MLSPF - Melrose Shares Don't Reflect The Value Of Growing Profitable Aftermarket Opportunities

2024-06-10 21:10:29 ET

Summary

• Melrose PLC has been a more modest performer compared to its peers in the aerospace industry despite good margin progression and strong trends in the Engines segment.
• Ongoing slippage in new aircraft deliveries should benefit Melrose, as it leads to more maintenance cycles for existing fleets and high-margin aftermarket revenues for Melrose.
• Melrose's recent trading update shows positive revenue growth, particularly in the engine segment, and there should be additional margin improvement in 1H'24 results in August.
• As a beneficiary of increasing fleet age and maintenance activities, Melrose shares look more interesting after this period of modest underperformance.

Writing about Melrose PLC ( MLSPF ) (MRO.L) late in 2023, one of my main concerns about this relatively new aerospace pureplay was the risk that the Street had more or less priced in the emergent commercial aerospace cycle and would move on to the next hot theme....

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