To all those who believe there is little business left for Austal in the US, I recommend a read of the following Report to Congress on the Annual Long-Range Plan for Construction of Naval Vessels (December 9th, 2020):
In particular, Table 6 on page 7 shows that the overall Battle Force Inventory is expected to increase from 305 to 363 vessels between 2022 and 2032. Looking at the breakdown by vessel type, it is interesting to note that a significant portion of the overall increase is represented by “Small Surface Combatants” (+15 units), “Combat Logistics Force” (+14 units) and “Support Vessels” (+12 units), which are all categories that fall under Austal’s expertise.
Accordingly, Austal expect ~2bnUS$ pa in new shipbuilding projects for the US Navy from 2022 (see slide 14 of the FY2020 Results Presentation); if that expectation were unreasonable, it would seem bizarre that the US Government have already declared their intention to co-fund a 100mUS$ extension to the Mobile shipyard to build steel warships (in addition to the current aluminium ones, see slides 12-13 of the same presentation).
None of this potential new shipbuilding business is currently priced in by the market, as ASB’s current Market Cap is basically equivalent to the current Net Cash, plus the FCF value of the existing Order Book, plus the value of the Support business.
Essentially, ASB is presently being priced as little more than a run-off legacy business, when it is actually more akin to a long-duration infrastructure asset.
Cheers
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