We caught up with management at the Undersea Defence Technology exhibition yesterday. Three subsidiaries were on show (SEA, ELAC and EID) and with whom we discussed specific exposure. A common theme when discussing the future among exhibitors was modularity and miniaturisation, also for increasingly uncrewed vessels. It was therefore the KraitArray system that caught most of our attention. Towed by crewed or uncrewed vessels or used statically for harbour protection, this has been developed by SEA over the last 10 years and is gaining interest from customers worldwide as a lighter and cheaper alternative to existing systems by the likes of Thales. This, combined with the recent £135m contract for Ancilia Naval countermeasure system (advanced decoy launcher), provides an encouraging outlook for this business and we look forward to hearing more about prospects when we visit SEA with investors later this month. The Portuguese team from EID are now optimistic following a challenging period and ELAC in Germany have strong visibility via the Italian submarine programme (see our 'Hunt for Blue October' note for more detail). Valuation The shares trade on a FY25 (April y/e) P/E of 17.2x and EV/EBITDA of 10.1x and DPS yield of 2.1%, which in our view remains attractive for exposure to growing areas of defence spending. Next event The company is hosting an investor visit to SEA in Devon on 30th April – please contact us if you would like to attend.