We Maintain Our Fair Value Estimate for Thales As We Confirm Our Expectations

Thales' business is well diversified with 48% of revenue coming from civil and 52% from defense. Escalating global security concerns, intensified by the conflict in Ukraine, are driving structurally higher growth in the defense market. We anticipate this growth will be uninterrupted for at least several years, considering that many countries, particularly in Europe, have underspent since the end of the Cold War. Thales group is strategically positioned to benefit, given its significant stakes in a broad array of major international defense projects. Thales derives approximately 68% of its defense revenue from Europe, and we expect the collective defense budget there to increase by almost 35% in the next five years.