It was a report from Petra - I copied itPETRA CAPITAL REPORT“Our...

It was a report from Petra - I copied it

PETRA CAPITAL REPORT

“Our analysis of EOS’s un-risked $13bn Defence sales pipeline providesan indicative roadmap for the future, and in doing so highlights the growthpotential of the company’s core business. We have increased our medium-termsales forecasts to reflect this analysis, and ultimately our confidence inEOS’s ability to leverage its technological advantages to capitalise onincreased defence spending. Our revised TP is $7.07ps (from $6.89ps), and ourBuy rating is unchanged.”

The details and assumptions pertaining to each contract opportunityoutlined above are as follows:

· UAE RWS. Accounts for the bulk of EOS’s current sales backlog, withPhase 1 (200 units at ~$900k each) currently being delivered, and Phase 2 (300units at $900k each) expected to commence in mid-2021;

· ADF i RWS. Recently announced order for 251 RWS with a contracted valueof $94m (~$370k per unit), for which product deliveries are expected to commence in 2H20 and complete in mid- 2021 (i.e. 6-9 month contract duration);

· ADFRWSLand400.WiththeLand400Phase3tenderingprocessnowdown-selectedtotwo,EOS looks certain to secure the RWS (R400S Mk 2) component of the supplycontract (450 units at $670keach) given that both of the competing bids feature its single weapon station;

· ADF RWS ii (programme extension). Defence budget allocations and therecent ADF RWS contract (251 units) indicate that EOS will likely be contractedto retrofit its RWS to the balance (~1,000 units) of the ADF’s lightweightprotected vehicles (namely Bushmaster and Hawkei);

· ADFLand400RWS(turret).InadditiontotheR400SMk2requirementthatisafeatureofthedesign specification for both Rheinmetall (Lynx) and Hanwah’s (Redback)down-select, the latter also incorporates EOS’s T2000 turret (450 units at $2m each);

· CUASi(preferredsupplierstatus).Whiletheend-customerhasnotbeendisclosed,EOShasconfirmed its down-select to preferred supplier of a “major international CUASrequirement” (i.e. ~150 units at $20m each), with an initial order (i.e. ~10 units) expected within the next 6 months;

· CUASii.InadditiontotheCUAScontractabove,EOShasthusfaralsoinitiateddiscussionwithfour other prospective CUAS customers. Notwithstanding EOS’s estimatedaddressable market of ~$21bn over 10 years to 2030, we assume one additionaltender (i.e. 75 units at $20meach);

· USOMFVRWS.TheOMFVisthereplacementprogrammefortheM-2BradleyIFV.Ofrelevanceto EOS is the requirement for ‘lethality’ and ‘optionally manned capabilities’,and the intent to encourage foreign participation. We assume a ~30% share toEOS (10,000 units at $540keach);

· ROCV(ADF,US,EU).EOSrecentlysecureda$4mRWS(R400S)orderfromaEuropeanNATOcountry, some of which are optimised for Remotely Operated Combat Vehicles(ROCVs). EOS currently has a ROCV sales pipeline >$1bn, with major contractawards possible in <12 months.