MST Access | Move to Ohio targets US contracts | 19 Oct 23

Oct 19, 2023 | Research 2023

XTEK Limited (XTE.AX) | Senior Analyst: Andrew Johnston, Associate Analyst: Noah Hunt

Update Report – Move to Ohio targets US contracts

Price: A$0.48; Valuation: A$0.73 (unchanged); Market Cap: A$49m


  • XTEK is targeting US Defence contracts with the moving of its XTclave manufacturing plant from Adelaide to the US, as well as cost savings.
  • The Company has also recorded its third small Ballistics protection equipment order in FY24 – all building XTEK’s credibility for potentially larger contracts.
  • Numbers for the full year starting to come together with revenue, working capital and cost savings.

XTEK’s XTclave-based lightweight helmets and body armour is well positioned for a US Special Ops contract, but products needs to be manufactured in the US. Moving XTclave to the US will help as well as save $2m pa.

XTEK now has nearly $10m of Ballistics sales to international customers so far in FY24 following the recent $1.6m order. Management is confident of further near-term orders which should help with winning some of the larger supply orders in its $300m pipeline in Ballistics.

These announcements support our FY24 forecasts with the XTclave move to the US saving ~$2m p.a. (costing $0.8m in FY24), and the consistent international orders supporting our revenue and working capital forecasts as well as probability of winning larger international ballistics orders.


Geopolitical instability is driving strong growth in defence budgets Countries are adding defence personnel and refreshing personal ballistics
protection. High levels of gun violence in the US create ongoing demand from a wide range of enforcement agencies.

XTEK has proven capability in delivering quality products and service to Australian Defence, US agencies and more recently international customers.

XTclave is XTEK’s proprietary technology that provides lightweight armour and helmets. We expect it will be a significant contributor to value in coming years.


Our earnings forecasts increase slightly with revenue growth offset by lower margins in the Technology segment. We estimate a 12-month forward value for XTEK based on capitalising FY25 EBITDA at a discounted market multiple. Our valuation is $0.73 per share is unchanged with slightly higher earnings offset by a slightly lower market multiple.


Key risks include an inability to replicate the large international orders that it recorded in 2022, reduction in the contracts it wins with Australian Defence, failure to be able to ramp up cost-effective production of its XTclave based helmets and body armour, increased competition in the US law enforcement market and loss of share and being unable to shift the US sales channel away from white-label sales.



About MST Access

MST Access is our micro-cap division, selecting quality small companies that have little or no coverage in the Australian market, yet have a worthy investment case. MST Access is attracting strong support as an effective way for quality micro-cap companies to have their story told. We have a strong pipeline of companies coming under coverage over the next few months and will continue to bring their stories to you as we initiate.

You can also see the report on or if you are a MST Marquee client via our Institutional Research Portal (MST Marquee) at

If you have any questions, please give us a call.

Senior Research Analyst
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