Why the VEEM (ASX:VEE) share price just shot 15% to an all-time high

A government contract has spurred the marine tech company to new heights.

| More on:
submarine, defence contract, navy, naval,

Image Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The VEEM Ltd (ASX: VEE) share price has broken an all-time record today. At the time of writing, shares in the marine technology manufacturer are trading at $1.32 – up an incredible 14.78%.

The rise comes after the company announced the federal government has placed an order with it for $9 million worth of submarine refurbishments.

Let's take a closer look at today's news.

What's affecting the VEEM share price?

In a statement to the ASX, VEEM says it has already received $3 million, and expects another $6 million, from government enterprise ASC Pty Ltd "in relation to the next full cycle docking for the Collins Class [submarine] maintenance program."

VEEM says the contract is based on a "sophisticated scheduling approach" that takes into account uncertainties from COVID-19 and future metals prices.

The company claims this will provide more certainty to ASC and allow VEEM to better forward plan. Work will begin within the next financial year with the first deliverables due by July 2022.

The order is similar to one ASC placed with the company in March 2020 – also for $9 million. The VEEM share price increased 5.4% on that day.

Management commentary

VEEM managing director Mark Miocevich said of today's news:

The new order from ASC is further demonstration of our reputation for precision engineering to the exacting defence standards of the Royal Australian Navy. This order will provide certainty to our planning and positively impact our profitability in the 2022 and 2023 financial years.

VEEM share price snapshot

Over the past 12 months, the VEEM share price has risen by around 217%. Unlike many other ASX companies, VEEM did not experience significant financial shock relating to the pandemic. So arguably, the increase in its share price could be attributed to genuine business growth rather than a rebound from the COVID-driven market sell-off.

While servicing the defence industry is an important segment of VEEM's business, it is not the only one. The company's value shot up by around 7% in March after it announced partnerships with Italian superyacht builders.

VEEM has a market capitalisation of around $168 million.

Motley Fool contributor Marc Sidarous 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.

More on Industrials Shares

Earnings Results

This $27 billion ASX 200 share is jumping on strong quarterly results

Investors are cheering on this giant's quarterly update this morning.

Read more »

Woman sits at her desk working at night, while traffic flows on a busy freeway out the window behind her.
Industrials Shares

'Very saleable': The beaten-up ASX 200 stock that could be a takeover target

Is this stock driving towards a takeover?

Read more »

Woman on the phone at a hardware store.
Industrials Shares

Why this $18 billion ASX 200 stock is lifting off on Wednesday

The ASX 200 company is racing ahead of the benchmark.

Read more »

piggy bank at end of winding road
Dividend Investing

Which ASX 200 industrials share will pay the best dividend yield in 2025?

Can investors rely on ASX industrials stocks to pay good dividend yields this year?

Read more »

A businessman waers armour and holds a shield and sword.
Industrials Shares

Is this ASX industrial stock a buy for defensive cash flows?

If you crave defensive growth, let's see what the experts think.

Read more »

Distressed man at a casino puts his head in his hands, covering his face.
Record Lows

Star shares crash 25% to record low on shocking cash crunch

The market appears concerned that the casino operator could be about to go bust in the game of business.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Industrials Shares

Up 130% in a year, why this ASX defence stock is soaring again today

It takes just five weeks for this company to do something that used to take 17 months.

Read more »

A transport worker walks alongside a stack of containers at a port.
Share Market News

Here's how the ASX 200 market sectors stacked up last week

Industrials came out best amid another bad week for the ASX 200, which fell 2.47% to 8,067 points.

Read more »