Q3 update: Trading is in line despite a challenging US backdrop. Strong operating cash conversion continues, with net debt at 31 August of £38m (30 April: £39m). Expected FY21E revenues are fully covered by the order book, which has grown 3% since 30 April to £464m. FY21E trading expectations are unchanged (consensus adj. operating profit: £57.5m; INVe: £57.2m). Sensors & Information: The sector has seen continued strong performance, with order intake 7% higher than the prior period. Roke continues to trade well, with a strong outlook. Establishing Roke USA should support further growth, with several Electronic Warfare systems currently on trial with the US Army. The integration of Cubica is progressing well. Progress in US Sensors continues, with a Full Rate Production contract on the Enhanced Maritime Biological Detection programme expected later this year. The AVCAD and JBTDS bio agent detection programmes continue through their EMD phases. Given shorter cycle orders, FY22E cover stands at 45% (vs 47% prior period). Countermeasures & Energetics: Performance has been in line with expectations, with CV-19 and Administration change-related disruptions (including timing of customer acceptance tests and labour and supply-chain challenges) not having had a material impact to date. FY22E order cover of 67% compares to 82% last year, which benefited from the 2-year Countermeasures Australia order received in FY20 that has been traded down. A follow-on order is expected this year. Tennessee expansion is progressing as planned. Cash upgrade: FY21E net debt improves 27% to £33m, driven by lower cash tax and capex timing. FY22E improves 21%. No changes to trading forecasts. Our view: FY21E revenue fully covered by orders, a cash upgrade and an encouraging pipeline of opportunities, all despite the current challenging US backdrop, highlights the transformation at Chemring over recent years, in our view. SoTP-derived 12m TP of 400p. Re-iterate Buy.