Safran

According to a Financial Times report, Safran is reportedly considering the sale of parts of its Aircraft Interiors division, excluding the cabin seats, for up to €1.5bn. The division generated about €3bn in revenue in 2024, roughly 11% of the group, but profitability remains weak: EBIT was below 1% in 2024 and negative in 2023. While we don’t have a breakdown between seats and the rest, this move appears to be a targeted portfolio clean-up, shedding lower-margin assets like galleys and overhead bins while keeping the profitable seats. 

In our SOTP, we value the whole of cabin interiors at €1.82bn, with the bulk of this being the assets business, which isn't for sale in the deal. So, in all, the €1.5bn fetched could be significantly above our fair value and may lead to a slight increase in our SOTP fair value. In any case, this remains marginal in light of the weight of propulsion (€52bn fair value) and equipment/Defence (€22.5bn). 

More interestingly, our expert expects that such a move would enable the management to refocus on the more dynamic business and would free up some capital to keep investing in the rest of the business. 

While momentum is likely to remain strong, our reduced rating is predicated on relatively high valuation (PE25 at 35x and PE26 at 28x) and the fact that we see the fair value only marginally ahead of the current share price (1% upside). But our expert believes there is some upside to our numbers to take into account an improved guidance and a better SOTP, which will likely translate into more upside. 

In current markets, Safran is a defensive play (pun intended) and is worth keeping in your portfolio in his opinion.