The war that started in Israel last year is only one area of ​​global geopolitical conflict in recent years. Before October 7th, of course, the Russia-Ukraine war started, and in addition, there are growing concerns about the growing power of China in East Asia. As a result, many countries are increasing their defense budgets and benefiting from increased demand as defense companies develop solutions and products to meet changing needs. Geopolitical, technological and military changes in the world are the most significant and rapid changes observed in the last 85 years, according to the results of a recent defense sector survey conducted by analysts at the investment bank Oppenheimer.
Oppenheimer says countries like China, Russia, Iran and North Korea are identifying opportunities to change the world order. The investment bank sees this change as structural, and if the US and its allies want to remain the world’s dominant force, they will have to invest huge resources in technology to strengthen their military advantage.
Israeli defense companies traded on the Tel Aviv Stock Exchange are benefiting from this trend, with their financial reports published in recent weeks revealing $1 billion in new contracts in Israel and abroad. Some of these companies operating in various sectors of the defense industry are experiencing a long-term business boom.
Elbit Systems Ltd. (Nasdaq: ESLT; LEVEL:ESLT)
$930 million in new contracts
Elbit Systems is the largest Israeli defense company traded on the TASE. The company designs and manufactures defense systems and weapons for sea, air and land use, and has received record orders over the past year, including over the summer. In late July, Elbit notified the Israeli Ministry of Defense of a $190 million contract to supply Iron Sting precision-guided mortars, and a later $340 million contract to supply the Ministry of Defense with ammunition. Contracts were signed with foreign customers: a $270 million contract for the supply of rocket artillery to a European country and a $130 million contract for Iron Fist defense systems.
Still, despite Elbit’s unprecedented backlog of orders, the company’s share price has risen modestly this year due to pressure on investors to sell shares from anti-Israel organizations and relatively low cash flow that doesn’t reflect the jump in orders. Currently, Elbit’s market value is 9.1 billion dollars.
Imagesat International (TASE: ISI)
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$84.5 million in contracts for satellite and analysis services
The Yehud-based satellite services company has signed two major contracts in recent weeks: the company announced it will provide two satellites and related products and services to a customer in Asia for $30 million over three years. In July, the company announced that it had signed a $54.5 million service contract for satellite intelligence-based analytics. ImageSat’s share price has risen 6.5% over the past year, giving it a market value of NIS 784 million.
Ashot Ashkelon Industries Ltd. (TASE:DON’T SAY)
$23.5 million order for manufacturing and supply of components
Ashot manufactures jet engine shafts, transmissions, gears and gearboxes, landing gear components and tungsten products for the aerospace and defense industries, including armored vehicles and tanks such as the Merkava and Namer. Founded in 1967, the company has 440 employees in Israel and the United States, and its customers include major aircraft manufacturers.
In August, the company announced that it had received new orders from the Ministry of Defense for the production and supply of units with spare parts and system maintenance (US$ 23.5 million at current exchange rates) worth NIS 86.4 million for supply over two years. The company reported a significant increase in the pace of new orders due to the war, including products not previously ordered from the Ministry of Defense. The war has boosted Ashot Ashkelon, with its share price up 101% over the past year, giving it a market value of NIS 816 million.
Aryt Industries (TASE: ARYT)
$218 million for the supply of flashlights
Aryt Industries, based in Sderot on the Gaza border, has received large orders throughout the year and manufactures drones and military electronic products. In August, it received orders from the Ministry of Defense to procure fusions worth $80 million ($21.8 million at the current exchange rate) by 2025. The company is expanding its production lines and workforce in connection with this and previous orders from the Ministry of Defense. Aryt is one of the best performing stocks on the TASE over the past year with a 134% return, which has increased its market cap to NIS 465 million.
IMCO Industries (TASE: IMCO)
A $7 million contract for a subsidiary
IMCO has been one of the most prominent stocks on the TASE over the past year, with its share price increasing by 176%. Based in the Haifa region, the company manufactures electronic, mechanical and electromechanical products for military use and trades with a market capitalization of NIS 134 million. The company’s US subsidiary recently received a new order worth $7 million to manufacture and supply components for a US defense company between 2025 and 2027.
Orbit Technologies (TASE: ORBI)
A $6 million contract for satellite communications systems
Netanya-based Orbit Technologies provides communications and audio control in airborne systems, and terminals for airborne and marine satellite communications. Last month, Orbit announced $6 million in orders to supply satellite communications systems for new naval platforms. The orders came from an integrator in Asia and will be delivered between 2025 and 2030. After a 16.2% increase in its share price last year, Orbit was acquired at a market value of NIS 586 million.
PCB Technologies (TASE: PCBT)
A $6 million contract for an Israeli client
Two weeks ago, PCB Technologies announced that it had placed an order for the supply of printed circuit boards to be assembled as part of a security project for a customer in the defense industry in Israel. The value of the contract is 5.6 million dollars. This week, the company announced another $7.4 million order to supply electronic equipment products and printed circuit boards for a defense project in Israel. With contracts totaling $49 million since the beginning of the year, PCB’s share price has risen almost 92% in the past year to a market value of NIS 398 million.
NextVision Stabilized Systems (TASE: NXSN)
$1.1 million for custom stabilized cameras
Based in Ra’anana, the company designs and manufactures stabilized night and day cameras used primarily for drones. Its solution helps to stabilize the image even in difficult flight conditions. The company’s customers are in the defense sector, but there are also commercial customers. Among its clients are the Ministry of Defense, Elbit Systems and Israel Aerospace Industries. Over the past month, the company announced a $1.1 million order for cameras and other products for delivery this year. NextVision’s stock price has risen 114% over the past year, giving it a market cap of NIS 3.8 billion.
Globes, Israel business news – en.globes.co.il – published on September 5, 2024.
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