FY trading performance in line: Trading performance in the year to 31 October is in line with market expectations (consensus adj. operating profit: £57.5m, INVe £57.2m). FY21E year end net debt is now expected to be £27m, representing an 18% improvement to our previous estimate. Company-defined operating cash conversion is 105% of EBITDA, with rolling 36 month operating cash conversion of 107%, testament to the improved quality. FY22 order cover building: In October Chemring was awarded the Full Rate Production contract for the Enhanced Maritime Biological Detection (EMBD) US Program of Record. The sole source framework contract is valued at up to $99m, with an initial order of $16m for delivery in Q4 FY22 and FY23. Chemring Australia also received a contract modification for F-35 countermeasures in the amount of $20m, in addition to the $22m contract announced on 28 September. Following these awards, the closing order book was £502m (vs £476m in the prior period) giving 83% cover of FY22E revenue (vs 78%), with Countermeasures and Energetics at 94% (vs 92%) and Sensors & Information at 65% (vs 53%), with strong demand seen at Roke. Estimate changes: With FY21E (Oct y/e) expectations met, we leave FY22E trading assumptions unchanged for now, as we continue to be mindful of the challenging operating environment in the US, albeit given continued strong order momentum this may prove conservative. Our FY21E net debt estimate improves 18% to £27m, with ongoing working capital management aided by lower capex and cash tax in FY21E, offset slightly by higher incentive shares. Our view: Chemring has navigated a challenging US environment that has caused issues elsewhere in the sector. The improved quality of the group can also be seen in the continued high operating cash conversion. Our SOTP-derived 12m TP nudges up to 405p (from 400p) on lower net debt. The balance sheet appears deployable. Prelims on 14 December. Re-iterate BUY.