First Berlin Equity Research has published a research update on Kleos Space S.A. (ISIN: AU0000015588). Analyst Christian Orquera reiterated his BUY rating and maintained his AUD 1.60 price target.

Abstract
Kleos Space SA (Kleos) has published its Q3 2022 cash flow report and business update. The company’s cash receipts from customers amounted to €0.34m in Q3 and €1.3m after nine months. At the end of September, the company reported cash and cash equivalents of €3.9m. Mr Alan Khalili, a US citizen and Kleos‘ CFO since July, will transition to the CEO position by year-end. This decision will help Kleos acquire more contracts in the US, particularly from the government (e.g. National Reconnaissance Office contract). Kleos‘ co-founder and current CEO, Mr Bowyer, will focus on his present strategic role as Director. The company intends to hire a new CFO soon. Kleos expects the Vigilance Mission (KSF1) cluster to complete commissioning and reach formation in November, which is a trigger for revenue generation shortly afterwards. One of the four KSF1 satellites will become operational later due to a software issue, but this will not hinder the cluster’s first three satellites from delivering accurate RF data to clients. Due to KSF1’s tight timeframe to generate revenue by YE, we have lowered our FY 2022 revenue forecast to €1.2m (previously €2.2m). Patrol Mission (KSF2), which launched in early April and is also undergoing commissioning, is anticipated to begin operations in early Q1 2023. Observer Mission (KSF3) is scheduled to launch on the Transporter-6 SpaceX rocket by year-end, and management expects it to be operational during H1 2023. Kleos is close to meeting key short-term milestones. Our price target of AUD 1.60 and Buy rating remain unchanged.