Quickstep Holdings Limited (ASX: QHL)

SP7.5c, TP 15c

Recommendation:Buy (Higher Risk)

Australian Prime Minister Malcolm Turnbull hasannounced that Australia will spend nearly $A7B on massive, long-range surveillance Triton drones that will dramatically expand the country’s abilityto monitor activities in the Pacific region.

The first RAAF Triton will come into servicein 2023, with the full fleet (of six, potentially seven) set to be operating by2025.

The initial $1.4B includes $200M for a jointprogram with the US Navy on the development, production and sustainment of theaircraft (which has the wingspan of a Boeing 737).

Readthrough for QHL:

TheTriton surveillance drones are made by US defence giant Northrop Grumman.

QHLalready has longstanding close ties with Northrop Grumman through the contractto build carbon fibre parts for the F-35 Joint Strike Fighter.

Wewould hope that QHL will be able to get additional work for this drone program.