Cathay Haitong Securities: First-time 'Overweight' rating for Cirrus (02507), future sales expected to see both volume and price increases

According to Zhitong Finance APP, Cathay Haitong Securities issued a research report stating that it is covering the company for the first time and granting Cirrus (02507) $CIRRUS (02507.HK)$ an 'Overweight' rating. It is estimated that the company's EPS for 2025-2027 will be $0.43/0.51/0.59 per share respectively. Based on comparable company valuations, the company is given a PE ratio of 20 times (26E), with a target price of HK$79.76 per share. The company is a global leader in private aviation, driving growth through its SR piston aircraft & Vision jet dual strategy. Benefiting from abundant orders, increased production capacity, and continuous product iteration, future sales are expected to see both volume and price increases.

The main viewpoints of Guotai Haitong Securities are as follows:

The global leader in private aviation, with the two best-selling piston and jet models

The company was founded in the United States in 1987 and acquired by the Aviation Industry Group in 2011, gaining financial support. Currently, the company is the global leader in private aviation (with a 32% share of deliveries in 2023) and owns two product lines: the SR2X series (the best-selling single-engine piston aircraft over the past 22 years) and the Vision jet (the best-selling business jet for six consecutive years). The company has an excellent track record, with revenue CAGR from 2020 to 2024 at 19.53%, and net profit CAGR at 35.22%.

Global general aviation market shows steady growth, with increasing evidence of essential demand

Benefiting from economic growth, relaxed credit, an increase in high-net-worth individuals, airport infrastructure development, and technological advancements that lower the threshold for personal flight, the global general aviation market size grew at a CAGR of 4.86% from 2000 to 2024, reaching $26.725 billion. In terms of volume and price, the average aircraft unit price increased at a CAGR of 4.35% from 2000 to 2024, serving as the core driver. The global general aviation industry has experienced prosperity, a downturn after the financial crisis, recovery, and is now entering a phase where efficiency and safety are becoming essential demands.

Outstanding core competitiveness, with leading market share continuously improving

The company’s market share has consistently risen from 2000 to 2024, making it the global leader in general aviation. Its core competitiveness lies in: 1) ensuring aviation safety, the most critical competitive advantage, through CAPS+SafeReturn dual guarantees; 2) attracting consumers through clever market positioning that ensures high cost-performance and high resale value; 3) continuous product iteration and upgrades (SR series evolved to G7, Vision to G3), achieving optimal overall performance; 4) advanced composite material manufacturing and flexible production capabilities, as well as a customer-centric sales model.

Dual drivers, abundant orders, and rising volume and prices

The company's SR series positions itself in the piston aircraft segment, with strong competitiveness expected to continuously increase its market share. The Vision jet pioneered the 'new blue ocean market' for private single-engine jets. The company currently has abundant backlog orders (1,056 units reserved as of H1 2025) and expects capacity to rise continuously through 2025-2026. Additionally, the proportion of high-value models continues to increase, driving both volume and price higher, while future after-sales service revenue has significant room for growth.

Risk Warning

(1) Demand fluctuations, (2) new models not meeting expectations, (3) cost volatility.

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