OHB SE is a leading European space technology group, headquartered in Bremen, Germany. The company designs, builds, and operates satellites, and is a key player in Europe’s strategic space initiatives, including Galileo, Copernicus, and the Ariane launch vehicle program. With a market cap around €1.5 billion, OHB fits squarely within our target range and offers a unique blend of defense and space exposure.
Investment Thesis: OHB is trading at a significant discount to its US peers, despite a record backlog and strategic importance to European sovereignty. The company is poised to benefit from increased European defense and space spending, particularly in Germany, as governments prioritize independent access to space and secure communications. With a strong balance sheet and improving operational execution, OHB is set for a re-rating as these catalysts materialize.
Key Catalysts (12 months):
- Ramp-up of Ariane 6 production and launches, increasing revenue visibility.
- New contract wins in German and European defense programs, including satellite-based secure communications (e.g., SATCOMBw 3).
- Potential spin-off or strategic partnership of its space systems division to unlock value.
- Continued growth in the small satellite market, leveraging its OHB SmallSat platform.
Key Risks:
- Execution risk on fixed-price contracts, leading to margin pressure.
- Dependence on European institutional customers and potential budget delays.
Valuation: OHB trades at approximately 12x forward earnings, a discount to US comparables like Kratos (KTOS) and Rocket Lab (RKLB). With expected earnings growth of 15-20% over the next two years, the PEG ratio is below 1.0, indicating undervaluation.
Balance Sheet: OHB has a solid balance sheet with net cash and a healthy backlog of over €4 billion, providing strong revenue visibility.
Risk Disclaimer: This article is for informational purposes only and does not constitute investment advice. All investments involve risk, including the possible loss of principal. Past performance is not indicative of future results. Please conduct your own research or consult with a financial advisor before making investment decisions.