Q: Morning Troops. This is more of a hopeful question than anything. It is now almost a certainty that we will be spending more on defence regardless of who wins the election. If it actually comes to pass that our country decides to ease up on defence procurement from the US and spend more at home, how are companies like CAE positioned to profit from this and do you see it happening? Cheers.
5i Research Answer:
CAE is well positioned, with about 42% of its business already in defense. It could benefit from both a 'buy Canadian' movement and even from an 'avoid the US' movement from other countries also increasing defense budgets. Its programs have long lead times, and there is already a big backlog, so investors might not see drama right away, but we do think the trend is positive.