Electro Optic Systems Holdings Ltd (ASX: EOS) shares are charging higher on Friday after the company returned from a trading halt with a major contract update.
At the time of writing, the EOS share price is up 14.24% to $10.67.
That adds to what has already been a huge run for the defence company. Its shares are now up around 22% over the past month and almost 300% higher than this time last year.
Let’s take a closer look at the announcement.
US$124 million order lands
According to the release, EOS said it has received a US$124 million order for its Slinger counter-drone remote weapon system (RWS).
The order has come from Generation 5 Holding LLC, or Gen5, which is a UAE-based company headquartered in Abu Dhabi.
Gen5 is 100% owned by Odeley Investments, which is a private office of defence equipment, technology, and services.
The order includes the RWS, cannons, spares, training, and other supplies.
EOS said the systems are being supplied against a backdrop of ongoing regional tensions in the Middle East.
The company also described Slinger as the leading product in its counter-drone defence offering.
The systems are expected to be manufactured in Australia and the UAE, with delivery planned across 2027 and 2028.
The order is still subject to Gen5’s customary terms, as well as export approval requirements.
A new Middle East joint venture
In addition to the contract news, EOS also announced a conditional joint venture shareholders agreement with Gen5.
The proposed 50/50 venture would be based in Abu Dhabi, and would focus on high-energy laser weapons (HELW) and RWS across the Middle East and North Africa.
Under the arrangement, Gen5 is expected to contribute US$40 million of equity. EOS would contribute intellectual property covering laser and RWS technology.
The joint venture is expected to focus on developing and selling next-generation 200kW to 300kW HELW. It would also handle manufacturing and distribution of certain existing EOS systems, including the R400, R500, and R800, in the UAE and selected markets.
What comes next?
EOS expects work on the joint venture to continue during 2026, with the venture potentially starting to contribute to results from 2027 or 2028.
But the announcement includes some big targets. Gen5 and EOS are aiming to secure a minimum US$250 million order for the 200kW to 300kW laser weapon product within 12 months.
They are also targeting a minimum US$290 million contract within 9 months for 100kW laser weapons to be developed through the joint venture.
The post This ASX defence stock just jumped 14%. Here’s the big news appeared first on The Motley Fool Australia.
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Electro Optic Systems. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.