A US$450M contract has been awarded by General Dynamics to Austal to design, construct and outfit a new submarine module manufacturing facility at its Mobile shipyard. It is a strong endorsement of Austal’s growing importance as part of the US Navy’s industrial support base. It will add to the recently constructed steel-shipbuilding capability and to the ~US$300M in new facilities planned to support surface shipbuilding programs and opportunities. We maintain a BUY call and increase our valuation to $3.10 (prior $2.86) on anticipated growth in longer-term earnings streams.
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