I’m not sure about you, but I’m getting a bit sick of living in a VERY interesting part of next century’s history textbooks.
In recent weeks our newsfeeds have been swamped with horrifying images of the war in Ukraine which seems to be touching everyone in some way. Whilst the outpouring of support for those affected is heartening, the whole thing is incredibly sad and a sobering reminder that conflict like this can still occur, even in 2022.
Defence is a huge industry. The global defence market is currently valued at USD $483.47 billion and is expected to grow at a rate of 5.8% through to 2026.
Australian based homeland security specialist company XTEK’s (ASX: XTE) mission is to protect our frontline protectors with products and solutions for defence and law enforcement sectors. The Company manufactures high-quality ballistic protection in Adelaide, South Australia and in the US out of their facility in Columbus, Ohio.
The Company has received a purchase order to the tune of $2.75 million for the urgent supply of specialist armour. Whilst the customer was undisclosed in this case there is a chance the order has some link to the Ukraine conflict.
The order has been delivered to the customer via HighCom, XTEK’s wholly owned subsidiary which creates armour. HighCom was acquired by XTEK back in 2019 and forms the foundation of the Company’s ballistics division.
Making their alliances known, HighCom has a fundraiser running to provide urgent support to the civilian defence units protecting cities and villages in Ukraine from the Russian invasion. The Ukranian American Coordinating Council has obtained a special licence for regulated, military-grade items such as helmets and body armour which are being shipped to Ukraine in bulk by a trusted shipping partner. ‘Come Back Alive’ is a Ukranian organisation distributing these products on the ground to hotspots across the country.
“By leveraging the Group’s advanced manufacturing capabilities in Adelaide, South Australia, and in Columbus, Ohio, in the US, we were able to immediately respond to and fill this order for the urgent supply of $2.75m of specialist ballistic products,” said Scott Basham, XTEK Group CEO. “It is a great demonstration of the Group’s capabilities to support our customers with little to no notice to meet their urgent operational requirements.”
The unfortunate reality of war means that some stocks like XTEK will benefit. Only an hour post open their share price has jumped 4.55%. The Company is well placed to continue this trend following $170,000 worth of manufacturing assets being constructed and over $900,000 of body armour and helmet products under development as at 31st December 2021.
The provision of armour and protective equipment to the invaded underdog turns the tables on defence stocks which have long been avoided by ESG focused funds and investors. XTEK would be rewriting that narrative. After all, we all heart react the videos of Ukranians waving their flag in the face of the Russian army. Isn’t national defence necessary and ethical?
Samantha Freidin is a business journalist at Emerald Financial whilst also completing a Masters of Marketing and Digital Communications at Monash University.
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