Hua Fu International: Initiated coverage on Cirrus (02507) with an 'Outperform' rating and a target price of HKD 86.72

According to Zhitong Finance APP, Hua Fu International issued a research report stating that Cirrus (02507) $CIRRUS (02507.HK)$ is expected to generate revenues of USD 1.426/1.654/1.928 billion during the period from 2025 to 2027, with net profits reaching USD 162/199/242 million respectively. Based on the Discounted Cash Flow (DCF) valuation model, the firm initiated coverage with an 'Outperform' rating and set a target price of USD 11.12 (equivalent to HKD 86.72).

Hua Fu International's key views are as follows:

Cirrus is a pioneer and global leader in the private aviation industry.

Since its founding in 1984, Cirrus has revolutionized personal aviation, with cumulative deliveries of over 10,000 SR2X series aircraft and more than 600 Vision Jets globally. By the end of 2024, the company holds a dominant position in the private aviation sector, capturing a market share as high as 23.2%. In terms of financial performance, Cirrus has demonstrated strong revenue growth, increasing from $587 million in 2020 to $1.197 billion in 2024; net profit surged from $36 million in 2020 to $121 million in 2024, with a compound annual growth rate (CAGR) of net profit reaching 32.3%. The net profit margin also improved from 6.2% in 2020 to 10.1% in 2024.

Under consumer-oriented scenarios, demand for private jets shows steady growth.

General aviation encompasses all aviation activities outside military and scheduled commercial flights, including private flying and specialized aviation. The global private jet market has achieved steady growth in both delivery volume and value, with average selling prices also trending upward. The sustained growth in global private jet deliveries can be attributed to the expansion of high-net-worth individuals (HNWIs) and flight trainees, as well as ongoing infrastructure development. The industry exhibits a high level of concentration, with Cirrus holding a leading position in the piston aircraft segment. The market share of its two main aircraft series continues to rise. Cirrus differentiates itself through industry-leading safety features and a comprehensive 'product + service' ecosystem.

Cirrus's product lineup, ranging from the SR2X series to the Vision Jet, meets diversified market demands, with the SR series targeting the premium piston aircraft market and the Vision Jet positioned as a cost-effective option in the turbine aircraft category. The company’s competitive advantages stem from its groundbreaking safety features, including the life-saving 'Cirrus Airframe Parachute System (CAPS)' and the revolutionary 'Safe Return Emergency Autoland.' Crucially, Cirrus has evolved beyond traditional manufacturing operations into a provider of a comprehensive 'product + service' ecosystem, covering services such as flight training, aircraft management, and financing. This high customer retention model generates recurring revenue, enhances brand loyalty, and brings about high repurchase rates and strong pricing power.

Risk Warning:Fluctuations in raw material prices; supply chain disruptions; intensifying market competition; changes in customer demand; policy changes.

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