Getting exposure to space on the ASX
I was asked last week about getting exposure to space. Not an easy one to be exposed to and maybe there are better markets and companies out there but there are three on the ASX that sprang to mind.
First up is the one that everyone got excited about Electro Optic Systems (ASX: EOS)
In the context of the company revenue Space is not a massive part of the business but it is growing.
This is the space focus:
You would not be buying EOS for its space exposure. It is a defence system provider. Advanced optics, precision control systems, communication technologies.
CV19 has taken its toll on EOS with multiple disruptions to the delivery process and limited access to test-firing have hindered sales. The easing of restrictions should free up the pipeline and help EOS get back on track.
The stock has popped recently on a UAE order which seems a little sensitive so not much has been reported.
Numbers were a little underwhelming to be honest but after a swoon, the market focused on the positives.
I would start to get interested below 500c.
Kleos (ASX: KSS)
KSS is a CDI. This is a Chess Depositary Interest. Basically, a US-focused company traded here on the ASX. KSS is an Earth Observation data-as-a-service company, collecting radio signals with its own satellites and then processing them using its proprietary algorithms to create data products.
KSS is targeting a geospatial solutions market worth around US$549bn.
- It sells actionable defence and security data.
- Maritime intelligence
- Environmentally protection market.
KSS raised $19m at 72c to execute its plan.
Based in Luxembourg and focused on the global opportunity it has signed some positive recent deals in South America.
In November it launched its Scouting Mission satellite from India and are currently being successfully commissioned.
Pretty complicated business to be honest and you should probably read the recent announcements and presentation.
Rather than observing the Earth in the visible domain as you would with cameras, Kleos is observing it in the ‘radio frequency’ part of the spectrum using antennas.
It is a bit like reverse GPS. It uses multiple satellites to locate where radio signals are coming from. If it is not legally supposed to be coming from there, that data can be sold to maritime and other agencies.
It has four of these satellites monitoring at the moment with more to come. More satellites mean more opportunity.
Has been going sideways and I suspect 72c will be some resistance given the placement. There is also a negative with the Sky and Space (SAS) listed company that went bust probably keeping some away.
Maybe a little early for me but worth a look if you are interested.
XTEK (ASX: XTE)
Not really a space stock per se. It is primarily a provider of personal armour for soldiers and police forces. Helmets and bulletproof vests. But it is expanding its product offering.
Here are the numbers:
Its space push is leveraging its advanced composite materials.
- Produces materials with higher specific strength to weight ratio.
- Ultra-high process pressure can reduce composite outgassing, often a limiting factor for use of composites in space.
It has signed a partnership with Skykraft to design small spacecraft and launcher systems.
This one has been trading in a range. Bottom end of that range so some upside.
Very thin. Illiquid and not followed by many.
I have met the CEO a number of times at Small-Cap Conferences. Maybe as we enter the season of these conferences we will see more focus on this one.
US defence spending will be the driver of this one. Soldiers, police and the militarisation of the law and order business help.
$40m market cap. A few positive announcements recently and some directors buying but not much to go on really.
Liquidity is an issue but an interesting company none the less.
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