Name change to TP Group and export win
Corac's (LONDON:CRAU) confirmation that shareholders have approved the name change to TP Group is a reflection on the changing nature of the group to a specialist engineering business. It was apt, therefore, that it announced earlier in the same week that it had won a £3.4m export contract from a South-East Asia shipbuilder. This provides further evidence that the group’s submarine atmosphere control products are a success both in the UK and in export markets. With the order due for delivery from 2016 to 2018, visibility in the Aerospace & Defence division is further enhanced and it supports our thesis that such long-term programmes provide a solid base to expand its activities in defence and beyond.
Export order in South-East Asia
On 19 May the group announced that it had won a £3.4m export order with a major South-East Asia shipbuilder for two of its submarine atmosphere control units. The units will be built in the group’s Portsmouth, UK, facility and will be delivered from 2016-18. This order follows on from an agreement for a programme of work first announced in January 2014, and highlights the group’s ability to cultivate long-term partnerships with prospective customers and use its leading position in this market to win substantial contracts. While the contract does not alter our short-term forecasts with the majority of revenue occurring post-2016, it provides further order cover and visibility in the group’s Aerospace & Defence segment.
Further defence opportunities remain
With submarine markets a global area of investment, Corac is well positioned to win further orders in the UK, where it is a clear leader in submarine atmosphere control, but also for export, where it dominates the addressable market outside the US. With programmes lasting many years and follow-on orders such as this demonstrating the leading position of Corac’s products, we believe it is in a good position to capture a disproportionate share of this growing market.
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