Investors Chronicle The final investment frontier
Post on: 16 Март, 2015 No Comment
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The UK seldom makes the front pages for its space excursions. When the US and Russia were glamorously battling it out to send the first man into the solar system, successive UK governments took a back seat by cutting off funding for manned missions.
This inevitably led the nation’s top engineers and space enthusiasts, such as Francis Thomas Bacon, to work with Nasa on developing the Apollo 11 flight that sent Neil Armstrong to the moon. Another hall of famer is Helen Sharman, who in 1991 — 30 years after the Soviet Union first put a man into space — was the first Briton to be sent into orbit. The Sheffield-born chemist successfully fended off 13,000 applications to gain access to the Anglo-Russian Project Juno, yet like Mr Bacon her experience came courtesy of overseas technology.
Away from the spotlight, however, Britain steadily carved out a reputation as a leader of satellite and probe construction. Though not quite as exciting as sending a man, monkey or dog into space, this mostly culminated in co-operation on a number of smaller-scale European projects, like the ill-fated Beagle 2 one that failed to land on Mars.
That all changed by 2014, though, when Britain’s reputation as a peripheral player in space exploration finally came to a grinding halt. After millions of miles of travel, the 10-year Rosetta mission’s finale gripped the entire world and ended in glory when the Philae lander unit achieved its goal of docking on the comet’s surface.
As well as firing up interest in space, this European mission also put Britain’s technology on the map, particularly as several UK businesses developed many of the systems critical to its success. This list includes Aim-traded SciSys (SSY), the computer software and services specialist responsible for the mission control system development and maintenance, and better-known companies such as e2v Technologies (E2V) and BAE Systems (BA.).
Europe’s largest defence contractor, BAE, has its fingers in a number of space-related pies, including producing a smartphone for Rosetta’s communication at its technology centre in Essex. While tightening military budgets have caused the group all kinds of problems, other areas like space and cyber security have provided some respite. This includes a $540m (346m) arrangement with the US Air Force Space Command to maintain space radars used for missile warning and space surveillance operations.
Nonetheless, at 462p, shares in the aerospace and defence group trade on a modest 12 times forecast earnings, making it cheap relative to peers like Lockheed Martin (US:LMT) and Thales (FR:HO). That’s certainly not bad for a company that has outperformed the FTSE 100 in each of the last three years and a yield of 4.4 per cent.
Another company enjoying extraterrestrial success is niche electronics producer e2v (buy, 170p, 04 Dec 2014 ). The Chelmsford-based manufacturer of radio frequency and microwave components supplied the camera systems used to capture images of Rosetta’s journey and the comet’s surface, while even helping to map the landing spot.
In fact, pretty much all the images you saw of the mission came courtesy of e2v’s imaging business, which has now been involved in over 150 space missions since the 1980s. What’s more, the technology firm is so enthusiastic about the growth potential of space that its semiconductors division, too, has got in on the act.
Increasing demand for bandwidth used to transmit information between satellites in space underpins demand for e2v’s radiation-resistant semiconductors, says Marc Saunders, president of space imaging at the firm. According to him, space has become the fastest growing segment of its business, with operating margins at the interim point of 22 per cent for semiconductors and 10 per cent for imaging.
If anything, worldwide coverage of events like Rosetta has driven even more orders for space products, in what he describes as the most extreme of any technology market with a high barrier to entry. From a personal and business view, Mr Saunders is delighted that the world is starting to take space science seriously, and believes the UK’s potential has been reinforced by growing investment from overseas companies.
People may talk about saving money on healthcare and other pressing things, but Rosetta was a good news story for the world, he says. There is a hunger for people to know how the universe works and where we originate from. These are big questions that are very important.
There is also an increasing level of investment in UK space, particularly in the upstream technology end of it. Airbus (FR:AIR), Thales and Lockheed have all invested in UK facilities, which goes to show that the UK is one of the places to be.
Over the years, other international names, too, have been snapping up innovative British companies that played an integral role in piecing together the Rosetta probe. ABSL Space Products, for example, produced innovative batteries that are smaller, lighter and more reliable than the traditional nickel-cadmium ones for the spacecraft, as well as developing systems to examine dust from the comet.
Operating out of a site in Oxfordshire, the UK-based company is now owned by US battery manufacturer EnerSys (US:ENS). And Bradford Engineering — bought by US control specialist Moog (US:Mog.A) in 2011 — developed the tanks used to store helium in Philae out of its UK base. Engineers there also developed a Ptolemy gas analyser the size of a shoebox to examine similarities between water ice on comets and Earth’s oceans, plus monitor organic material on the comet.
And then there’s ERS Technology, another UK-based business under foreign ownership that played a pivotal role in the mission. Under the umbrella of consulting company Arcadis (NL:ARCAD), ERS developed numerous subsystems, including the reaction wheels, solar array drive motors, Philae harpoon motors and the lubricant for the atomic force microscope.
In addition, satellite expert Telespazio, a joint venture between Finmeccanica (IT:FNC) and Thales, helped with the overall design and on-board software from its Bedfordshire office, while Airbus-owned Satellite Technology designed a momentum wheel that stabilises the probe as it descends and lands on the comet. The Sevenoaks-based satellite specialist is a spin-off company of the University of Surrey that was acquired by EADS Astrium in 2009.
As the world’s second-biggest space technology company, Airbus oversees an industrial network bringing together more than 550 companies in 12 European countries. Despite its recent difficulties in aerospace. the French conglomerate has been making headlines for its innovative European Ariane 5 launcher and played a key role in developing the technology for Rosetta from its base in Stevenage.
Another company that regularly makes the headlines for its space operations is Lockheed Martin. The Pentagon recently retained the US defence giant’s key space systems programs in its proposed fiscal 2015 budget, encouraging the group to expand its coverage through technological innovation and acquisitions.
One region it has been focusing on is the British Isles. Indeed, this summer executive vice-president of Lockheed’s space systems unit, Richard Ambrose, said he wanted to set up a space company in the UK on account of the British government’s vision of cultivating an even stronger space industry.