Surveillance contract valued at £11m Subsidiary Chess Dynamics Ltd has been awarded an extension to an existing contract (announced on 6th July 2020), to supply surveillance equipment to a European customer, with deliveries expected to commence in H2 of FY24. The contract extension has a value of approximately £11m, strengthening the Group’s order book and enhancing the visibility in the coming financial year and beyond. Our View No changes to estimates but improved outer year visibility is encouraging. At H1 results, announced in December, order cover was >95% of consensus FY23E revenue (FY21:89%). The balance sheet provides optionality (FY23E net funds of £5m). Demand for Cohort’s array of expertise in defence markets is supported by the UK’s aspirations to invest 2.5% of GDP in defence and rising budgets / tensions in Europe and Asia-Pacific. Valuation: Cohort offers good value in a shrunken listed defence sector. The shares are now trading on an FY23 P/E of 13.2x and an EV/EBITDA of 8.0x, both below the forward year 10-year average (P/E 14.5x and EV/EBITDA 9.8x). Our TP is unchanged at 700p, implying >50% upside.