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The Markets
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Aerospace

Chemring off earlier highs ahead of results despite defence momentum into 2023

Ahead of final results from defence sector group Chemring Group (LSE:CHG), its shares have been roughly flat for the past few months, having dropped back from the huge initial spike following Russia's invasion of Ukraine.

An 11-month update in October confirmed a solid second half despite the challenging macroeconomic backdrop.

Broker Peel Hunt noted that most analysts forecasts pe-tax profit in a range between £60.9mln and £64mln, clustered around the £63mln mark.

As well as orders in Countermeasures and in the niche Energetics businesses, growth in consulting and technology business Roke continues apace: with orders up 75% and headcount increased from 611 people in 2021 to 828.

Contract wins include one for the UK Government to develop the next generation of phased array radar technologies to address the challenges associated with hypersonic missile defence.

Order cover for 2023 was building, with 93% of Countermeasures and Energetics expected revenues already covered, and 60% of the shorter-cycle Sensors and Information.

"The momentum is clearly there heading into FY23E and further out," said Peel Hunt, which has a 'buy' rating on the shares.

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