Intrinsic Value FACC AG (1FC.DE)

• Previous Close: €9.47
• Intrinsic Value: €29.52
• Upside potential: +212%

Stock Valuation Context

Business Model And Market Position

FACC AG operates as a specialized aerospace component manufacturer, serving global aircraft and engine manufacturers with high-precision aerostructures, engine nacelles, and cabin interiors. The company’s three core segments—Aerostructures, Engines and Nacelles, and Cabin Interiors—cater to critical aviation needs, from winglets and spoilers to customized luxury cabin solutions. As a subsidiary of AVIC Cabin System Co., FACC benefits from vertical integration within the AVIC group, enhancing its supply chain resilience and access to emerging markets, particularly in Asia. The firm’s engineering expertise and aftermarket services, including repair and maintenance, further solidify its role as a trusted partner in the aerospace sector. Despite intense competition from giants like Safran and Spirit AeroSystems, FACC maintains a niche position by focusing on lightweight composites and innovative cabin designs, aligning with industry trends toward fuel efficiency and passenger comfort. Its reliance on long-term contracts with OEMs provides revenue stability but exposes it to cyclical demand fluctuations in commercial aviation.

Revenue Profitability And Efficiency

FACC reported revenue of €884.5 million in its latest fiscal year, with net income of €6.4 million, reflecting thin margins typical of the aerospace supply chain. The diluted EPS of €0.14 underscores modest profitability, while operating cash flow of €32 million suggests adequate liquidity for near-term obligations. Capital expenditures were negligible, indicating a focus on optimizing existing capacity rather than expansion.

Earnings Power And Capital Efficiency

The company’s earnings power is constrained by its low net income margin (0.7%), though its asset-light repair services and design offerings may support higher returns. Debt levels at €283.5 million against €59 million in cash highlight leveraged operations, with interest coverage likely pressured by cyclical downturns. The absence of capex signals limited reinvestment for growth.

Balance Sheet And Financial Health

FACC’s balance sheet shows €59 million in cash against €283.5 million in total debt, implying a leveraged position. The lack of detailed capex data complicates assessment of liquidity needs, but €32 million in operating cash flow provides a buffer. The debt-to-equity ratio, if calculated, would likely reflect industry-standard leverage given the capital-intensive nature of aerospace manufacturing.

Growth Trends And Dividend Policy

Revenue growth hinges on commercial aviation recovery and OEM order flow, with no dividends paid, suggesting reinvestment priorities. The company’s reliance on aerospace cycles makes it susceptible to macroeconomic shocks, though its AVIC affiliation may offer stability in Asian markets. Long-term trends like lightweight materials and cabin upgrades could drive demand for FACC’s niche offerings.

Valuation And Market Expectations

With a market cap of €301.8 million and a beta of 1.42, FACC trades at a discount to larger peers, reflecting its smaller scale and higher volatility. Investors likely price in risks from supply chain disruptions and OEM concentration, balanced by its AVIC backing and exposure to post-pandemic travel demand recovery.

Strategic Advantages And Outlook

FACC’s strategic ties to AVIC provide access to China’s growing aviation market, while its expertise in composites aligns with industry efficiency goals. However, reliance on cyclical OEM demand and geopolitical risks (e.g., AVIC’s state-linked status) pose challenges. Near-term performance will depend on commercial aviation’s rebound and successful execution of cost-control measures.

Sources

Company filings, market data