Leonardo SpA (LDOF.MI): Beechcraft/Leonardo only remaining bidder in US Navy trainer program - worth ~1% of Market cap

According to Breaking Defense (3-Nov), Sierra Nevada has pulled out of the US Navy Undergraduate Jet Training System program (UJTS), leaving the M-345N, proposed by Beechcraft (Textron) and Leonardo as sole bidder, with contract award expected Q3 2027. If we assume Leonardo has 50% of the ~$10bn program for 216 jets and 10% margins, that is about Eur500m EBIT or Eur350-400m PAT - factoring in the time value of money, we estimate the program is worth about 1% of Leonardo's ~Eur30bn market cap. We value Leonardo using a three-phase DCF, with explicit forecasts for the first 5 years (to 2031) with profit growth of 12.1% CAGR (previously 8.6%), mid-term (years 6-10) assumed growth of 9.6% profit growth, and perpetuity growth of 3% (in line with nominal GDP growth: 1% real GDP growth and 2% inflation). We use a 90% long-term cash conversion assumption and 9% WACC to give our target price of Eur69 per share (equivalent of 2026E EV/EBIT of ~21.3x).