Brazilian airliner TAM recently spun out its frequent flyer program, renamed Multiplus, which began trading on the BOVESPA (Brazilian stock exchange) on Friday. And based on the valuation a surprising winner coming out of this appears to be Groupe Aeroplan Inc.
Kenric Tyghe, analyst with Raymond James, said while there are differences between the Brazilian and Canadian markets, he is confident in the strength of the customer loyalty business.
"Where previously we were cautious on both the magnitude and timing of the economic recovery, we are now cautiously optimistic that the recovery in consumption expenditre in Canada will be stronger than is currently widely expected," he said in a note to clients. "Our previous 8.5x EBITDA mutliple in the context of the IPO pricing and recent macro data points appears to conservtive."
The Multiplus IPO raised US$390.7-million on R$16 share.
"The valuation reflects a combination of a scarcity premium for publicly traded loyalty programs," he said.
In any case, Mr. Tyghe sees a 9.5x target mutliple, factoring in the Multiplus valuation, positive consumer data, and upward swings in Canadian GDP. This raises his target to $15 from $13, while maintaining an Outperform rating on Aeroplan.
Eric Lam