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.
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.