Evans & Partners upgraded EOS

Evans & Partners upgraded EOS to Positive (highest rating). Target: 7,14 dollar. They forecast an EBITDA of 89 million in 2022.

Some highlights:

The supply of RWS [to the Australian Defence] is just the start for EOS, with even larger contracts in the offing for tank turrets (EOS is one of two bidding for $1bn+, decision 2022) and space activities – the $2bn earmarked for space situation awareness (i.e. satellite and space debris tracking) that was taken out last year has now been re-instated.

There is also scope for involvement in the supply of directed energy weapons (laser beams) for the close-range defence of naval vessels and armoured vehicles. Such weapons are already part of the company’s anti-drone systems, but they have capabilities against much larger targets. Range is not an issue with lasers.

EOS remains an exciting long-term story. Years of heavy investment in developing cutting edge IP is paying off, with the company in a unique position to win sizeable contracts in Australia and overseas. The opportunities span weapon systems (ballistic and laser), space tracking and satellite communications. With the coronavirus disruption now priced in, we upgrade to Positive.

On Space:

The Government will invest around $7bn in space capabilities over the next decade. This includes plans for a network of satellites to provide an independent and sovereign communications network and an enhanced space control program. The Government will continue investment in space situational awareness, including sensors and tracking systems.

EOS currently performs more than 15,000 space tracks per week. Its space sensors can identify and monitor the orbits of space debris and other small space objects, down to 10cm in diameter.

The Government will also invest in upgrades and support to existing and future satellite

communications systems, through a mix of allied and commercial arrangements. The plans include communications satellites and ground control stations that will be under Australian control.

Cheers

Research Evens & Partners