Q: Canada has narrowed the choice of submarine suppliers to two. Hanwha from South Korea and TKMS from Germany. This is a multi billion dollar project. Does Kraken do business with one or both of them? What impact will this have on PNG's sales? How much of this has already been baked into PNG's price run-up? Is one supplier more beneficial for PNG's future?
5i Research Answer:
PNG has done business with TKMS but has not mentioned Hanwha in any of its press releases. This does not mean it does not do business with it, though, as many customers will remain private. The contract could be $60B, but we note decision is not expected until late 2026 and delivery not until 2030. Thus, the timeframe dilutes current impact somewhat. PNG has not disclosed its value of an potential part of any contract. But certainly we would expect a decent chunk of business. But with a four year timeframe, and the fact that this bidding is not new news, we would expect much of this potential impact is in the stock already. Still, an actual decision would take away some risk and would likely have a small beneficial impact to the stock.