Coming out of the pandemic, the supply chain in the commercial aircraft manufacturing market has gradually recovered and has now become more stable. As a result of this momentum, MAL has achieved record gross margins, accelerated topline growth, and valuation multiple expansion, while also raising dividends. MAL is expected to continue benefiting from healthy aircraft demand, supported by production backlogs at Boeing and Airbus representing roughly 10 years of output. Given the improving prospects and sustained business momentum, we are open to an upgrade if the company can continue to deliver strong results. For now, to remain conservative, we are maintaining our rating at “B.”

Since the new CEO joined in 2023, BNS has gradually regained business momentum through new operational priorities such as increasing the company’s focus on value over volume and strategically expanding into the U.S., while remaining willing to reduce operations in non-core markets such as Colombia and Costa Rica. These initiatives demonstrate improved operational discipline and have started to help the business move back on the right track. Despite management’s efforts to reorganize operations and optimize capital allocation, we believe there is still room for improvement. If fundamentals continue to improve, we see potential for BNS’s valuation multiple to re-rate toward levels more in line with its peers. While BNS may not be a life-changing opportunity, we continue to view it as a high-quality dividend grower with decent returns over time. We remain open to an upgrade if management can sustain business momentum; for now, we are maintaining our rating at “A-”.

The economics of the storage business are highly attractive, with a highly cash-generative model and limited capital requirements to maintain the assets. The company runs a highly leveraged balance sheet, which SVI has partially hedged with around 88% fixed-interest debt. Similar to other real estate operators, SVI is expected to benefit from declining interest rates, which not only improve valuation but also make it cheaper to refinance debt and fund acquisitions. Canadian self-storage is one of the best-performing niche real estate asset classes with a long runway for growth and consolidation, and SVI is well positioned to perform well over the long term. The company has also started to repurchase shares in recent years for the first time, indicating management believes the shares look attractive. We think SVI is a unique real estate compounder run by management with a decent track record of value creation. Given the company has maintained healthy organic growth and actively repurchased shares, we are open to a future upgrade, but for now, to remain conservative, we are maintaining our rating at “B”.