Honeywell Wins Retrofitting Contract - Analyst Blog

Honeywell International Inc. (HON) has won a $100 million contract from Vietnam Airlines. The scope of work entails the supply of avionics suites and auxiliary power units for 36 new and 22 existing Airbus A321 aircraft.

The avionics suite will provide real-time data to the pilots to help navigate the aircraft by outlining the route ahead for better fuel efficiency. The auxiliary power unit is estimated to save almost $10,000 per aircraft every year.

Honeywell is a leading supplier of electronics, consumable hardware, engine controls, environmental controls, landing systems, power systems, propulsion engines, aerospace services and space products and systems for the aerospace industry, including commercial and regional airlines, air cargo carriers, as well as Original Equipment Manufacturers (OEMs) of commercial, regional, military aircraft and spacecraft.

Honeywell's attractive collection of businesses has the potential to earn consistently above-average returns. The company's focus on working capital management, free cash flow generation and balance sheet strength remain positive attributes in the current weak environment.

The company is a global leader in refrigerants, aerosols and foam-insulation blowing agents used to replace ozone-depleting Chlorofluorocarbon and Hydro chlorofluorocarbons. Those same products also improve the energy efficiency of homes, appliances and commercial refrigeration systems.

The company's proactive restructuring initiatives have positioned it to navigate better than many of its peers, but we have yet to see signs of stabilization in a number of its major end-markets.

At Automation and Control Systems, the largest segment by revenue, industrial customers are delaying both capital and operating expenditures across a number of businesses, driven by weakening demand.

Honeywell International Inc. is a diversified technology and manufacturing company, serving customers worldwide with aerospace products and services, control, sensing and security technologies for buildings, homes and industry, turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology  for refining and petrochemicals and energy-efficient products and solutions for homes, business and transportation. The primary competitors include Johnson Controls Inc (JCI) and United Technologies Corporation (UTX).

We currently have a Neutral recommendation on Honeywell.

 
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