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Summary
- National safety & security has been one of the major focus areas for governments worldwide. As a result, companies in the defence sector are gaining traction.
- Morrison government has announced that it would invest A$270 billion to upgrade the capability and potency of the Australian Defence Force.
- Austal and Jianglong Shipbuilding‘s JV, Aulong Shipbuilding, recently delivered the largest and fastest aluminium passenger ferry in China to Beihai Ennova Cruise Co.
- XTEK Limited received a purchase order for the supply of extra AeroVironment WASP AE Small Unmanned Aerial Systems from the ADF.
- The US Air Force awarded DroneShield a contract worth ~US$200,000 deal for the implementation of multiple units of DroneSentryTM.
Apart from finding a solution to make the world COVID-19 free, another critical area most countries around the world are focusing on is security, both at the personal and country level. On that front, many companies from the defence industry are gaining traction from various parts of the world.
In a recent media release, it was highlighted that over the next ten years, the Morrison government would invest ~A$270 billion for the upgradation of capability and potency of the Australian Defence Force (ADF) to safeguard the Australian citizen and to protect the country’s interests in a fluctuating global environment.
In the 2020 Defence Strategic Update, the Morrison Government highlighted essential changes in Australia's defence posture, as it prioritises the Indo-Pacific region. The update also updated on new plan to tackle the challenges faced by Australia’s defence while expanding investment & personnel throughout the complete Australian Defence Force.
The strategic update would bring job opportunities as Australia’s increasingly skilful & sovereign defence industry grows.
On that note, let us look at a few ASX-listed companies from this industry and see their recent development.
Austal Limited (ASX:ASB)
Austal Limited is an international shipbuilder, defence contractor as well as marine technology partner from Australia. The Company designs, constructs plus support ground-breaking defence & commercial vessels for the top operators around the world.
Aulong Delivers Largest and Fastest Aluminium Passenger Ferry built in China
On 15 July 2020, Austal Limited announced that Aulong Shipbuilding had delivered a 70-metre, high-speed catamaran passenger ferry, with a capacity to carry 1,200 passengers and the ability to reach a speed of up to 34 knots, to Beihai Ennova Cruise Co. Ltd. Aulong Shipbuilding is a joint venture of Austal and China’s Jianglong Shipbuilding. The new ferry will be operated by Beihai Ennova Cruise and would travel between the Port of Beihai and Weizhou Island.
Construction Commences on Austal’s Largest Ever Ferry
On 9 July 2020, Austal announced that Austal Philippines began the creation of a newly designed 115-metre high-speed vehicle-passenger catamaran for Danish ferry operator Molslinjen. The new ‘Auto Express 115’, known as Express 5 would be the largest ferry that is constructed by Austal and is a further design development of the unique 109-metre high-speed catamaran, Express 4, which was delivered to Molslinjen in January 2019.
XTEK Limited (ASX:XTE)
XTEK Limited provides superior products to deliver customised solutions to sectors such as government, law enforcement, military, space and commercial. The Company is engaged in the development and commercialising its proprietary technologies by utilising its proven distribution network.
Additional ADF SUAS Purchase Order:
On 25 July 2020, XTEK Limited announced that it received a purchase order for the supply of extra AeroVironment WASP AE Small Unmanned Aerial Systems from the Australian Defence Force (ADF) worth A$2.8 million. The new order is in conjunction with the continuing SUAS supply agreement with the ADF.
The Company has a strong relationship with ADF and has delivered over 50 AeroVironment WASP AE SUAS by July 2020. Also, there are additional SUAS scheduled for delivery in the near-term.
A Peek into XTE’s FY2020 Revenue Guidance:
On 6 July 2020, XTEK Limited released FY2020 Revenue Guidance and projects to deliver revenue over A$42 million.
XTEK manufacturing capability, which includes XTclave™, has the power to generate annual revenue of up to ~A$40 million, expanding twice as compared to the previous projections. Further, the Company also highlighted that it is well-positioned to service increasing interest in its ballistic solutions. Additional orders are expected in the future, which would strengthen XTE’s future revenue expectations.
DroneShield Limited (ASX:DRO)
Headquartered in Sydney, DroneShield Limited is a global leader in drone security technology. The Company has been in the news recently because of two back to back achievements. Let us look at both.
The United States Air Force Contract Award:
On 23 July 2020, DroneShield announced that it had been awarded a contract worth ~US$200,000 by the US Air Force for the implementation of multiple units of DroneShield’s DroneSentryTM integrated detect-and-defeat counter-drone system at the Grand Forks Air Force airbase.
As per the contract, the US Air Force acquired an option to purchase new systems after the initial implementation. Oleg Vornik, the CEO of the Company, said that the US Air Force chose DroneShield’s technology because the technology uses Artificial Intelligence software and tracking/defeat automation that the potential to solve the 319th SFS problem statement and has small to no impact on manning.
The contract awarded for the implementation of DroneSentryTM integrated detect-and-defeat counter-drone system by the US Air Force is DRO’s first US Air Force deployment. Also, the US Air Force is the most demand customers in the world, and the Company feels proud of being chosen by them.
Order from European Ministry of Defence:
On 24 July 2020, the Company received another order for its RadarZeroTM portable counter-drone system, powered by the DroneShieldCompleteTM Command-and-Control (“C2”) system.
The sales proceeds from RadarZeroTM portable counter-drone system would be A$100,000 and is for the evaluation purpose. The Company expects that there would be additional deployments with this Ministry of Defence customer.
June Quarterly Highlights:
In Q2 FY2020 for the period ended 30 June 2020, the Company made considerable qualitative and quantitative development. During this period, the net cash inflow from the customers and grants were around A$2.1 million. The Company noted an increase in the cash balance related to the start of the quarter. There was a significant increase in the US government business.
The Company started working towards the execution of a formal contract regarding the A$70 to A$85 million Middle Eastern bid. It also won a four-year framework agreement to provide DroneGun TacticalTM to the European Union police forces.
Do Read: 3 Stocks in The Security Services Space: AVA, DRO, and SP3
Stock Information (as on 24 July 2020):
