What are the foundation stones laid by Chemring Group to bolster the Roke business?  

Summary

  • CHG had shown a 4% growth in the top-line business and a 10% increase in the underlying operating profit during H1 FY21.
  • The Company will pay an interim dividend of 1.6 pence per share on 10 September 2021.
  • Chemring Energetics UK had collaborated with Martin-Baker Aircraft Company for a partnership of 15 years.

Chemring Group PLC (LON: CHG) is the industrial stock listed on the London stock exchange. CHG’s shares have generated a return of 19.85% in the last 12 months. It is listed on the FTSE 250 index.

Company Overview

Chemring Group PLC is the UK based leading aerospace and defence technology firm. Moreover, the Company is engaged in the manufacturing of advanced technology products for the aerospace, defence and technology markets. It has production facilities in four countries and currently employs around 2,300 people globally. CHG operates through two product divisions -  

  • Countermeasures & Energetics
  • Sensors & Information

H1 FY21 Interim Results (for the six months ended 30 April 2021 as of 03 June 2021)

Strong profitability despite currency headwinds – The revenue for CHG had increased from £191.0 million during H1 FY20 to £198.5 million for H1 FY21, driven by the outstanding business performance of the Sensors & Information division. Moreover, with regards to the profitability, the underlying operating profit grew by around 10%, and underlying earnings per share went up by approximately 20% during H1 FY21. The Company will pay an interim dividend of 1.6 pence per share on 10 September 2021 with respect to H1 FY21, illustrating the growth of around 23% from the interim dividend paid during H1 FY20.

Secured several long-term contracts in Countermeasures & Energetics division Chemring Countermeasures USA had received a five-year contract regarding the supply of infra-red decoy flares. Meanwhile, Chemring Energetics UK had agreed upon the long-term partnership of 15 years with Martin-Baker Aircraft Company.

Robust Growth for the Roke business – The Company had witnessed double-digit growth in revenue, orders, and operating profit during H1 FY21 for the Roke business benefitted by increased focus of the UK government on Cyber and Electromagnetic activities and enhancement of the digital infrastructure.

Acquisition of Cubica Group – On 03 June 2021, CHG has announced the acquisition of Cubica Group (Cubica Technology Limited and Q6 Holdings Limited) to be funded from existing banking facilities. Moreover, this deal would accelerate the progress of the Roke R&D business. This deal must be a foundation stone laid for the expansion of the growing Roke Business.

One Year Chart

(Data Source: REFINITIV)

CHG shares were trading at GBX 319.10 and were up by close to 4.11% as of 03 June 2021 at 10:34 AM GMT. The 14-day RSI stood at ~78.07, while the 20-day simple moving average was around GBX 295.13. CHG’s 52-week Low and High were GBX 213.10 and GBX 323.50, respectively. The market capitalization of CHG is approximately £867.10 million.

Business Outlook

CHG had delivered encouraging financial performance during H1 FY21. Moreover, the order book as of 30 April 2021 reflects 92% of the expected revenue for H2 FY21. However, the Company had raised concerns regarding the uncertainty revolving around the timing of the defence spending because of the Covid-19 pandemic. Nonetheless, the leading position in several markets and increased investment towards technological advancement would ensure long-term returns for the shareholders.

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