Russia's invasion of Ukraine has fundamentally changed Germany's view on defence & security. Consequently, the German government presented its "National Security Strategy" yesterday, which will also affect Germany's and Europe's defence from and in space. Here are our key takeaways:

• The German government devotes increased attention to space as a strategic dimension and expands its capabilities in this area.
• The German government aims to develop a space security strategy, which defines future lines of action for protection and defense in space and for increasing the resilience of the nation as a whole. Measures to strengthen the military's capability to act through the use of space will be described.

For OHB, Germany’s only space tech pure-play with a strong defence track record, we see further opportunities driven by institutional demand for defence and security in and from space. While the first wave of budgets should flow to land systems (like tanks and ammunition), the second wave of defence spending should flow to space defence and security with OHB being one the the key beneficences during the mid-term (from 2024e onwards).

Currently, OHB conducts the feasibility study for “Odin’s Eye” (Europe’s early missile warning system from space, worth €

8m

) as a prime contractor, bids on the open contract “SATCOMBw3” (3rd generation of communication satellites for German Armed Forces, eNuW: € 1bn contract volume) and is part of the leading consortium bidding on IRIS² (Europe’s resilient communication satellite constellation, worth € 6bn).

Furthermore,  the "Heinrich Hertz" Satellite will be launched tomorrow and serves as demonstrator for new communication technologies of the German Armed Forces. OHB's close relation to Armed Forces can also be witnessed by the current "SeRANIS" satellite mission, another scientific demonstrator for the University of Armed Forces in Munich.

Given Germany’s and Europe’s renewed commitment on space defence & security, we should see additional space-based defence projects in the future, allowing for double-digit annual sales growth during the mid-term (eNuW: 13%). BUY with unchanged PT of € 48.00, based on DCF.