Shares in MS International (LON:MSI) rallied after the engineering group clinched a £16.6 million contract to supply naval gun systems to a NATO nation.
Delivery of the systems is expected to begin towards the end of 2027. This contract is a significant win for MS International, which is sharpening its focus on defence.
What does MS International do?
For the uninitiated, Doncaster-headquartered MS International is a diversified engineering company operating across three divisions. These are Defence and Security, Forgings, and Petrol Station Superstructures and Branding.
MS International said the order includes its effector, radar and optical systems. The company will also supply its fire control system to counter surface, semi-submersible and aerial (including drone) threats ‘at a time when adaptable weapon systems are increasingly required’.
Defence delays weigh
At the FY26 results in July, MS International said its group-level order book was marginally lower year-on-year at the end of April. At the time, the company was awaiting ‘some substantial anticipated defence orders’ that had been delayed.
Shore Capital’s Joe Spooner thinks the order book stood at less than £160 million at that stage. ‘We also note revenues in MSI’s Defence and Security unit were £72 million last financial year,’ said Spooner. ‘In this context, the contract announced today looks like a meaningful win.’
| FY24A | FY25A | FY26A | |
| Revenue (£m) | 109.6 | 117.5 | 115 |
| Adjusted pre-tax profit (£m) | 15.7 | 20.1 | 15.1 |
| Net cash (£m) | 35.5 | 23.7 | 45.1 |
Source: MS International, Shore Capital
Revenues reduced from £117.5 million to £115 million in FY26 as slower-than-expected defence procurement programmes delayed orders. Accordingly, adjusted pre-tax profits fell from £20.1 million to £15.1 million. However, MS International’s net cash pile increased from £23.7 million to £45.1 million.
Robust demand
The Defence and Security business remained the strongest-performing division. Growth was supported by strong demand in the US and increasing international interest in the company’s counter-drone technologies.
Away from defence, Forgings had a challenging year in the UK, US and Brazil due to uncertainties with US tariffs. Elsewhere, the recently-combined Petrol Station Superstructures and Branding division benefited from cross-selling opportunities and growing demand for electric vehicle infrastructure.
Shares in MS International have surged more than 600% higher over the past five years. While new investors risk being ‘late to the party’, we see some positive catalysts ahead.
Governments are prioritising defence following Russia’s invasion of Ukraine and the more recent Middle East conflict. And the £260 million cap continues to receive substantial international interest for its defence and security products. The latest order adds to MS International’s defence backlog. And the deal reinforces its position as a supplier of integrated naval weapon systems to NATO.
MS International is reviewing its portfolio as it sharpens its focus on defence. The company is actively exploring the sale of its Petrol Station Superstructures and Branding division. And strategic options for the Forgings arm could be reconsidered once that process is ‘approaching a satisfactory conclusion’.
