History & rationale: Cohort acquired ELAC from Wärtsilä in 2020 for just £14.2m. It is a market leader in sonar technology for surface ships and submarines. c50% of revenue is generated from EU customers and c50% from Asia. The Group acquired ELAC to take advantage of the strong submarine new build market, strong demand for sonar re-fit / upgrades, and to strengthen its presence in SE Asia and Europe. Cohort expects the Naval export market to APAC (ex-China) will total $150bn over the next 10 years. ELAC shares highly complementary expertise, capabilities and technologies with the SEA offering. Recent progress: ELAC’s experienced team has built on almost a century of hydro-acoustic knowledge to create capability that has displaced the likes of Atlas Elektronik (10x larger). Its sensors, transmitters and software must survive extraordinary ranges of temperature and pressure. It is currently working on a large Italian sonar project, at low margin through the development stage; production is to begin towards the end of this financial year. We also visited the construction site of a new facility costing €20m, expected to be operational in 2025, that will significantly enhance ELAC’s efficiency and capacity. Future opportunities include unmanned underwater vehicles. Group Q1 recap: FY24 cover stood at 93% of consensus revenue, from 90% at the beginning of the year. The order book rose >12% since y/e. Conservatively, FY guidance was unchanged. Prospects and the balance sheet are strong. Shares on a discount: The shares are trading on a CY24E EV/EBIT of 8.5x, a material discount compared to the 5-year average of 12.2x. Relative to the UK peer Group, Cohort trades on an 17% discount on CY24E estimates that assume a 12% operating margin, which is slightly higher than the peer average. BUY.