ADACEL TECHNOLOGIES LIMITED (ADA)
Share Price Analysis and Chart

10/09/2024

1

Buy

$0.70

89.19%

Bell Potter observes Adacel Technologies retained the FAA contract for Tower Simulation System post a reconsideration by the FAA and an unsuccessful tenderer.

The broker highlights the contract's value at US$59m over five years including maintenance and hardware support.

No changes to the broker's earnings forecasts.

Due to an increase in the valuation multiple, Bell Potter lifts target price to 70c from 65c. Buy rating remains.

FORECAST
Bell Potter forecasts a full year FY25 dividend of 0.00 cents and EPS of 2.11 cents.
Bell Potter forecasts a full year FY26 dividend of 0.00 cents and EPS of 3.92 cents.

28/08/2024

1

Upgrade to Speculative Buy

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Despite Adacel Technologies' disappointing FY24 result, Taylor Collison retains the faith, positing the company offers an asymmetric opportunity for investors related to the resubmission decision by the Federal Aviation Authority for Training Simulator Software, which the broker believes will be reawarded to Adacel.

The broker considers the company to be heavily undervalued by the market and observes any new contract wins will scale sharply on the company's stable cost base.

Highlights from the FY24 result included the write down of -$1.9m of intangibles, which triggered a -$1.4m EBITDA loss versus the broker's forecast $1m profit. 

Cash flow in the June half also disappointed due to the increase in inventory arising from the initial award of the contract, but the broker expects the build to unwind through FY25.

The big negative was downgraded FY25 guidance to $4m to $5m from $6m to $8m at the December half result as customers opted not to take up extra work.

Rating is upgraded to Speculative Buy from Outperform/Accumulate.

FORECAST
Taylor Collison forecasts a full year FY25 dividend of 0.00 cents and EPS of 2.40 cents.
Taylor Collison forecasts a full year FY26 dividend of 2.60 cents and EPS of 3.10 cents.