DALLAS, TX -- November 20th, 2025--  Electro Optics Systems Holdings Ltd (ASX: EOS): Stonegate Capital Partners updates their coverage on Electro Optics Systems Holdings Ltd (ASX: EOS). EOS announced the acquisition of the UK-based interceptor business from MARSS Group for a total of A$10.0M. This acquisition adds a complimentary counter-drone capability, which is expected to take 12-24 months of further development. This establishes EOS as a leading counter-drone capability company. Interceptor drones are an emerging advanced technology, seen as a critical future tool. Following the launch of a counter-drone the system pursues the target with onboard imaging, an infrared seeker and market-leading AI-based guidance. The system is compact and mobile, suited to fixed sites and vehicle deployment, and is designed to integrate with common sensors and command and control systems as part of a layered counter drone solution. Notably, a version of this system can be side-loaded to EOS’ RWS. It is expected that this acquisition will require an additional AUD$10.0M over the next three years, portions of which may be funded by customers. 

 Company Updates:

Significant HELW Contract: In August of 2025 EOS announced that it has secured an order for a 100kW high power laser weapon system (HELW) for counter-drone warfare. This is an A$125.0M contract for a HELW that is to be delivered to a European NATO member, with revenues expected to be recognized over the next 3 years. Of note, this unit can take down 20 drones per minute, which is approximate 5 to 10 times more efficient than current kinetic kill options and does not have the constraint of cool down time. We also note that this contract is expected to be accretive to margins and cash flow positive in the back half. Going forward we expect EOS to secure a further contract for a HELW in 2026. Given the short training window needed to operate these weapons, and significant need for cheaper and effective counter-drone weapons we expect this vertical to become a very significant growth driver as EOS has reason to believe it is poised to capture 50% of the HELW TAM given the proprietary technology and first mover advantage it has.

Growth Outlook: The Company has laid out a three-pronged approach for accelerated growth over the medium term that is two parts internal and one part external. EOS expects to focus resources on counter drone RWS technology over the next 1 to 3 years and HELW technology over the next 2 to 5 years. With the above mentioned contract already signed, and another contract not far behind, we believe that this midterm growth potential will quickly come into focus. Aside from these HELW contracts the Company has seen significant macro tailwinds as the EU continues with its ReArm Europe Program, expecting to mobilizes €800.0M across the European Union, culminating in the “drone wall”.

Strong Backlog: As of the most recent market update, the Company has a strong order backlog that is over AUD$400.0M, almost 3 times higher than it was at year end. This is supported by a recent Slinger counter-drone order contract valued at AUD$20.0M. Most of this backlog is expected to be monetized in 2026 and 2027. In addition to this strong backlog the Company also has a significant pipeline of sales opportunities.

Valuation: We use both a DCF Analysis and Comparable Analysis to inform our valuation of EOS. Our DCF analysis arrives at a valuation range of AUD$8.16 to AUD$9.56 with a midpoint of AUD$8.79. For the Comparable Analysis we arrive at a valuation range of AUD$7.09 to AUD$9.75 with a midpoint of AUD$8.42.

About Stonegate
Stonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Our affiliate, Stonegate Capital Markets (member FINRA) provides a full spectrum of investment banking services for public and private companies.

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