Daily Brief Australia: Austal Ltd, S&P/ASX 200, Electro Optic Systems Hldg, DUG Technology Ltd and more

• There is 1 change for the S&P/ASX20 Index, 1 change for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index and 2 changes for the S&P/ASX 200 (AS51 INDEX).
• There is between A$30m-A$135m to trade in the index changes and that is between 0.7-16 days of ADV in the stocks. Short interest has jumped in a few stocks.
• We expect positioning to be lower than the passive trading in Nick Scali, Viva Energy Group, Perseus Mining, Austal Ltd and Healius.

• As reported by Brian Freitas on 6 June the list of changes to the S&P/ASX family of indices was announced, including some change for the S&P/ASX 200 (AS51 INDEX).
• The S&P/ASX 200 index has become quite overbought as of last Friday’s Close, a pullback is probably imminent.
• This insight evaluates possible scenarios for the possible 2-4 weeks, beyond the June 20 date when the index review will become effective.

Electro Optic Systems (EOS) is a specialist defence business focused on remote weapons systems (RWS) and counter drone systems. The group is set to benefit from increased defence spend globally along with the rapid emergence of drone warfare and the subsequent requirement for asset protection systems. A strong balance sheet and restructured cost base provide a solid platform through which these opportunities can be leveraged.

Electro Optic Systems (EOS) is a specialist defence business focused on remote weapons systems (RWS) and counter drone systems. The group is set to benefit from increased defence spend globally along with the rapid emergence of drone warfare and the subsequent requirement for asset protection systems. A strong balance sheet and restructured cost base provide a solid platform through which these opportunities can be leveraged.

DUG Technology (DUG) provides seismic data processing services and software primarily to the oil and gas industry. As a small but innovative player in the field, the recent launch of elastic multi-parameter full waveform inversion (MP-FWI) technology gives the company the opportunity to gain market share despite the uncertain industry outlook. The recent Q325 update confirmed that order intake has returned to growth, supporting our forecasts for a recovery in revenue and profitability from FY26. In our view, this is not factored into the current share price. Uptake of solutions for immersion cooling and mobile high-performance computing (HPC) could provide further upside to our forecasts and valuation.