Austal limited (ASB: ASX) is a global designer and builder of ships and supports high performance vessels. Its ship yards are in WA, Vietnam, the Philippines and in the US. It designs and manufactures defence and commercial ships. It specialises in twin hulled aluminium ships and ferries, and services commercial and defence customers worldwide.

Investment Summary

As a contractor, the share price valuation is heavily dependent on the amount and quality of contracts Austal has. However, its real assets like shipyards and repair facilities can't be easily replaced and provide a strong valuation grounding. It also provides a relatively consistent dividend yield, and if it establishes itself in the US shipbuilding market, it could be able to receive much more profitable and consistent contracts, and become a global defence contractor.

Current Operations

Austal limited is finishing building two vessel types for the US Navy, Expeditionary Fast Transports (EFTs), and Littoral Combat Ships (LCS) - patrol boats, but has won two large new contracts for its newsteel shipbuilding facility for USN and Coast Guard, for the construction of towing and salvage vessels.

ASB is also building vessels for the Australian government at its shipyard in Henderson WA and is building a service and sustainment business across the Pacific.

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