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29 Sep 22. Hanwha Gro up moves to acquire shipbuilder DSME. South Korea’s Hanwha Group announced on 26 September that it has entered into a preliminary agreement with Daewoo Shipbuilding & Marine Engineering (DSME), one of the country’s largest commercial and naval shipbuilders, to acquire a 49.3% stake and management rights for two trillion won (US$1.4 billion).
Per the conditional memorandum of understanding (MoU) signed between the two companies, six subsidiaries of the Hanwha Group – including its Hanwha Aerospace defence unit – have been designated as the preferred bidders. However, this will only be legally binding if Hanwha holds its lead against further competitive bids until 17 October.
The shares will largely be acquired from DSME’s main creditor, the government-owned Korea Development Bank (KDB), whose shareholding in the shipbuilder will reduce to about 28.2% from its current controlling stake of 55.7%. Hanwha stated that a formal acquisition agreement is expected to be announced in November and expects the transaction to be completed by the first half of 2023.
Although financially troubled for years, DSME has successfully built large surface combat vessels and advanced diesel electric submarines for the Republic of Korea Navy (RoKN) alongside its rival Hyundai Heavy Industries (HHI). The company has also won naval export deals in Indonesia, Thailand, Philippines, and the United Kingdom.
HHI’s earlier attempt to acquire DSME from KDB in a comparatively priced merger deal fell through in January after the European Commission blocked the deal, citing competition issues in the liquified natural gas (LNG) carrier market.
Hanwha also attempted to acquire DSME through a US$4.6 billion deal in 2008. The offer was then accepted by KDB but the transaction was terminated after the two parties failed to agree on payment terms.
Should the latest takeover bid be successful, Hanwha Group will be able leverage on its new naval shipbuilding capabilities along with its existing portfolio of defence products, such as ship combat management systems, to offer turnkey naval solutions to the RoKN and international customers. (Source: AMR)
29 Sep 22. Tarsier Announces New Company Name: Walaris. Tarsier, the designer and developer of autonomous EO/IR-based drone detection, tracking, and identification systems for counter-UAS, perimeter surveillance, and critical infrastructure protection, announces Walaris as its new company name. The Walaris name better reflects the company’s core technical ethos and coincides with record revenue growth in 2022. Walaris’ proprietary AirScout technology is a signal processing and sensor fusion software platform. AirScout uses hardened artificial intelligence to fuse and process real-time data from sensor arrays, automating critical decisions for operators and unlocking airspace awareness of rogue drones.
“Walaris’ AirScout software is on the cutting edge of what’s possible with artificial intelligence and computer vision today. Our technology is consistently outperforming expectations, creating a new paradigm in airspace security and counter-UAS deployments,” said Kyle Meloney, CEO & Co-Founder of Walaris. “As Walaris, we look forward to continuing to support customers as they deliver advanced security and defense solutions for current and future projects and programs.”
Walaris serves customers across the defense, national security, government, and critical infrastructure protection markets worldwide. Its AirScout software is a key component in actively fielded solutions for counter-UAS, perimeter surveillance, and critical infrastructure protection. For additional details, please visit www.walaris.com.
Formerly known as Tarsier, Walaris designs and develops autonomous optical-based drone detection, tracking, and identification systems for counter-UAS, perimeter surveillance, and critical infrastructure protection. Its proprietary AirScout software utilizes novel artificial intelligence and high-performance computer vision to provide comprehensive airspace awareness of malicious and reckless drones. Walaris serves customers across the defense, national security, government, and critical infrastructure protection markets worldwide. For more information, please visit: www.walaris.com. (Source: BUSINESS WIRE)
28 Sep 22. Avingtrans – Taking the nuclear option. A manufacturer of critical engineering components and services for the nuclear, industrial, defence and medical imaging sectors has a robust order book, strong sales visibility and offers catalysts for value creation, too.
In an uncertain macroeconomic environment, it pays to seek out companies with robust order books and pricing power to mitigate the risk of a downturn in earnings. It also pays to back management who have a record of delivering over the economic cycle.
Avingtrans (AVG: 425p), a manufacturer of critical engineering components and services, fits the bill. The group generates its earnings from the following sectors: energy (31 per cent of revenue), industrial and defence (38 per cent), hydrocarbon (28 per cent) and medical (2 per cent). Exposure to highly regulated growth sectors support robust profit margins – gross margin increased from 30.4 to 34 per cent to deliver a cash profit margin of 12.7 per cent in the latest financial year – and offers defensive qualities too.
Moreover, improving sentiment in the nuclear, oil and gas sectors is manifesting itself through increased orders as highlighted by strong order intake at Vermont subsidiary for work on nuclear life extensions, $7mn of new orders from Korea Hydro & Nuclear Power, and a $4.1m decommissioning contract with Nuclear Waste Partnership. It also helped drive operating profit at the group’s engineered pumps and motor division up by a fifth to £5.5m on slightly higher revenue of £53.2m.
Engineered for a profitable outcome
* Adjusted pre-tax profit of £8.2m on annual revenue of £100m
* Closing net cash of £16.7m
* Dividend raised five per cent to 4.2p a share
Avingtrans’ management has proved adept at creating bumper returns for shareholders by acquiring, turning round and then exiting businesses, as highlighted by the disposal 18 months ago of Peter Brotherhood at a gross return of four times capital invested. The directors are working their magic once again.
The group’s process solutions and rotating equipment (PSRE) division delivered 23 per cent higher operating profit of £5.3m on eight per cent higher revenue of £44.7m, buoyed by a strong recovery and record order book at Boston-based Booth Industries, a designer and maker of fire doors, blast doors and wall systems. Having turned round the business following its acquisition in 2019, and subsequently secured a £32mn order to supply cross-tunnel doors for HS2 in 2021, the focus is now on increasing both aftermarket and overseas sales.
The PSRE unit also benefited from contract wins in the nuclear sector, including a ramp up of volumes of high integrity stainless steel storage boxes for Sellafield that store intermediate level waste retrieved from silos at legacy locations in Cumbria. The contract is worth £70mn in revenue for the delivery of 1,000 boxes over the next six years, and the group’s Metalcraft subsidiary is well placed (as the only company to transition to phase two) in next year’s tender for the third phase – a potential contract worth £900m.
True, higher investment in the group’s medical imaging business that specialises in next-generation helium-free MRI technologies for orthopaedic imaging systems will hold back profit growth ahead of product launch later in 2023. finnCap are predicting slightly higher pre-tax profit of £8.6mn and EPS of 22.8p on revenue of £109mn in the 12 months to 31 May 2023. However, it’s well making the investment given that the addressable orthopaedic imaging market is worth around £400m a year, and Magnetica ‘pay per scan’ business model could mean that the opportunity is far larger. Furthermore, Avingtrans’ net cash of £16.7mn (52p a share) is still expected to rise to £17.8m by May 2023 even allowing for the higher investment in the medical business. The group’s £4m investment in Oxford-based Adaptix (3D X-ray systems for orthopaedic and veterinary applications) is a potential share price catalyst too, the privately owned company has recently submitted a 510(k) pre-market notification with the Federal Drug Authority (FDA) for product approval in the US orthopaedic market.
The holding has produced a 119 per cent total return since I included the shares in my 2017 Bargain Shares Portfolio during which time the FTSE Aim All-Share Total Return index has declined 3.5 per cent, and the share price is up six per cent since the interim results (‘Priced for a highly profitable outcome’, 22 February 2022) in a market down 21 per cent.
Trading on a cash-adjusted price/earnings (PE) ratio of 16, and with potential for further exits to realise substantial shareholder value (Booth Industries, Energy Steel, Metalcraft, and ultimately Hayward Tyler), I maintain my 520p sum-of-the-parts valuation, which includes £11m (34p a share) for the surplus land at Luton. It’s worth noting that 55 per cent of annual revenue is generated outside the UK, so the group is also a beneficiary of sterling weakness. Buy. (Source: Investors Chronicle)
28 Sep 22. Rafael Advanced Defense Systems Ltd. has completed the acquisition of Pearson Engineering Ltd. (PER). The acquisition was executed under a stock purchase agreement (SPA), transferring 100% of the ownership. The acquisition includes PER’s subsidiary company Responsive Engineering Ltd.
“This acquisition is part of RAFAEL’s continued strategic investments, with the purpose of transferring cutting-edge, state-of-the-art technologies, products and systems into the United Kingdom, in support of UK national security and prosperity”, says M.G (ret.) Yoav Har Even, RAFAEL’S President and CEO. “Until recently, most of RAFAEL’s operations in the UK were in partnership with UK prime contractors, with the majority of workshare manufactured in Israel. Pearson and Responsive Engineering’s activity is supported by an outstanding legacy of excellence in innovation. By acquiring this company, we will be able to enhance and expand PER’s manufacturing capabilities in the UK, thus strengthening our UK supply chain to better support our customers, especially the UK MOD and British armed forces. This will lead to a significant increase in the number of jobs in Newcastle and will build strong links with academic institutions throughout the UK and specifically in North East England.”
“Pearson Engineering is immensely proud of its life-saving combat engineering systems, which are used by land forces worldwide. This acquisition will not only allow us to enhance our existing product portfolio but will enable the development of innovative, class-leading products and capabilities. RAFAEL’s ambition for Pearson and Responsive brings valuable growth and stability, for our employees, our trusted supply partners in the region and the wider community in the North East. It will undoubtedly create more jobs and generate exciting career opportunities within both companies”, says Craig Priday, Pearson Engineering Managing Director.
“Both RAFAEL and Pearson have an outstanding legacy in force protection capabilities”, says Dr. Ran Gozali, EVP, GM Land and Naval Division for RAFAEL. “RAFAEL’s reactive armour, fitted to most UK armoured vehicles in Iraq, saved the lives of many British soldiers. The UK MOD Challenger 3 program is another point of synergy. Pearson and Responsive are manufacturing the tank’s turret structures and, supported by RAFAEL, Pearson will be able to locally manufacture and integrate the TROPHY active protection system, providing the highest level of protection to the crew. This is a great example of RAFAEL’s commitment to deliver additional cutting-edge technologies and capabilities to Pearson Engineering, to support current and future UK MOD needs.”
About Pearson Engineering For more than three decades, Pearson Engineering has provided Armed Forces with the mobility and counter-mobility equipment they need to succeed in their missions around the world. From our home in Newcastle upon Tyne in the United Kingdom, we are proud to be recognised around the world for our contribution to armoured vehicle programmes. We design products which help combat forces to defend, move and fight and to adapt quickly to maintain their battlefield advantage. Our innovative approach to providing ‘scalable battlefield mobility’ is based on delivering attachments for armoured vehicles which enhance their agility, adaptability and flexibility and which provide essential mission capabilities to Commanders. We are located at Armstrong Works in Newcastle, which is a purpose-built armoured vehicle manufacturing facility. Together with our daughter company, Responsive Engineering, we combine our armoured vehicle experience with our class-leading manufacturing expertise, to also provide manufacturing, assembly, integration and test services for armoured vehicle programmes.
In 2022, Pearson Engineering was proud to receive the Queen’s Award for Enterprise in the International Trade category, in recognition of our exceptional export performance. This was the third Queen’s Award in the company’s history.
About Rafael Advanced Defence Systems Ltd. RAFAEL is a world-renowned, Israeli-based defense contractor, specializing in cutting-edge, innovative defense systems, such as the famous TROPHY active protection system, vehicle armour solutions, counter IED technologies and many other systems. The company is Israel’s third largest defence company, with 8,000+ employees and over 30 subsidiaries worldwide, serving the defence, security and aerospace markets. RAFAEL is a truly global organization, with a strong Page 2 of 2 Proprietary of Rafael – Advanced Defense Systems Ltd. Unclassified presence in many major defence markets; this includes the US, India, South Korea most European NATO member countries, including the UK, as well as throughout Asia, Scandinavia, and South America.
27 Sep 22. COHORT Plc. AGM Statement. Cohort, the AIM listed technology group, is today holding its Annual General Meeting (AGM) and accordingly issues the following announcement:
AGM Statement and first quarter update
Cohort’s performance last year was in line with our revised expectations at the time of the half year results in December 2021, with robust cash generation, and a record closing order book with strong cover for the current financial year commencing 1 May 2022. The order book not only grew in value, but its longevity continued to increase with orders across the Group stretching out to 2030.
The Group’s record order book of £291.0m at 30 April 2022 underpins nearly £128m of the current financial year revenue, representing 78% (2021: 64%) of current consensus forecast for the year. Following order wins since 1 May 2022 of over £70m, including a £34m contract win for SEA (announced 7 September 2022), the order book on 20 September 2022 stood at over £300m with revenue cover of current consensus forecast for the year of 95%.
Cohort maintains its sound finances: net funds at 23 September 2022 stood at £7.2m, compared to net funds of £11.0m at 30 April 2022 reflecting the timing of working capital flows. The Group’s cash and readily available credit was over £40m at 23 September 2022 providing significant financing headroom beyond our currently anticipated commitments. We have continued to see a higher level of activity from the UK MOD, particularly at MCL which we expect to exceed last year’s performance significantly. As we indicated at the time of the Group’s preliminary results announcement on 28 July 2022, we are seeing some impact from supply chain delays and price increases, and this has been most noticeable at EID, which has also continued to experience order delays. We now expect EID’s performance to be weaker than we saw in 2021/22. Overall, we continue to expect that our trading performance for 2022/23 will be ahead of that achieved for the year ended 30 April 2022. We also remain optimistic that the Group will make further progress in 2023/24, based on current orders for long-term delivery and on our pipeline of opportunities.
TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.