Here’s why the Austal (ASX:ASB) share price is in the spotlight today

The Austal (ASX: ASB) share price could be on the move today following an update late yesterday. Here’s what the company announced.

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The Austal Limited (ASX: ASB) share price could be on the move this morning after the company announced an update on its joint venture program.

At Wednesday’s market close, the shipbuilder’s shares finished the day at $2.45.

What did Austal announce?

In a statement to the ASX, Austal advised it’s in discussions to sell its shareholding in Aulong Shipbuilding Co Ltd.

Established in June 2016, Aulong is a joint venture company focused on pursuing Chinese commercial and non-military vessel opportunities. It’s operated by Austal and Guangdong Jianglong Shipbuilding Company (Jianglong Shipbuilding) of Zhuhai, China. Austal owns a 40% stake in Aulong, with the remaining 60% interest held by Jianglong Shipbuilding.

Austal stated that its currently in talks to sell its ownership in Aulong to Jianglong Shipbuilding. A letter of intent has been executed targeting completion of negotiations by 31 October 2021.

The company highlighted that it has licenced a number of commercial aluminium vessel designs for marketing throughout mainland China. With construction at Jianglong Shipbuilding’s facilities in the Guangdong province, the ships are supported by local shipbuilding infrastructure and expertise. Close to 1,000 employees work across two shipyards at the site, running the joint venture.

Austal noted it will provide further updates to shareholders when more information about the divestment becomes available.

How has the Austal share price performed?

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.

Over the last 6 months, the Austal share price has significantly dropped amid worrisome media speculation around the company. Its shares sunk from $3.50 to around $2.70, reflecting a 20% fall. To date, Austal shares have moved in circles, most likely frustrating investors.

Based on the current share price, Austal presides a market capitalisation of roughly $880 million, with 359 million shares outstanding.

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Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Austal Limited. 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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