Solid H1 performance, debate around H2 momentum Meggitt''s performance in H1 was solid in our view, with margins down a limited 390bps, despite a 14% drop in sales. We note this was a challenging accomplishment given the limited benefit from cost saving measures in H1, notably with regards to headcount (2019 costs = 35% of sales). Given the lack of guidance, concerns arose on the scale of margin recovery in H2, as sales are arguably going to come in below H1 level. Uncertainty clearly remains around the strength and shape of the recovery but we expect the group to still be able to post a palatable 14.2% margin in H2 thanks to over GBP200m of PandL cost savings targeted for the FY. In addition overall short-term focus on H2 performance should shift towards mid-term recovery potential as we progress through the year. More visibility on aftermarket eases concerns on a retirement cliff The added disclosures on aftermarket are welcome, and show that the shift away from older platforms has already happened, with aftermarket from fleets over 20y representing only 15% of 2019 revenues (20% in 2016). We believe this exposure is largely driven by legacy regional, widebody and business jets, while the younger portion of the fleet, below 10 years, should be largely focused on narrowbodies. While recovering to 2019 Civil AM levels should take some years (we do not expect this prior to 2025), we would expect the bulk of lost sales to be recovered by 2022, along with a solid margin recovery close to 2019 levels thanks to cost-cutting measures. Joining the list of de-rated defensives, upgrade to Outperform Going into results we had concerns that margin performance might be weak in H1 and would trigger concerns about financial strength. This was further accentuated by press reports in August (Bloomberg) about a potential equity raise of up to GBP600m; Meggitt shares have underperformed key aftermarket peers Safran and MTU by 12% since late July. With...