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Austal (ASX:ASB) has sank on Friday to lunchtime, losing a quarter of its value, after revealing in the middle of confessions season that its finance guys ‘double-counted’ a contract linked to a U.S. Navy order in Alabama.
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Long story short, Austal revealed it’s been counting on $24 million that didn’t actually exist, because that $24M had already been factored into Austal’s own earnings projections. You know, the first time they counted it.
Not a great look, and it’s that time of year when the market feels extra justified to lay the pain on anybody not pulling their weight money-wise.
As a result, Austal has absolutely cratered in value by Friday afternoon.
A month ago, shares were trading above $8/sh. Now, they’re down to $4.72/sh. That’s a 50% loss, or thereabouts, if you squint. The number doesn’t really matter more than the shape of the chart at that point.
The kicker is that Austal actually released this news yesterday, after close. If they were hoping to avoid the market’s ire, it didn’t really work. Could have made it worse, but that’s speculation. What is worrying is this company is meant to be helping the Aus government get AUKUS off the ground, albeit indirectly.
It’s also kind of a major organ of the Western World’s shipbuilding capacity, and it isn’t very good at putting them out as quickly as South Korea, which, for some reason, we didn’t let come in and show Austal how it’s done – at least, not beyond 19.9% ownership. That decision, after today, now looks even stranger to this finance journalist.
But it still builds ships for the Aus gov’t, and this journo can report one source who shall remain unnamed once made some very concerning allegations about the quality of shipbuilding on-site at its Henderson shipyard in WA.
Which, when you consider Austal once made a ship for the U.S. that caught fire at sea, might be more than just rumours. In fact, Austal builds Littoral Combat Ships (LCS’s), which, depending on who you ask, can stand for something else.
ASB last traded at $4.72/sh.
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