YB new stock pitches (Thu, Oct 1)

Honeywell Aerospace is a newly independent, pure-play aerospace supplier offering mission-critical avionics, engines, power and control systems. Technology is installed on roughly 90% of commercial aircraft, and early integration into aircraft designs, certification barriers and long product lives support decades of high-margin aftermarket revenue, which represents 45% of sales. The opportunity follows a 41% decline from post-listing highs: demand remains strong, evidenced by an $18B backlog, but tier-2 and tier-3 supplier bottlenecks are limiting revenue conversion and may not improve meaningfully until 2027. Standalone ownership should allow more focused investment in suppliers and next-generation products. A five-factor model produces a 6.67% annual return in the bear case and 10.8%-14.78% in the base-to-bull cases, with a blended five-year price of $397; a separate 7% revenue-growth, 15.25% margin and 30x exit-multiple model values the shares at $175-$218. The principal risks are execution on supply-chain recovery and a newly levered balance sheet carrying $16B of debt and 3.5x EBITDA leverage, which management expects to reduce below 2.5x by 2028.

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Sitios owns 37,989 towers across 15 Latin American countries, but consolidated tenancy of only 1.28x leaves substantial potential operating leverage as additional tenants require little incremental cost or capital. At MXN 7.09, including the Q1 equity issuance, the shares trade at 4.6x LTM levered FCF, a 21.79% yield; the thesis requires cash-flow growth from BTS additions, contractual escalators and rising tenancy, not multiple expansion. Underlying results are stronger than peso-reported figures: Q2 revenue declined 2.4% as reported but rose 21.3% at constant currency, while tower lease revenue grew 17.9% and EBITDAaL 14.8% on that basis. Current 2026 guidance is approximately 1,800 new sites after customer deployment timing reduced the prior 2,000-plus expectation. Telesites/Opsimex provides a relevant precedent: after building out its network, it paid MXN 1.6bn of dividends annually from 2022 through 2024. Risks include 5.21x net debt/EBITDAaL, related parties representing 86% of the customer base, currency exposure and governance concerns highlighted by the undisclosed consideration for the Colombia related-party sale. The thesis fails if continued construction does not ultimately produce higher utilization and AFFO per share.

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TAV has rebuilt the earnings base lost when Istanbul Atatürk closed, diversifying across 15 airports with concessions extending into the 2050s. In 2025 it generated record revenue of €1.82B, EBITDA of €560M and free cash flow of €223M; current 2026 EBITDA guidance is €580-630M. The thesis has three drivers. First, Middle East normalization would support Medina and Georgia traffic after the war caused July’s guidance cut. Second, the heavy investment cycle is cresting: Antalya and Ankara are complete, while Almaty and Medina projects are financed at the asset level, allowing parent capex to fall from 2027. The base case takes leverage from nearly 3x to about 1.6x EBITDA by 2029 without asset sales, equity or investment cuts beyond those already planned. Third, at roughly €4B enterprise value, TAV trades at 6.6x current guided EBITDA and under 6x next year, versus approximately 8-11x for listed airport peers. Weighted bear, base and bull scenarios imply a euro return above 20% annually through 2029; the bear case loses modestly, while the base case requires execution without multiple expansion. Principal risks are Turkish political and currency shocks, a prolonged Middle East conflict, refinancing, and Antalya’s sharply rising concession payments after 2031, whose economics remain encouraging but unproven.

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