Chemring (CHG) 331.5p

Gain to date: 5.6%

Original entry point: Buy at 314p, 5 August 2021

Having initially struggled to gain any traction after we flagged Chemring’s (CHG) appeal in August 2021, Russia’s invasion of Ukraine changed the dynamics of military spending and helped lift shares in the defence firm.

However, results for the six months to 30 April didn’t get the best reception from the market (published on 8 June) as the company reported a slowdown in orders. According to the company, this reflected ‘adverse US order timing’ and the impact of continued Covid-19 restrictions in some geographies.

More positively, the company reported revenue up 11% to £220.4 million and pre-tax profit up 22% to £33.1 million, with net debt cut in half to £18.5 million. The Roke cybersecurity unit, a key reason why we were attracted to the shares in the first place, also did well. It posted strong growth and helped to boost group margins.

Berenberg analyst George McWhirter comments: ‘Roke recorded another excellent performance, again recording double-digit growth in orders, revenue and earnings before interest and tax. We expect this momentum to continue, supported by the planned heightened discretionary investment into the business.’

SHARES SAYS: Keep buying.