H1 results: The order book rose 39% y-o-y to £1.04bn. On unchanged FY guidance, H1 op. profit of £25m implies a 66% H2 bias vs. our 70% expectation. H1 revenue increased by 8% and op. profit decreased by 5%. As flagged in February, operational challenges in Tennessee impacted Q1. This and higher interest led to adj EPS down 11% to 6.6p. The interim dividend, however, is increased by 13% to 2.6p. Cash conversion improved to 83% as focus on w/c was maintained. Net debt increased to £75m (H122: £25m) due to capex; the b/s remains strong at 0.85x ND/EBITDA. Divisional summary: Strong performance at Roke, up 19%, and growth in the specialist energetic materials businesses offset a weaker period for Countermeasures. Underlying op. profit margin of 11.2% (H1 2023: 12.7%) primarily reflects operational issues in Tennessee (Countermeasures). FY outlook: Order intake across both sectors has increased FY order cover to 93% (vs. 90% at H1’23). The Board’s FY expectations are unchanged. Estimates: We leave P&L estimates unchanged. Revenue growth and margins will accelerate beyond our 3-year forecast period given Energetics expansion, part funded by government grants. FY24E/25E/26E net debt rises by £4.7m/£24.7m/£24.7m to £60.5m/£84.8m/£67.0m to reflect a new plan to expand Energetics (see detail overleaf), grant funding, LTIPs & FX. Our view: The shares trade at a >10% CY24E EV/EBIT discount to peers, an opportunity given impressive visibility, encouraging ambition and sector-leading margins. We roll forward our SOTP derived TP to FY25E, which raises our target to 480p from 450p. We expect that any short-term political disruption will be navigated. Long-term prospects are attractive and recent government grants reinforce Chemring’s position as a key strategic supplier.