Shares in Value Logo
Product Review Img Vertical

Date : 06/07/2022

Austal (ASX: ASB) Shares gained 25% in a single day after Striking a deal worth US$3.3 Billion with USCG

Austal Ltd (ASX: ASB) is an Australian shipbuilder and defence prime contractor that provides services worldwide. They are engaged in designing, building, and maintaining some of the world’s most modern commercial and defence vessels. In its three decades of history, Austal has contracted more than 300 vessels for 100 commercial and defence clientele in 54 countries.

The company is the first ASX-listed shipbuilder and is Australia’s largest defence exporter. The company has grown to become the world’s largest aluminium shipbuilder. Austal has another privilege that it is the only foreign-owned prime contractor designing, constructing, and sustaining ships for the US Navy.

Australian-based Austal operates shipyards and service centres in Australia (US), the Philippines (PH), Vietnam (VN), the Philippines (PH), as well as servicing centres across the globe, notably in the Middle East.

Austal shares are flying high in the market after USCG awarded Austal a contract with a potential value of US$3.3 billion or A$4.35 billion.

ASB: 1H22 Key Financial (In AUD)

ASB shares are skyrocketing after closing a deal with USCG. ASB stock is trading at $2.25, increasing 25% in a single day. The current market cap of the company is 811.93 Million AUD.

ASX-ASB

  1. Austal’s 1H22 revenue was $722.378 million declining by 14% YoY (1H21: $840.321 million).
  2. NPAT of the company was $45.06 million declining by 14% YoY (1H21: $52.434 million).
  3. The company’s operating expense was $52 million, increasing by 4.22% YoY.
  4. EBITDA of the ASB was $88.88 million (1H21: $89.24 million)
  5. At the end of 1H22, it had cash and cash equivalents of $306.82 million.
  6. The company returned $14.4 million in cash to its shareholders when its board of directors announced a dividend of 4 cents per share unfranked on 24 August.

Why are ASB Shares Skyrocketing?

When Austal announced it had been awarded a contract worth US$3.3 billion or 4.25 billion AUD by US Coast Guard, investors showed tremendous excitement. As a result of which, ASB shares have reached an 11-month high.

According to the contract, Austal will design and construct 110-metre Offshore Patrol Cutters (OPC) for the United States Coast Guard (USCG). The vessels will be constructed at Austal USA’s new USD100 million steel shipbuilding facility in Mobile, Alabama.

The construction of the vessels will begin in 2023, with an option to construct 10 ships further.

The new OPCs will be used by USCG in Law enforcement, migrant and drug interdiction, and search and rescue missions. The Cutters will also serve Arctic goals by helping control and safeguard new commercial and energy development activities in Alaska.

As a consequence of the new contract, the company expects its FY2022 EBIT will be higher than the previously forecasted $107 million. The company can’t quantify the impact but will update its shareholders as soon as the new EBIT is calculated.

ASB: CEO’ Remarks

Austal Limited’s CEO Paddy Gregg said the new contract is Austal USA’s third steel shipbuilding programme and recognises its expanding competence.

He further added that the new Offshore Patrol Cutters for the US Coast Guard are a great chance for Austal USA to show off its new steel shipbuilding skills. These skills are based on years of proven construction experience with the LCS and EPF programmes for the US Navy.

Conclusion

After winning a massive contract worth US$3.3 billion, Austal has strengthened its position. Investors were seen interested in the ASB stock, and the share price skyrocketed. The company has built a new steel shipbuilding facility worth $100 million, which will be utilised to construct the OPCs. If the plan is executed correctly, it could allow the company to expand into the European market.

Are You Looking To Buy The Best Stocks In 2022?

Stay on top of upcoming market trends! Whether you are an SMSF investor or a young investor with your portfolio, we cover a wide range of stocks across all sectors, including mining, financials, industrials, real estate, technology, health and biotech, etc. It will give you an edge to invest and trade ASX listed stocks across large, mid and small caps with an advantage.

Get stock tips with our Market Experts. We help self-directed investors and self-managed super funds (SMSF) make smarter investment decisions and get better returns. Fill in your details and download your free Report instantly for Top 3 Dividend Stocks to buy in 2022!

 

Top 5 ASX Stocks
to Buy for Capital Growth in 2022

asx landing page
The hardest part to finding growth stocks is having an ability to understand the finer details of these companies from their valuations through to first mover advantage and having key factors on hand to make informed investment decisions.

Our experts take the guesswork out.

Download Your Free Report

By downloading this report you agree to the TERMS AND CONDITIONS and our PRIVACY POLICY

Scroll to Top

Login

By submitting this form, I agree to the TERMS AND CONDITIONS and PRIVATE POLICY

Please fill in your details to download the free dividend shares report.

We will send your report instantly. Please put your correct email address and phone number.