Counter drone company surges past $1 billion valuation with new contract win

Shares in Electro Optic Systems Ltd (ASX: EOS) jumped more than 18% on Monday after the company said it had signed a contract to supply a high energy laser weapon to a South Korean customer.

The company said in a statement to the ASX that it had signed a binding conditional contract worth about $120 million to manufacture and supply a 100kW "high energy laser weapon" to a company in the Republic of Korea.

It would also establish a joint venture between itself and the customer to supply the weapons within South Korea, and would license the intellectual property around the weapon to the new joint venture company.

The product will be manufactured at the company's new laser weapon manufacturing facility in Singapore, the company said.

Milestone payments to come

While the total amount payable was US$80 million, the company would also receive an initial deposit under the agreement.

The company went on to say:

The conditions of the contract include the payment by the customer of the initial deposit (US$18 million), the customer procuring the issuance of a letter of credit for the remaining amount of the contract, and the customer inspecting and being satisfied with EOS' Singapore facility. The customer expects these to be completed prior to 31 January 2026.

The contract was also subject to customary terms, including milestone payments and full refund entitlements in the event of non-performance, EOS said.

EOS said it expected that the contract would be fulfilled by the end of 2027.

Contract follows year of testing

The company said the laser weapon was part of its technology suite, which included "using kinetic weapons, interceptors, rockets and high energy laser weapons to defeat drones''.

The EOS laser weapon development program included three years of field testing and numerous firing trials of the laser in close collaboration with customers. To ensure high performance, it is supplied with algorithms, radar, threat detection, target acquisition and beam locking systems. This conditional contract represents EOS' second export order for a 100kW class laser defence system and follows a first export order to a Western European customer, announced on 5 August 2025.

The company said it would also be holding a webinar on Tuesday, 16 December, during which Managing Director Dr Anreas Schwer would discuss the new contract.

Electro Optic Systems was valued at $966.7 million at the close of trade on Friday.

The company shares traded as high as $5.96, up 18.9% on Monday morning before settling back to be 15.5% higher at $5.79.

Bell Potter has a buy rating and $8.10 price target on its shares. 

The post Counter drone company surges past $1 billion valuation with new contract win appeared first on The Motley Fool Australia.

Motley Fool contributor Cameron England has positions in Electro Optic Systems. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Electro Optic Systems. 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 Scott Phillips.

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