Sectors: Defence

EOS +23.02%: Produced a dramatic operational turnaround in 1H26, with revenue almost quadrupling and underlying EBITDA swinging firmly into profit, but the numbers were uneven relative to expectations.

Counter-drone technology company DRO produces systems that detect, track, and defeat unmanned aerial threats i.e. how wars will be fought in the next decade. The stock, like the sector, surged dramatically in 2023–24 on the back of Ukraine-driven demand but has given back significant ground since late 2025 following one of the most significant corporate governance crises on the ASX in recent years:

Defence ETFs have quickly become one of the market’s fastest-growing thematic exposures – nothing unusual here, ETFs follow performance as they search for turnover. VanEck launched DFND in September 2024 as Australia’s first dedicated defence ETF, with BetaShares (ARMR) and Global X following within weeks as investor demand surged alongside rising geopolitical tensions and record global military spending. Both funds peaked in January 2026 amid peak optimism around European rearmament and NATO spending before pulling back, although DFND has still delivered the stronger return since inception.

The question we ask today is whether Hanwha’s bid demonstrates that deep seated value has returned to the defence space. 

EOS is a very different investment proposition to DroneShield. Revenue has been far more volatile, fluctuating between $128 million and $219 million over the past five years as the business remains heavily reliant on winning large government contracts. FY25 was particularly challenging, with revenue falling to $128 million and earnings (EBITDA) declining to a $24 million loss, highlighting that the company has yet to establish consistently profitable operations.