Holding 01/12/16 Aritex Cading $406 $314 –2.2x 2.6x – –6.2x –Chengdu Aerospace Superalloy Technology •••China Aviation Planning and Design Institute (US$342M) – Provides technical consultation services to the A&D industry Tainjin Aviation Mechanical and Electrical (US$115M) – Develops and manufactures secondary power and fireproofing systems Aritex Cading (US$108) – Manufactures production and assembly lines for aeronautic companies Zhejiang Rifa Holding Group Sales: $56,537 EBITDA: $5,265 Cash: $14,634 HNA Aviarion Group $1.923 $124 –<ul style="display: flex;"><li style="flex:1">0.6x 13.5x </li><li style="flex:1">HNA Group </li></ul>–––– ––––AVIC International •••SR Technics – Provides MRO services for the civil aviation sector Gategroup Holding (US$1,923) – Provides airline catering and provisioning services worldwide Asia Jet Partners – Offers aircraft management, on demand charters, jet card membership, and consultancy services 11/23/15 AIM Aviation AVIC Aerospace International Sales: $15,547 EBITDA: $2,730 Cash: $17,549 04/05/15 Danbury Aerospace 12/05/14 Align Aerospace –Continental Motors (AVIC International) –AVIC International 10/23/13 TIMCO Aviation Services 01/03/13 Enstrom Helicopter Corp. 02/28/11 Cirrus Design Corp. Sources: CapIQ, Dacis, Deloitte, NY Times $393 $60 $210 <ul style="display: flex;"><li style="flex:1">1.1x 13.4x </li><li style="flex:1">Hong Kong Aircraft </li></ul>Engineering Company ••TIMCO Aviation Services (US$393) – Aircraft MRO provider to commercial, government and private customers GE Engine Services Xiamen (US$43) – Provides MRO and aviation services for engine operators Sales: $1,775 EBITDA: $140 Cash: $168 –– ––Chongqing Helicopter Investment China Aviation Industry General Aircraft <ul style="display: flex;"><li style="flex:1">John Zhang </li><li style="flex:1">Angela Chen </li></ul>Principal +86-138-1613-2926 <a href="mailto:[email protected]" target="_blank">[email protected] </a>Stephen Perry Managing Director (949) 769-3323 x302 <a href="mailto:[email protected]" target="_blank">[email protected] </a>Alyssa Morrisroe Managing Director (949) 769-3323 x306 Ilana Germaine Vice President (949) 769-3323 x308 <a href="mailto:[email protected]" target="_blank">[email protected] </a>Paul Liang Managing Director +86-21-5012-0990 <a href="mailto:[email protected]" target="_blank">[email protected] </a> Principal +86-138-1736-9958 <ul style="display: flex;"><li style="flex:1"><a href="mailto:[email protected]" target="_blank">[email protected] </a></li><li style="flex:1"><a href="mailto:[email protected]" target="_blank">[email protected] </a></li></ul>Aerospace & Defense Market Insights Country Overview | 2017 India Aerospace & Defense Overview The Indian aerospace and defense (A&D) industry is one of the fastest growing A&D industries worldwide. The Indian aerospace industry, an approximate US$16 billion market, currently ranks in the global top 10 aerospace industries and is predicted to become the third largest aviation market by 2026. As the A&D market continues to increase, India will require 1,850 new commercial aircraft worth US$265 billion, over the next two decades. The robust expansion in commercial aviation creates similar augmentation within the A&D supply chain subsectors, particularly within the maintenance, repair and overhaul market (MRO). The Indian government aims to continue expanding the MRO industry by offering exemptions on paying customs duty, airport royalties, value-added taxes and ensuring adequate land available for MRO service centers. The Indian defense industry also continues to expand quickly. The Indian defense sector budget (US$50.7 billion) became the fourth largest global defense budget in the world and will continue to grow to US$56.5 billion by 2018 as the country seeks to bolster its military. The Indian government offers several policy initiatives aimed at strengthening the local defense industry. In 2016, the Indian government removed regulations barring foreign A&D firms from holding more than a 49.0% stake in local ventures. This relaxation of FDI regulations will assist India in becoming a key A&D manufacturing hub. The easing of regulations also spurred Boeing to announce, in November 2016, plans to invest in a factory to produce the F/A-18 Super Hornet fighter jet. Additionally, reports exist of Lockheed Martin’s plan to shift their F-16 production facility to India. As more favorable regulations are introduced, large A&D firms will continue to invest in India’s burgeoning A&D industry. <ul style="display: flex;"><li style="flex:1">Public Comparable Companies </li><li style="flex:1">Hindustan Aeronautics Limited (HAL) Spotlight </li></ul>($ in US millions) Market Cap <ul style="display: flex;"><li style="flex:1">LTM </li><li style="flex:1">TEV / LTM LTM EBITDA </li></ul>Margin 20.9% Business Description <ul style="display: flex;"><li style="flex:1">TEV </li><li style="flex:1">Revenue EBITDA </li></ul>HAL produces various aircraft, helicopters and engines and provides MRO services <ul style="display: flex;"><li style="flex:1">Bharat Electronics </li><li style="flex:1">$5,840 </li></ul>$253 $21 $11 $10 $4,530 $337 $25 $11 $15 $1,287 $231 $6 16.6x Dynamatic Technologies Taneja Aerospace and Aviation Sika Interplant Systems High Energy Batteries 13.2x 17.8x 27.3x 14.4x N/M 10.9% 24.0% 7.6% 14.6% 8.9% <ul style="display: flex;"><li style="flex:1">Select Segments </li><li style="flex:1">Description </li></ul>$5 $7 $4 • Engaged in manufacturing various space structures Space <ul style="display: flex;"><li style="flex:1">Kavveri Telecom Products </li><li style="flex:1">$4 </li><li style="flex:1">$37 </li></ul>• Offers aircraft, helicopter and power plant MRO services MRO <ul style="display: flex;"><li style="flex:1">Mean </li><li style="flex:1">17.9x </li><li style="flex:1">14.5% </li></ul>• Manufactures five various military aircraft Aircraft Trading metrics as of 6/19/17. Valuation multiples based on LTM financial data as of 3/31/17 <ul style="display: flex;"><li style="flex:1">Select Recent A&D Transactions </li><li style="flex:1">Select Indian Company Profiles </li></ul>($ in US millions ) TEV / TEV / <ul style="display: flex;"><li style="flex:1">Company </li><li style="flex:1">Commentary/Investments </li><li style="flex:1">Date </li><li style="flex:1">Target </li><li style="flex:1">Acquirer </li><li style="flex:1">TEV Sales EBITDA </li></ul>••Manufactures and supplies electronic products for the defense sector Offers communication, radars, naval systems, opto electronics, electronic warfare systems, weapon system, tank electronics and simulators products 08/14/15 India Aviation Training Institute <ul style="display: flex;"><li style="flex:1">$41 </li><li style="flex:1">1.3x </li></ul>– –––––––––––AXISCADES Engineering Technologies 06/26/14 Thales Software India –L&T Technology Services 02/06/14 Deepti Electionics & Electro-Optics <ul style="display: flex;"><li style="flex:1">–</li><li style="flex:1">–</li></ul>Global Strategic Technologies ••Offers aerospace components, assemblies and aircrafts Defense Land Systems India (2013) – manufactures purpose built special military vehicles <ul style="display: flex;"><li style="flex:1">07/09/13 Sansera Engineering </li><li style="flex:1">$57 </li></ul>

2017 Aerospace & Defense Global Overview

Details

Download

Copyright

We respect the copyrights and intellectual property rights of all users. All uploaded documents are either original works of the uploader or authorized works of the rightful owners.

Support