Permanent Capital Vehicle And Tax Assets Will Drive Long Term Earnings Power

Catalysts

About Aimia

Aimia is an investment holding company that owns and operates cash generative, industrial and services businesses and is repositioning itself as a permanent capital vehicle.

What are the underlying business or industry changes driving this perspective?

• Continued optimization of holdco costs toward a target below 1.5 percent of book value could structurally lift consolidated net margins and increase free cash flow available for reinvestment and buybacks, supporting higher earnings per share.
• Systematic deployment of a growing cash balance and tax refund proceeds into undervalued, cash rich U.K. and other international businesses with potential controlling stakes could accelerate revenue growth and widen EBITDA, creating multiple avenues for revenue and earnings expansion.
• Improving operational performance at Bozzetto and Cortland, with demonstrated EBITDA margin expansion despite macro and tariff headwinds, may position the portfolio to benefit when industrial demand and trade flows normalize, supporting stronger revenue growth and higher consolidated margins.
• Ongoing share repurchases at a persistent discount to net book value and NAV, funded by operating cash flow and asset-level cash, could mechanically increase book value per share and earnings per share over time, providing a potential path for value recognition in the equity.
• Large tax loss carryforwards and capital losses in Canada and the U.S., combined with a long-term plan to scale North American investments, create a backdrop for potentially tax-efficient gains and higher after-tax earnings if acquisitions ramp ahead of loss expiries.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Aimia's revenue will decrease by 41.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from -0.2% today to 91.4% in 3 years time.
• Analysts expect earnings to reach CA$93.1 million (and earnings per share of CA$0.62) by about December 2028, up from CA$-1.1 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 4.0x on those 2028 earnings, up from -229.4x today. This future PE is lower than the current PE for the CA Chemicals industry at 14.8x.
• Analysts expect the number of shares outstanding to decline by 4.86% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.51%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• A prolonged period of weak global industrial activity and ongoing tariff uncertainty affecting textiles, marine and shipping could structurally depress demand at Bozzetto and Cortland, limiting pricing power and driving lower consolidated revenue and EBITDA over time.
• If attractive acquisition opportunities in the U.K., U.S. and Canada remain scarce or prove less cash generative than expected after purchase, the shift toward a permanent capital vehicle could fail to scale. This could result in underutilized tax losses, slower reinvestment and weaker long term earnings growth.
• Reliance on continued cost cutting at the holdco and subsidiaries to lift profitability may reach natural limits. If macro conditions deteriorate before new growth investments contribute, margins could compress again and net earnings could revert toward losses.
• Persistent high cost debt at the holdco level and required interest payments on the 2030 notes and Bozzetto facilities could constrain flexibility to fund buybacks and acquisitions, especially if operating cash flows soften. This could pressure free cash flow and net margins.
• Clear Media’s recovery is tied to a rebound in Chinese consumer spending and advertising. If that secular recovery stalls or reverses, the business may deliver weaker than expected revenue and cash flow, dampening the group’s overall earnings trajectory.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of CA$3.75 for Aimia based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be CA$101.9 million, earnings will come to CA$93.1 million, and it would be trading on a PE ratio of 4.0x, assuming you use a discount rate of 8.5%.
  
• Given the current share price of CA$2.79, the analyst price target of CA$3.75 is 25.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.