BAESF - Dassault Aviation Is A High Conviction Buy As Profitable And Secularly Growing Core Business Is Valued At Zero

• Dassault Aviation is an established French company with substantial business jet manufacturing market share and a defense business which produces the Rafale jet.
• The defense business has been completely insulated from COVID-19 impacts, and have in the meantime won a major contract from India, exemplifying Rafale value during the wait for Gen-6 fighters.
• The civil aviation business, which manufactures the Falcon series business jets, was hit by lock-downs, but the outlook in the B&GA market is of almost total recovery.
• Despite no remarkable operating problems, and no financial distress to speak of, after accounting for their stake in Thales SA and a negative net debt, their aviation businesses are given a zero value.
• Dassault Aviation constitutes an unambiguously asymmetrical upside opportunity thanks to a small free-float and a substantially passive investor base, that we rate a high-conviction buy.

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