Consensus community valuation
$4.80
Average Intrinsic Value
46.8%
Undervalued by
Active Member Straws
#Bull Case
Added 5 months ago

ASX ASB Austal Boats

With an order book nearing $5b and recent pivot toward a dual build sustain business model Austal is well placed to benefit from tail winds generated by NATO nations target of 2% gross GDP defence spend. Regionally Austal is well positioned to secure further sales orders and sustainment contracts with many of its core military designs well suited to operation within the Asia pacific region.

Closer to home the Royal Australian Navy is moving ever closer to a capability crunch with its patrol fleet. The aging Armidale Class Patrol boats (ACPB) are near the end of their designed service life and despite a concerted effort to extend this service life the platforms are surely nearing a sustainment cost curve nearing the acquisition cost of a replacement Cape Class Patrol Boat (CCPB). The RAN’s ACPB replacement is the 80 meter Arafura Class Offshore Patrol Vessels (OPV) which are not due online until 2023 at the earliest prior to having to complete full operation trials and evaluation which will extend the timeline to being fully operational out until 2024/25.

The NAVY already operates two CCPB which it acquired under a lease and buy back agreement financed by the NAB, additionally Customs also operate a fleet of CCPB's. An obvious capability gap filler would be a rapid procurement of 8 to 10 CCPB's which could be built quickly and introduced into service rapidly as the NAVY would not require lengthy training or operational trials period and could be funded and sustained in line with the RAN's current CCPB model.

The potential needs based requirement within the AU and Austal’s growing footprint within the USN make it an attractive proposition and worthwhile portfolio constituent during a period where market volatility may effect equity markets. Austal is well structured with a solid order book and placed in an industry insulated from global financial macro and supported by regional posturing due to the emergence of China and its maritime land grab.

 

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#ASX Announcements
Added a week ago
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#ASX Announcements
Added 3 weeks ago

US Navy modification to LCS contract.  The modification provides Austal with a total potential additional value of US$43,362,000 (approx. A$62,700,000).

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#Profit Upgrade
Added a month ago

29 May 2020 : UPGRADE FY20 group revenue $2.0b and Group EBIT of no less than $125m.  Previous guidance of Group Revenue of no less than $1.9b and Group EBIT of no less than $110m.

ASB was the pick on "Talk Your Book" Podcast by Andrew Mitchell of Ophie Asset Management on 20 May 2020.

https://omny.fm/shows/chris-judd-s-talk-ya-book/andrew-mitchell-ophir-asset-management?in_playlist=chris-judd-s-talk-ya-book!podcast

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#US Gov Backing for Shipyard
Last edited 2 weeks ago
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#ASX Announcements
Added 2 weeks ago
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#ASX Announcements
Added a month ago
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