External reports (aggregated public sources), Value Investors Club

Value Investors Club

External reports (aggregated public sources)

Equity Bottom-Up

Controladora Vuela Cia-Adr / Equity Bottom-Up

<ul><li>VLRS is Mexico's largest ultra-low-cost carrier with Indigo Partners as a key shareholder, benefiting from favorable negotiated aircraft pricing with Airbus</li><li>Despite a decline in stock price, the company's business model and profit profile remain unchanged</li><li>VLRS has faced temporary challenges but is positioned to benefit from a more rational airline market in Mexico following the demise of Interjet</li></ul>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

VLRS is Mexico's largest ultra-low-cost carrier with Indigo Partners as a key shareholder, benefiting from favorable negotiated aircraft pricing with AirbusDespite a decline in stock price, the company's business model and profit profile remain unchangedVLRS has faced temporary challenges but is positioned to benefit from a more rational airline market in Mexico following the demise of InterjetThis content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Controladora Vuela Compania (VLRS) - Saturday, Jan 13, 2024

Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

Equity Capital Markets

Grupo Aeromexico / Equity Capital Markets

<ul>
<li>We update forecasts for Mexican carriers Aeromexico, Viva Aerobus and Volaris following extremely strong 1Q results, driven by capacity management.</li>
<li>We expect each carrier to produce record performances in 2024 as pricing gains continue through the year.</li>
<li>However, we expect market conditions to normalise beyond 2024 and see further gains as a lot more difficult, particularly given drag from higher aircraft ownership costs.</li>
</ul>


We update forecasts for Mexican carriers Aeromexico, Viva Aerobus and Volaris following extremely strong 1Q results, driven by capacity management.
We expect each carrier to produce record performances in 2024 as pricing gains continue through the year.
However, we expect market conditions to normalise beyond 2024 and see further gains as a lot more difficult, particularly given drag from higher aircraft ownership costs.


Mexican Airlines - Capacity Management to Drive Bumper 2024; Gains Beyond Difficult

<ul>
<li>Aeromexico reported record profitability in 2023 and we expect another record in 2024.</li>
<li>Our deep dive on the competitive landscape suggests a benign outlook as Aeromexico does not face competitor capacity growth in 2024.</li>
<li>The US DOT's tentative ruling that Delta and Aeromexico must terminate their JV is a meaningful negative from 4Q24 unless their appeal is successful.</li>
</ul>


Aeromexico reported record profitability in 2023 and we expect another record in 2024.
Our deep dive on the competitive landscape suggests a benign outlook as Aeromexico does not face competitor capacity growth in 2024.
The US DOT's tentative ruling that Delta and Aeromexico must terminate their JV is a meaningful negative from 4Q24 unless their appeal is successful.


Aeromexico – Another Record Year in Prospect in 2024

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares Russell 2000 ETF / Technical Analysis

<ul>
<li>We discussed last week how consolidation was likely, so far that has played out with the SPX back testing the 4300-4325 area which we anticipated would cap upside for 2023.</li>
<li>We continue to watch short-term support at 4300, and we cannot be bearish if the S&amp;P 500 is above 4300.</li>
<li>The Russell 2000 (IWM) is back to test support at $180; we would expect to see this hold as support, but a failure to hold would mean a trip to $170
</li>
</ul>


We discussed last week how consolidation was likely, so far that has played out with the SPX back testing the 4300-4325 area which we anticipated would cap upside for 2023.
We continue to watch short-term support at 4300, and we cannot be bearish if the S&amp;P 500 is above 4300.
The Russell 2000 (IWM) is back to test support at $180; we would expect to see this hold as support, but a failure to hold would mean a trip to $170



Russell 2000 (IWM) Testing $180 Support; Breadth Remains Constructive; Construction/Engineering Buys

NASDAQ Composite Index / Technical Analysis

<ul>
<li>Since January 2023 we've anticipated for 4165-4200 to cap upside on the S&amp;P 500 for 2023, but that a rally to 4300-4325 is also possible; this remains our view.</li>
<li>In our 5/2/23 Compass we discussed how the Nasdaq Composite was testing 12,300 resistance, and that a breakout and reach to 13,180 is possible.</li>
<li>The Nasdaq Composite hit 13,154 Tuesday as Technology (XLK), and to a lesser extent Communications (XLC), are seemingly in a blowoff stage, while all other Sectors are neutral to bearish.</li>
</ul>


Since January 2023 we've anticipated for 4165-4200 to cap upside on the S&amp;P 500 for 2023, but that a rally to 4300-4325 is also possible; this remains our view.
In our 5/2/23 Compass we discussed how the Nasdaq Composite was testing 12,300 resistance, and that a breakout and reach to 13,180 is possible.
The Nasdaq Composite hit 13,154 Tuesday as Technology (XLK), and to a lesser extent Communications (XLC), are seemingly in a blowoff stage, while all other Sectors are neutral to bearish.


Downgrading Discretionary & Health Care to Market Weight, Staples & Utilities to Underweight

Mexico

Controladora Vuela Compania de Aviacion, S.A.B. de C.V. is a low-cost airline carrier based in Mexico.  The Company offers an unbundled pricing strategy which allows them to provide low base fares and enables its passengers to select and pay for a range of optional products and services for additional fees.

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Controladora Vuela Cia-Adr (VLRS US)

Controladora Vuela Compania (VLRS) - Saturday, Jan 13, 2024

VLRS is Mexico's largest ultra-low-cost carrier with Indigo Partners as a key shareholder, benefiting from favorable negotiated aircraft pricing...

Value Investors Club

Mexican Airlines - Capacity Management to Drive Bumper 2024; Gains Beyond Difficult

Deep dive on the financial prospects of the three major Mexican airlines, Aeromexico, Viva Aerobus and Volaris, highlighting record performances in...

Neil Glynn

Aeromexico – Another Record Year in Prospect in 2024

Detailed forecasts for Aeromexico suggest another record year in prospect in 2024 as our deep dive on competitive capacity suggests a benign...

Neil Glynn

Russell 2000 (IWM) Testing $180 Support; Breadth Remains Constructive; Construction/Engineering Buys

Russell 2000 $IWM Testing $180 Support; $RTY $SPX Breadth Remains Constructive; Highlighting buy ideas in Services (Research/Consulting &...

Vermilion Research

Downgrading Discretionary & Health Care to Market Weight, Staples & Utilities to Underweight

5/2/23 we discussed how $Nasdaq Comp was testing 12,300 resistance, and that a breakout and reach to 13,180 was possible. It hit 13,154 Tuesday as...

Vermilion Research

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