There’s 103% upside in FLYHT Aerospace, says Clarus analyst Ofir

April 21, 2014 By Nick Waddell

The management of FLYHT Aerospace (TSXV:FLY) has been building its business patiently for a decade, but the company’s real relevance is now emerging, says Clarus Securities analyst Eyal Ofir.

In a research report to clients this morning, Ofir initiated coverage of FLYHT with a “Buy” rating and $1.10 one-year target, implying 103% upside from Friday’s closing price of $0.54.

Ofir says all the things that were impediments to FLYHT executing on its business plan have become significant barriers to entry for would-be competitors. FLYHT has endured a “rigourous” certification program, positioned itself with Airbus, and solidified its position in China. The opportunity in China alone, he says, could generate as much as $57-million in hardware revenue over the next three years.

Calgary-based FLYHT ‘s main offering is AFIRS (Advanced Flight Information Reporting System), a turnkey solution that allows for SMS and voice communications between the flight crew, air traffic control and ground staff. The solution received major media attention after the loss of Malaysia Airlines Flight 370, on March 8th.

The Clarus analyst says he believes the recent tragedy will cause regulatory bodies to reassess their position on mandating satellite communications, and will fortify the resolve in China, where the government has already been proactive at mandating satellite communication technology to all aircraft by 2017.

Ofir says the regulatory thrust is paired with a hard business case for AFIRS. He says the company has a demonstrated a clear return on investment for airlines, noting that the technology can save more than $100,000 a year per plane by using AFIRS date to adapt a more responsive maintenance schedule.