Dassault Aviation Reports Healthy Business Jet Order Intake While Recovering From a Low Base

Narrow-moat Dassault Aviation’s first-half revenue of EUR 3.1 billion increased 18% year over year, resulting in EBIT more than tripling to EUR 175 million due to operating leverage. Total deliveries of Rafale and Falcon jets declined to 19, compared with 23 in 2020. New order intake to the value of EUR 3.9 billion compares with EUR 1 billion in the first half of 2020 due to the lack of large orders in the comparable period. The order backlog of EUR 16.7 billion equates to two and a half years of sales. The group maintains its delivery guidance of 25 Rafale jets and 25 Falcon business jets in 2021. Profitability should continue to benefit from a lower cost base and higher fixed-cost recovery. We maintain our EUR 1,600 fair value estimate and believe the shares are undervalued, but note the high uncertainty rating stemming from the low-volume, high-value nature of the group’s products. The company will do a 10:1 stock split in October in an effort to increase liquidity.