EOS 0.94% $4.31 electro optic systems holdings limited

EOS a brief summary of an interesting stock KJ

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    Got put onto this stock by a friend, havent bought in yet but just did a little FA on it, really like what they are doing so heres's what i found - sorry its brief ! DYOR and IMO .

    EOS - Electro Optic Systems Holdings Ltd

    SP: $3.95
    SOI: 96.1m
    MC: $379.6m

    What they do:

    EOS are an industry leader in counter-drone technology with a focus on the aerospace and defence markets. They produce defence weapons (some of which were developed with the Australian defence department) as well as sensors and systems for space control (directing energy beams to space objects for applications including tracking, characterisation, identification, communications, remote manoeuvre and missile defence).
    It was during 2018 that they shifted from being an R&D based business to a large scale manufacturer -- with a further production facility to come online later this year.
    Australian defence firms received a boost at the start of last year when Malcolm Turnbull established a $3.8bn fund offering loans to Australia’s defence export industry.

    EOS own the world’s largest private space research centre.
    They have a collaboration agreement with Lockheed Martin (US$97.3bn market cap) involving the tracking of space debris. This is becoming an increasingly important area with more companies now launching satellite constellations.
    In the 4th quarter of this year EOS will start moving space debris currently in orbit by using high powered lasers.
    Next year EOS will complete it’s software development for managing space traffic.
    Tenders have been submitted with outcomes likely to come later this year.
    They are currently operating at a loss in this sector but that is expected to change after 2019.
    Reports suggest the Australian space industry will be worth $12bn by 2030.

    EOS have taken orders for $600m worth of products in the last 12 months. 90% of the military systems sold by EOS are exported and there is currently no direct competitor for the type of remote weapon system that they are selling.
    Sales are limited by export licenses, as they can only sell to countries approved by Australia and the US.
    Revenues from the defence sales are expected to double during the 2019FY.
    There is currently an order backlog, with orders from the 3 main customers in place to deliver between 200-700 units over the next 8 years.
    The remote weapon system is worth an estimated $16bn, EOS expect a market share of around 35% to 2030.

    mce-anchorMade a profit of $15.08m in the last FY (after a $9m loss in 2017), although $7.7m of this profit came from foreign currency exchange gains -- 95% of current production and export contacts are in USD. During the 2018 financial year (EOS FY is in sync with the calendar year) revenue increased 425% from 2017.




    The current order backlog supports a revenue growth to $230m in 2020, and $350m in 2021, although growth is possible from Q2 2020 with new orders expected next across the space and defence sectors.


    Reported a $3m loss in the first quarter of this year after recording $26.3m in revenue. There is a total estimated outflow of $24.9m next quarter, down from the $29.2m outflow recorded in the first quarter -- manufacturing and operating costs being down $5.5m largely contribute towards this.
    They currently have $35.8m cash on hand.

    Top 20


    The top 20 currently hold 60.61% of the company with a seemingly strong institutional holding.

    Future catalysts
    The SP recently jumped from $3.26 to $4 when it was announced that enough orders had been received to maintain a compounding growth rate of 45% beyond 2020, with even stronger growth indicated for 2021. As of the end of 2019 EOS expect their order backlog to exceed $600m. Further growth forecasts and quarterly reports that show a profit are likely to act as further growth catalysts.
    The space sector beginning to contribute towards revenue should have a significant impact in improving profitability.
    EOS will have their flagship Huntsville production facility come online later in 2019 increasing production capacity.
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