GD's Unit to Supply Abrams Tanks - Analyst Blog
09 Janvier 2013 - 10:42AM
Zacks
General Dynamics Land Systems, a subsidiary of General
Dynamics Corporation (GD), has received a contract worth
$132.7 million from the U.S. Army TACOM Life Cycle Management
Command for the Royal Saudi Land Forces. Per the contract, the
company will be responsible for the production and supply of 69
Saudi M1A2 Abrams tanks to the Kingdom of Saudi Arabia.
This contract from Saudi Arabia is part of a plan by the Kingdom
of Saudi Arabia to upgrade its fleet of tanks. Basically, the
company will be supplying the improved M1A2S tanks. The company
expects the task to be completed by July 31, 2014.
General Dynamics has been upgrading the kingdom's fleet of M1A1
and M1A2 tanks to the M1A2S configuration preferred by the Saudis.
M1A2 SEP V2 is the most advanced digital tank with improved color
displays, day and night thermal sights, commander remote operated
weapon station (“CROWS II”), a Thermal Management System (“TMS”)
and a tank-infantry phone. The M1A2S conversion increases the
efficiency and capability of the tank.
Several international armies, including Egypt, Kuwait, Saudi
Arabia, Australia and Iraq, are major customers of Abrams tanks.
General Dynamics’ Abrams tanks provide the troops with a proven and
supreme decisive edge. Survivability, mobility, adaptability and
maintainability are important features of the tank. With these
features, Abrams tanks are formidable and will dominate the
battlefield.
In January 2012, the company had received the contract for
upgrading M1A1 tanks to the M1A2 Systems Enhancement Package
(“SEP”) V2 configuration. In February 2008, the company had
originally received the order from the U.S. Army TACOM Lifecycle
Management Command under which it was responsible for upgrading 435
M1A1 tanks that were in the Army's inventory for more than 20
years.
The company is continuously working on conversion of the tanks
to the M1A2 SEP V2 configuration. Moreover, the company is
developing further upgrades proposed for the Continuous Electronics
Enhancement Program (“CEEP”) building on the latest SEP and Tank
Urban Survivability Kit (“TUSK”) configurations of M1A1 and M1A2
main battle tanks.
Based in Falls Church, Virginia, General Dynamics engages in
mission-critical information systems and technologies; land and
expeditionary combat vehicles, armaments and munitions;
shipbuilding and marine systems; and business aviation.
Recently, the company procured three contracts worth $4.6 billion
from the U.S Navy for designing and developing the next-generation
strategic deterrent submarine. The contracts also included the task
of constructing and purchasing of materials for Virginia-class
attack submarines. This indicates that its revenue exposure is
spread over a broad portfolio of products and services. This
exposure to a number of uncorrelated markets will keep the overall
growth momentum steady.
However, like Northrop Grumman Corporation (NOC)
and Lockheed Martin Corporation (LMT), the future
prospects of the General Dynamics are also tied to the U.S. defense
budget, which remains a matter of concern. The company presently
retains a short-term Zacks Rank #3 (Hold) that corresponds with our
long-term Neutral recommendation on the stock.
GENL DYNAMICS (GD): Free Stock Analysis Report
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