Why the Xtek (ASX:XTE) share price is rising today

The Xtek Ltd (ASX: XTE) share price is on the rise today after the company announced its United States subsidiary, HighCom Armor Solutions, has received new customer orders. This comes following Xtek gaining approval of permanent export licences for its ballistics products to Mexico City.

At the time of writing, the Xtek share price is up 1.71% to 59.5 cents after reaching as high as 61.5 cents in earlier trading. In comparison, the All Ordinaries Index (ASX: XAO) is down 0.6% to 6,859 points.

What’s driving the Xtek share price higher?

The Xtek share price is gaining ground today as investors are apparently pleased with the company’s strategic direction.

According to the company’s release, Xtek has secured an order for $2.1 million worth of ballistics products from the Mexican Government. The new contract award consists of hard amour plates and helmet products. While Xtek has fulfilled 60% of the order so far, the remaining products are expected to be delivered early next year.

The decision to export personal protective equipment to Mexico follows the approval of a warehousing distribution agreement (WDA) from the US State Department office of Directorate of Defence Trade Controls.

The WDA allows Xtek to distribute personal armour products to Mexican military and law enforcement agencies across all government levels. The agreement has a term of over 10 years with a value of up to US$50 million. Xtek is also able to apply to the US State Department for an option to increase the value of the agreement.

In addition, Xtek will appoint a new distributor to Mexico City to oversee deliveries, and accelerate future export orders. The role is expected to support the company’s strategy in establishing new international markets.

Commentary from management

Mr Phillipe Odouard, Xtek managing director, commented on the award. He said:

Previously, exports to Mexico were limited by the need to continuously request export licences for quantities of any size, with each request typically taking several weeks to be awarded – so this new license streamlines the process significantly and makes it a much more attractive opportunity to export to these Mexican customers. The orders represent the start of a new expansion into Mexico that we are confident will build significantly.

Adding to his comments, HighCom CEO Mr Mike Bundy went on to say:

… Our business development and trade compliance team members have executed on a thorough and exhaustive process to ensure our company and group globally is adhering to the strict U.S. Government trade compliance regulations while streamlining supply and delivery of critical life-saving equipment to our allies south of the border.

About the Xtek share price

The Xtek share price has been on a rollercoaster ride over the past 12 months. Its shares reached as low as 38.5 cents in March, before jolting to a 52-week high of 91 cents in July.

With the current Xtek share price sitting roughly at the mid-way mark, Xtek has been busy focusing on its growth strategy. In the last six months alone, the company has secured orders from a variety of international customers.

More reading

• Why the Xtek (ASX:XTE) share price is edging higher today
• Xtek (ASX:XTE) share price soars 7% on AGM update

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. 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 Bruce Jackson.

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