Deputy Prime Minister Visits Leading Australian Defense Tech Facility, Highlights Industry Significance
Source: Streetwise Reports (7/9/24)
DroneShield Ltd. (DRO:ASX; DRSHF:OTC), a leading Australian defense technology company, recently hosted a visit from Hon Richard Marles, Deputy Prime Minister of Australia and Minister for Defence, at their new Sydney facility. Read on for Marles's thoughts on this visit and more.
DroneShield Ltd. (DRO:ASX; DRSHF:OTC), a leading Australian defense technology company, recently hosted a visit from Hon Richard Marles, Deputy Prime Minister of Australia and Minister for Defense, at their new Sydney facility. This visit underscores DroneShield's significance in the defense sector, particularly following their contributions to the Australian Government's Ukraine aid package in late 2023. DroneShield provided rapidly deployable C-UAS sensors and effectors, making up half of the AU$20 million package. These products are now utilized on the frontlines in Ukraine and various global locations to counter drone threats.
Deputy Prime Minister Marles praised DroneShield's achievements, stating in the company news release, "DroneShield is an example of Australian high-tech success story, with world-class cutting edge local R&D and manufacturing, and growing exports around the world, with focus on the U.S." This visit highlights the importance of DroneShield's innovations and contributions to both national and global security.
DroneShield has also experienced a significant surge in its share price, reaching yet another all-time high. According to The Motley Fool, the stock traded around 4% higher at AU$1.98 per share in early trade on Thursday. This marks a staggering 440% increase year-to-date, continuing its impressive rally since April. Just a year ago, in July 2023, the share price was approximately AU$0.30 per share. The recent surge has been driven by positive developments, including a AU$4.7 million order from a non-government Swiss international customer and robust financial results. The Counter Drone Market
The anti-drone market has been experiencing significant growth and is projected to continue on this trajectory in the coming years. According to a recent report from Strait's Research, "The global anti-drone market is projected to reach US$9.78 billion by 2030, growing at a remarkable CAGR of 26.7% during the forecast period (2022–2030)." This growth is driven by rising drone sales and increasing privacy concerns, which have fueled the demand for advanced anti-drone systems that can detect and neutralize weaponized drones, thereby enhancing security at critical locations. As reported by EIN News on June 14, "The anti-drone market size is expected to see exponential growth in the next few years. It will grow to US$4.63 billion in 2028 at a compound annual growth rate (CAGR) of 24.2%." This growth is attributed to the rapid increase in drone sales globally, raising concerns about unauthorized photography of concealed objects and privacy invasion. These concerns have significantly driven the demand for anti-drone solutions.
In a May 31 report, Abraham Akra from Shaw and Partners gave DroneShield a Buy recommendation and a price target of AU$1.40.
Several public safety authorities and commercial establishments worldwide have been rapidly installing anti-drone technologies to meet the rising demand for safety.
This trend underscores the growing need for enhanced security measures in various sectors. According to Strait's Research, "Several public safety authorities and commercial establishments worldwide are rapidly installing anti-drone technologies to meet the rising demand for safety."
Furthermore, civilian and military sectors are increasingly concerned about the possible security risks posed by illegal aviation systems, leading to a rapid expansion of the industry. As noted by EIN News, "Civilian and military sectors are increasingly concerned about the possible security risks posed by illegal aviation systems, causing a rapid expansion of the industry."
Government agencies in many nations have been proactive in implementing anti-drone systems to enhance security at sports arenas, borders, jails, airports, military sites, and public and government buildings. As highlighted by Strait's Research, "Government agencies in many nations are implementing anti-drone systems to enhance the security of sports arenas, borders, jails, airports, military sites, and public and government buildings."
The military and defense sector has held the most significant revenue share and is anticipated to continue dominating the anti-drone market. As reported by EIN News, "The military and defense sector held the most significant revenue share and is anticipated to dominate the anti-drone market during the forecast period." This dominance is driven by increased costs in research and development by prominent defense contractors and the increased deployment of anti-drone programs by various armed forces. Company Catalysts
DroneShield has recently made significant strides in the defense technology sector. Their relocation to a larger Sydney facility now accommodates approximately 130 staff, including over 100 engineers, and features an expanded manufacturing floor. This increased capacity allows DroneShield to produce up to AU$400 million worth of products annually, all researched, developed, and manufactured in Australia.
CEO Oleg Vornik emphasized the company's leadership in AI-powered C-UAS solutions and its role as a sovereign manufacturer in the current geopolitical climate. Vornik noted in the press release, "Over the last 10 years, DroneShield has become a global leader in AI-powered C-UAS solutions. Critically in the current geopolitical environment, it is also a significant sovereign manufacturer. We are pleased to have had an opportunity to brief the Deputy Prime Minister on our operations, and look forward continuing to support Australia and its allies with our advanced technologies."
According to Omor Ibne Ehsan of Investor Palace, DroneShield has the potential for substantial growth in the coming years.
DroneShield's financial performance and strategic contracts have driven significant investor interest. The company's share price has surged, reaching new all-time highs. As of early trade on Thursday, the stock rose 4% to AU$1.98 per share, marking a 440% increase year-to-date. According to The Motley Fool, this surge has been fueled by several key developments, including a AU$4.7 million order from a non-government Swiss international customer and a AU$5.7 million repeat order from a US Government customer. Additionally, DroneShield secured its first counter-small UAS procurement framework agreement from NATO Support and Procurement Agency (NSPA).
In Q1 FY 2024, DroneShield reported a 900% year-over-year revenue increase to AU$16.4 million, driven by multiple contract wins. The company also successfully raised capital, including AU$15 million through a heavily oversubscribed share purchase plan and AU$30 million from a share placement. This financial backing supports their ambitious growth plans, with analysts and investors maintaining a bullish outlook on the company's future prospects. A Deeper Look At DroneShield
In a May 31 report, Abraham Akra from Shaw and Partners gave DroneShield a Buy recommendation and a price target of AU$1.40.
Akra stated, "DroneShield is a market leader and early mover in counter-drone (C-UAS) tech. DRO specializes in advanced AI-driven counter-drone and electronic warfare solutions for terrestrial, maritime, and airborne platforms." Currently, DroneShield's stock is trading at approximately AU$1.295, which is close to the target price. Akra highlighted that DroneShield is well-positioned to benefit from rising global defense spending and the increasing focus on counter-drone capabilities, expecting the company's sales growth to exceed market growth rates due to its robust product suite and established track record.
According to Omor Ibne Ehsan of Investor Palace, DroneShield has the potential for substantial growth in the coming years. He noted that the company's Q1 revenues "skyrocketed 10x year-over-year to AU$16.4 million," driven by a remarkable 2023 where DroneShield achieved AU$9.3 million in profits. Ehsan highlighted the company's record-high cash receipts for a March quarter at AU$7.1 million, indicating robust financial health.
Ehsan expressed strong confidence in DroneShield's future, stating, "I believe DroneShield is poised for explosive growth in the coming years." He emphasized the increasing demand for counter-drone measures as drone warfare becomes more advanced and widespread. DroneShield's focus on defending against drone swarms places it well in a critical and rapidly-growing niche, according to Ehsan.
Further, Ehsan pointed out that DroneShield has "AU$519 million in its sales pipeline and AU$400 million in annual production capacity," suggesting the company is well-prepared to capitalize on the growing demand for drone defense technologies. He praised DroneShield's AI-driven detection and defeat capabilities and the recent introduction of the DroneSentry-X Mk2, which he believes will help the company secure significant contracts from governments.
DroneShield's impressive stock performance was also noted by Ehsan, who stated, "DroneShield's stock has already surged 721% over the past year. But I think there's plenty of room to run ahead." He concluded that DroneShield is "one of the best defense stocks to buy under $15 right now," indicating strong potential for continued success and growth in the defense sector.
Ownership and Share Structure
Management and insiders own 11% of the company. CEO Oleg Vornik owns 2.23% of the company with 15 million options on a fully diluted basis.
Non-Executive Chairman Peter James owns 0.58% of the company with 920k shares and 3 million options, on a fully diluted basis, and Non-Executive Director Jethro Marks owns 0.22%, with 1.5 million options, on a fully diluted basis, according to DroneShield.
The company reports that the largest independent investor, Charles Goode, owns 4.41% of the company with 21.5 million shares, while strategic investors own a total of 13.99% of the company.
Eprius Inc. is the second largest shareholder, with 3.16% of the company having 18.5 million shares.
The company reports that there are about 763 million shares outstanding and about 56 million free-float traded shares.
Its market cap is about AU$1.5 billion, and it trades in a 52-week range of AU$1.37 and AU$2.02.
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