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Austal ( AUTLF ) stock up 35% in quarter ended March

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U.S. shipyards shield firm from import tariffs

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Hanwha's stake buy indicates foreign interest in firm

By Aaditya GovindRao

April 2 (Reuters) - U.S. President Donald Trump's

policies that have rattled stocks around the world are

benefiting Australian shipbuilder Austal ( AUTLF ), analysts said

on Wednesday.

Shares of the company, which supplies defence and commercial

vessels to the Australian and U.S. navies among other clients,

surged 35% in the three months ending March, clocking their best

quarterly gains in nearly two years since June 2023.

In contrast, the broader benchmark lost about 4% on

concerns of stretched valuations among financial stocks and the

fallout from U.S. tariffs.

The surge in Austal's ( AUTLF ) shares comes amid Trump's call asking

Australia and other U.S. security allies to increase defence

spending. Australia said last week it would bring forward A$1

billion in defence spending in its federal budget.

"With higher defense spending and an increased sense of need

for autonomy in all domains, we could see more order activity

for Austal ( AUTLF ) from Australia," said Dhierin-Perkash Bechai,

aerospace analyst at Seeking Alpha and The Aerospace Forum.

"That is also driven by a sense that China may become more

aggressive in the region amidst a fallout between the U.S. and

its closest allies."

Austal ( AUTLF ) grew its order book to a record A$14.2 billion by

2024-end, 11% growth from six months ago.

The company's two shipyards in the United States insulate it

from Trump's potential import tariffs, which have roiled global

markets lately, further boosting Austal's ( AUTLF ) allure for investors.

These shipyards make smaller combat vessels, surveillance

ships and modules for nuclear-powered and nuclear-armed

submarines.

"Investors are looking for companies that are able to win

business in the U.S., but without tariffs and/or sacrificing

growth ambitions elsewhere," said Nicholas Sundich, an equity

analyst at Pitt Street Research.

Recently, South Korean conglomerate Hanwha

bought a 9.9% stake in Austal ( AUTLF ), nearly a year after the

shipbuilder rebuffed its A$1.02 billion takeover bid. The

acquisition underscores foreign interest in the company.