Why is Austal (ASX: ASB) soaring ~18%?
Austal (ASB) – Hanwha bid overshadows major US earnings reset
Austal emerged from its trading halt this morning (halted since 7 August) with two significant announcements:
1. Hanwha bid for Austal USA: Hanwha Defence USA has submitted an indicative, non-binding and conditional offer to acquire 100% of Austal’s US business for US$1.05–1.20bn on a cash- and debt-free basis. Encouragingly Austal has granted Hanwha access to commence due diligence.
2. FY26 earnings warning: At the same time, Austal disclosed an expected ~$175m EBIT loss at Austal USA in FY26, following a reassessment of recoverability on certain legacy Pentagon contracts. Group EBIT is now expected to be a ~$113m loss, with the US losses partly offset by ~$62m EBIT from Australasia.
The market is clearly looking through the earnings reset and focusing on the potential transaction. Hanwha’s offer provides a tangible valuation marker for the troubled US business and creates a potential pathway to crystallise strategic value while removing the source of Austal’s recent earnings volatility.
There is also strategic history here. Hanwha attempted to acquire the entire company in 2024, but the proposal did not progress amid Australian national-interest concerns. Hanwha subsequently received Australian government approval to increase its shareholding in Austal.
The interest from Hanwha is good news for Austal which has been one of the weaker ASX performers over the past 12 months (-33% vs. +9% for the ASX 200), with sentiment heavily impacted by losses on legacy US contracts. The proposed divestment potentially addresses that key overhang, which helps explain why the market is prioritising the bid over the sizeable FY26 downgrade.
- MM likes this move for Austal believing a test a move above $5 is a strong possibility.
NB Shawn’s Trading Ideas is long ASB and plans to run the position for now.
