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QHL (JSF parts production surprises on upside)


QHL announcedtoday (6 October 2016) that 256 F-35JSF parts were delivered during the September quarter, with a record 108parts manufactured in the September month. QHL also stated that capitalprojects for further JSF production expansion are expected to be complete inDecember 2016.

State One commentary

·         256 JSF parts sales in the September quarter represent a 56% increase onJune quarter’s sales of 163 parts (143 fuselage, 20 VTF). Production of 108parts in Sept indicates potential sales of 324 JSF parts (i.e., 108 x 3) in thecurrent Dec quarter. This represents a further 27% QoQ growth.

·         Based on production YTD, we believe full year (FY17E) JSF partssales could surprise on the upside relative to our forecast of 875 JSF parts(600 fuselage, 275 VTF).

Source: Company, compiled by StateOne Stockbroking

  • At current share price levels, we believe that QHL offers significantupside potential.
  • Recommendation: BUY (Higher Risk).

6/10/2016 10:00:00 AM

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