Bae Systems Share Discussion Threads

[anhar] 26/9/2023 13:48

In a diversfied income port like mine I regard some sectors as core, being those which I'd always want to include. These must-haves imo include arms manufacturers and my share here is BA. which I've held for many years, not that there's a lot of choice in the UK market in this sector.

[geckotheglorious] 22/9/2023 22:05

”Add to watch list but don't climb on board yet”

Jack Campbell

For this quality company, a new buyer would need to pay a premium at its current valuation. Recommend add to watchlist and wait for a pullback.

Compare to industry competitors, BAE Systems has superb margins.

The company's Backlog order 3x's their market cap— creating a solid moat for years to come.

[tournesol] 22/9/2023 21:38

Ba. is one of 3 shares discussed in a note from HL issued today about companies which will do well in a hard economic landing. They say the following BAE SystemsMilitary defence is a fact of life in today's world and the so-called 'threat' environment has only been accelerated by the Russia-Ukraine war. Governments are very unlikely to ever pull the plug fully on maintaining their defence systems and physical kit, and that's why we think BAE Systems offers some resilience.This giant manufactures fighter jet fleets, top-of-the-range tanks, and pretty much every other vehicle you can picture in a warzone. It's also making tracks to beef up its security and tech-based conflict solutions, which is a sensible move given the world of warfare is changing.Governments are high-quality customers and contracts tend to be long term. That feeds into a very enviable asset – visibility over future revenue.The current order book stands at £66.2bn. Risks and costs can change over the tenure of those contracts, which is leading to some question marks over profits while inflation is running so hot. That's something to keep an eye on.As is the eye-wateringly expensive acquisition of Ball Aerospace for $5.5bn. The deal looks like a good fit to us and displays BAE's serious intent to build out its in-space capabilities and relationships within the US intelligence community. But a smooth integration and management of cash and debt will be important to monitor.BAE offers reliable revenue which underpins a prospective yield of 3.0% – as ever though, no dividend is guaranteed.We see defence as a more resilient option with long-term growth potential. However, the geopolitical climate can always affect valuations in the short term.

[pj84] 20/9/2023 15:57

To add to the above, the Questor article also mentions that there are no signs of the elevated geopolital tensions reducing in the foreseeable future and on the target of Nato countries spending 2% of GDP, 7 countries met the target last year but 11 are expected to achieve that this year.

Also as the GDP of NATO countries increases so does the amount of the 2% target and Questor suggests that as interest rates start to peak around the world any resumption of growth will feed directly into the GDP targets.

So despite the recent share price increases Questor still rates the shares as a buy.

It also mentions investors have to be prepared for share price volatility and today's share price movement is a good illustration of that.

[rech] 20/9/2023 10:07

...Elevated geopolitical risk.. has prompted an about turn in attitudes towards defence spending in many major economies.

This has resulted in an improved outlook for defence companies, which has strengthened investor sentiment towards the sector. BAE’s shares now trade on a p/e of about 19.
While some investors will understandably argue that now is the time to take profits, Questor believes there are more gains to come.

Crucially, the world economy’s growth rate is poised to improve. The current cycle of interest rate rises is coming to an end and the clamour for interest rate cuts is likely to grow as inflation returns to target.

Since some military spending is directly related to economic output – Nato members, for example, are supposed to spend at least 2pc of GDP on defence – an improving global economic outlook should boost defence stocks.

Furthermore, the new era of elevated geopolitical risk shows no sign of abating. Ongoing tensions between the US and China, alongside the war in Ukraine, suggest that demand for military assets is likely to rise. In the current year, for example, 11 Nato members are expected to meet the 2pc spending target, compared with just seven last year, and defence expenditure among Nato members is expected to grow by almost 8pc this year. This compares with an annualised rise of just 2.8pc over the previous eight years and shows that the era of skimping on military spending is over.

In terms of recent performance, BAE’s half-year results showed an 11pc rise in sales and a 10pc increase in underlying operating profits. It has a record order backlog of £66bn and a solid financial position, as evidenced by a net gearing ratio of just 31pc. Its capacity to raise borrowings has been used to fund in part the $5.6bn (£4.5bn) takeover of Ball Aerospace. Since the acquisition offers double-digit annual growth potential and the prospect of margin enhancement, it could prove to be a sound investment.

British investors have a limited choice of defence companies, so BAE remains a worthwhile, and somewhat scarce, investment opportunity. Its returns are likely to be more modest after its huge outperformance of the FTSE 100 in recent years, but an improving market outlook and a sound financial position mean further gains are ahead.

[malvernwaters] 20/9/2023 09:00

Shephard Defence Insight explores the evolution of BAE Systems Hägglunds’ CV90 IFV from its inception in the late 1980s to the latest CV90 MkIV, detailing the order history and upgrade packages of its ten European customers.

[rodbender1] 19/9/2023 18:11

Yes that is an interesting article. Woodburn and BAe are caught in a tricky scenario. BAe first of all has a large presence in Saudi supporting Hawk, Tornado & Typhoon.

Then there is the elusive order for 48 Typhoon's or perhaps an upgrade with the Saudi Crown Prince supposedly visiting the UK in the autumn. Maybe he is shopping for something else and that would be so disappointing!

On top of that, part of the Saudi 'vision 2030', weaning the country off oil related jobs, 50% of defense spending will be In Kingdom. That means giving work to Vendors in Saudi something BAe has been slow to do. BAe's competitors haven't been so slow.

So, how do you say you cannot join the program when arguably they would also be a buyer of Tempest.

All the cards are in the Saudi's hands. Let us in the project or we might spend elsewhere!

[pj84] 18/9/2023 19:29

BAE opens door to Saudi Arabia tie-up in Tempest fighter jet programme
By JOHN-PAUL FORD ROJAS

UPDATED: 13:30 BST, 17 September 2023

The boss of defence contractor BAE Systems has opened the door to Saudi Arabia becoming involved in the UK’s flagship fighter jet programme.

Charles Woodburn, BAE’s chief executive, said the kingdom can ‘offer a lot’ and had a talented workforce that could boost the project.

Woodburn was speaking after it emerged that the Saudi government is pushing to become a full partner in the international global combat air programme.

The project, currently a collaboration between the UK, Italy and Japan, aims to get a demonstrator jet in the air by 2027.

The involvement of Saudi Arabia could unlock a huge source of funding for Tempest

Britain has already committed £2 billion to the programme, which aims to deliver Tempest – Britain’s next-generation supersonic stealth combat aircraft – by 2035. But doubts have been raised about its viability in a recent official report.

The involvement of Saudi Arabia could unlock a huge source of funding for a project expected to cost tens of billions of pounds, as well as engineering expertise.

Woodburn, speaking at a recent defence industry event in London, emphasised that any decision on including Saudi Arabia would be taken at a government level.

But he stressed during the event at the Royal United Services Institute that the Gulf nation, where BAE employs 7,000 ‘very capable’ staff, had more to contribute than just cash.

‘For any programme, the kingdom can offer a lot in terms of talent base,’ he said. Saudi Arabia is already a leading buyer of UK military aircraft, including Typhoons.

But the country’s direct involvement in a flagship defence collaboration could prove controversial, given its abysmal human rights record. It is also said to have raised hackles in Japan, with Tokyo reportedly opposing it on the grounds that it could delay the project.

[wad collector] 18/9/2023 16:00

Wish I only had one total loss, I have had many , from Carillion and Interserve right back to Marconi.
Won't make a ten bagger here in my lifetime here but if BAE go under then I think there will be more important worries than money....

[rech] 18/9/2023 15:36

@ wad collector.


I need no lessons in realising capital losses, thank you. Do you recall CMM, Cammell Laird? They had a contract to do a cut & shunt on an Italian ship, the Crozier. Cammells built a mid section, and were to extend the ship's length.

But on the way towards Birkenhead docks, the crew were offloaded in ?Gibraltar, and the ship never made it to the UK. On the bright side, I thought 'we have a mid section', all we need now is a front and a back, and we'll have a whole ship.

CMM shares were suspended. My one and only total loss. £3k

[wad collector] 18/9/2023 14:34

The answer is to hope that you have made a similar loss on other shares and offset the CGT...
I can give you some good advice on making losses...

[blueliner] 16/9/2023 11:32

Ditto re unsheltered, unloved purchase in 2011, now highest value stock in portfolio, dividends (now taxable) have paid for original investment. Also in no hurry to sell would be clobbered for CGT.

[rech] 16/9/2023 09:47

This is my first share where my paper gains are north of £100k. All unsheltered unfortunately. I'm in no hurry to sell.

[ribblewader] 16/9/2023 08:52

tournesol. My first purchase of BA. was back in 03, at less than £2. I sold my last holdings just below £10 in August, I too can see the shares reachingn £20, eventually.
I dont see what a tie up with an American Defence company would do, afterall we tried it with Boeing on Nimrod MRA4 and it did not go that well. Our current American market looks in good shape and I cant really see any benefit in going head to head with Lockheed/Boeing etc.

[rodbender1] 16/9/2023 05:48

I think you are right Tournesol - BAe has its fingers in so many pies from knocking out artillery shells to developing a 6th Gen aircraft. And is a 'player' in the American market which is the 'cream' what with their large defense spending.

Amazing to look back on the days when BAe were not quite such a force - when they owned Rover cars and had a stake in Orange the mobile communications people. Humble employees then got a discount on cars but the share price was as low as a pound.

The Thatcher era saved the then British Aerospace with the sale of Tornado to Saudi and now Ukraine as we know has triggered re-arming and increased spending. Today, the design and delivery of Tempest is now critical in BAe's journey. Who knows the outcome of that but with all that the share price potentially has a long way to run.

A shortcut to such a price would be a tie up with an American company. Of course that won't happen with government 'golden share' but in any case, as Orange used to say, the future is bright!

[chiefbrody] 15/9/2023 22:51

I wouldn't rule it out. Were BAE listed in the US the share price would be 15 already. Needs must/other investments etc etc

[tournesol] 15/9/2023 21:37

I bought in the day Russia attacked Ukraine. As I remember I paid £7 and change. I am sorry to say that it looks to me as if we are in the early stages of a fundamental transformation in the global defence landscape. If that is correct there might still be a very long way to go before BA. reaches its peak. I can imagine the share price reaching £20 within a few years.

[rodbender1] 15/9/2023 18:15

Nice work Chief !

[chiefbrody] 15/9/2023 17:28

Time to sell a few more next week me thinks. £10.50 will do. That'll be sells in the 7,8,9 and 10 quid range. Next batch can wait till Xmas at 11 squid ++

[wad collector] 15/9/2023 15:59

Well it looks like another All Time Closing High this week; can't complain about that.

[ribblewader] 13/9/2023 16:49

BAE Systems signed a contract with the Swedish Defence Materiel Administration (FMV) worth approximately $500 million for 48 new ARCHER artillery systems for the Swedish Army.

The ARCHERmobile artillery system, designed and produced by BAE Systems Bofors in Sweden, is already in service in the Swedish Army and has achieved the highest technical and manufacturing readiness levels. The 48 new systems covered by this contract will be built on a Rheinmetall MAN military vehicle, RMMV HX2 8x8, and first delivery to the Swedish Army will be in 2025.