The Austal Limited (ASX: ASB) share price has dipped slightly today following the announcement of a completed vessel delivery.
In early-morning trade, the Austal share price is down 0.18% to $2.70. In comparison, the All Ordinaries Index(ASX: XAO) is also flat on 6,134 points.
What does Austal do?
Austal designs and manufactures high performance vessels for commercial and defence customers worldwide. Most notably, Austal builds and services warships for the Australian Royal Navy and the United States Navy.
Patrol boat delivery
The global defence shipbuilder delivered its eighth guardian class patrol boat to the Australian Department of Defence.
Under the Pacific Patrol Boat Replacement project, the vessel, VOEA Ngahau Siliva, was gifted to the Kingdom of Tonga. This is the eighth ship delivered since December 2018 and the second Guardian-class patrol boat to Tonga.
The formal handover was conducted at Austal Australia's Henderson shipyard last Friday. The Tongan crew will now depart for their home country with further training and familiarisation at HMAS Stirling, Garden Island.
The vessel will be used for improved seakeeping (border patrols), regional policing, search and rescue and many other operations domestically and internationally.
Commenting on the transfer, Austal CEO Patrick Gregg said:
With this second vessel delivery to Tonga, we have now delivered eight of the 21 Guardian- class Patrol Boats contracted to the Australian Department of Defence. We're actually completing a vessel every three months and at any given time, we have five vessels under construction or fitout.
The Pacific Patrol Boat Replacement project was awarded to Austal in May 2016. The shipbuilder was granted an additional contract option, taking the program to 21 vessels. The total value of the contract is estimated to be more than $335 million.
Twelve Pacific Island nations including Papua New Guinea, Fiji, Samoa, Vanuatu and others will receive the vessels through to 2023.
About the Austal share price
The Austal share price took a 13% hit last week, following the broader ASX market sell-off. Overall, shares in the defence company haven't fared well with a 30% decline since the start of the year.
Austal has a market capitalisation of $974 million and a price-to-earnings (P/E) ratio of 10.9. This can be seen as quite cheap as investors are paying $10.90 for every $1 in last year's profit. The average price-to-earnings (P/E) ratio for the defence industry is around 18.8.
