Q: I'm thinking of replacing my MAL shares with MDA for about a 2 to 2.5% position . { MAL is currently 1% so it would be a position size increase but still on the small side } ..... I notice the market cap of MDA is three times the size of MAL as well ..... It looks to me like MAL is a recovery play and MDA is a growth play. Could 5i give me a brief outlook on the short term and long term prospects of both and your preference between the two companies ? And whether a term I often see 5i use is applicable here ? The term is " We do not see it as need to own " ...... Thankyou for your terrific service .....
5i Research Answer:
MAL is still in the process of recovering after the pandemic, and the prospect of a full recovery is still quite uncertain. On the other hand, MDA looks more like a promising candidate in this field, and the company’s growth has been solid in the last few years. The company is still trading at 15.4x Forward P/E and topline growth is expected to be above 20% over the next few years.
We are okay to switch to MDA despite its larger size, we think what matters is the pace and duration of growth rather than size alone. Also, we think the aerospace industry is a highly profitable, attractive market for investors to exposure.