Saab AB: Riding the Defense Wave with Cutting-Edge Tech and Strategic Contracts

The global defense sector has undergone a seismic shift since 2022, driven by geopolitical tensions, modernization efforts, and the urgent need for portable, combat-proven systems. Swedish defense giant Saab AB (SAAB.ST) stands at the forefront of this transformation, leveraging its expertise in portable anti-armor and air defense solutions to secure landmark contracts and solidify its position as a key beneficiary of rising military spending. Two recent deals—the SEK 900 million NLAW order and the SEK 1.5 billion RBS 70 NG air defense contract—highlight Saab's strategic advantages, long-term framework agreements, and the scalability of its technology. For investors, this presents a compelling case for a stock primed to capitalize on enduring defense trends.

The NLAW: A Proven Workhorse in the Anti-Armor Arsenal

Saab's NLAW (Next Generation Light Anti-Tank Weapon) system, ordered by Sweden in December 2022 for SEK 900 million ($87.3 million USD), exemplifies the company's focus on recurring, framework-driven contracts. This order, part of an existing framework agreement with the Swedish Defence Materiel Administration (FMV), ensures a steady pipeline of deliveries through 2026. The NLAW's value lies in its simplicity and lethality: a shoulder-fired missile capable of engaging tanks from above at ranges up to 800 meters. Its combat provenance—deployed in Ukraine and Finland—has made it a go-to system for militaries seeking to counter modern armored threats.

The NLAW's success underscores Saab's ability to capitalize on geopolitical demand. With Finland, Lithuania, and other Nordic nations modernizing their arsenals, the framework agreement structure allows rapid, cost-effective procurement. This recurring revenue model reduces execution risk and ensures a stable order backlog—a critical factor for investors assessing Saab's financial resilience.

RBS 70 NG: A Mobile Air Defense Workhorse with Global Reach

The RBS 70 NG, Saab's man-portable air defense system, is equally transformative. A July 2025 order from Sweden for SEK 1.5 billion ($157.8 million USD) will supply missiles and integration equipment for Saab's Mobile Short-Range Air Defence (MSHORAD) platform. Deliveries begin in 2027, with the system's modular design enabling rapid deployment on vehicles, ships, or static positions. Key specs include a 9-km engagement range, thermal imaging, and a reload time of under five seconds—critical for countering drones, aircraft, and missiles in contested environments.

The RBS 70 NG's combat record is unmatched. In Ukraine, it has been credited with downing Russian aircraft and drones, while NATO allies like Canada and Latvia have integrated it into frontline operations. The system's versatility—used in over 20 countries, from Brazil to the UAE—reflects its global market appeal. Framework agreements, such as Latvia's SEK 2.1 billion deal (2026–2030), further lock in long-term demand.

Why Saab's Position Is Unassailable

Saab's strategy hinges on three pillars: technological edge, framework-driven revenue streams, and geopolitical tailwinds.

1. Technological Edge:
2. The NLAW and RBS 70 NG are not just weapons but system solutions. The RBS 70 NG's integration into MSHORAD platforms (e.g., mounted on BvS10 vehicles) exemplifies Saab's ability to adapt to evolving threats.

3. Both systems leverage combat-proven designs, reducing development risks and accelerating adoption by militaries.

4. Framework Contracts:

5. Framework agreements, such as Sweden's, enable Saab to secure multiyear, recurring orders without competitive bidding hassles. This model is critical in volatile markets, as it provides visibility into future revenue.

6. The RBS 70 NG's global framework deals (e.g., with Lithuania and Latvia) ensure scalability, as countries on NATO's eastern flank prioritize air defense modernization.

7. Geopolitical Demand:

8. Post-2022, European defense spending has surged, with NATO members pledging to meet 2% GDP targets. Saab's focus on portable, interoperable systems aligns perfectly with this trend.
9. The Ukraine conflict has amplified demand for systems like the RBS 70 NG, which are effective against drones and low-flying aircraft—key threats in modern warfare.

Financial Outlook: A Robust Order Backlog and Growth Catalysts

Saab's order backlog stood at SEK 58.4 billion at the end of 2024, with defense systems like the RBS 70 NG and Gripen E jet driving growth. The company's diversified product portfolio—spanning missiles, radar systems, and combat aircraft—reduces reliance on any single market or technology.

The RBS 70 NG's global adoption (e.g., Australia's $100 million aid package to Ukraine) opens avenues for secondary markets and aftermarket sales. Meanwhile, Saab's partnership with Lockheed Martin on the NASAMS air defense system (which integrates the RBS 70 NG) expands its reach into U.S. and allied markets.

Investment Thesis: Saab as a High-Potential Defense Play

Saab's combination of recurring contracts, combat-proven tech, and geopolitically aligned demand positions it as a top-tier investment in the defense sector. Key catalysts include:
- Framework Agreement Wins: Ongoing negotiations with NATO members and Middle Eastern countries could expand the order backlog.
- MSHORAD Scalability: As militaries prioritize mobile air defense, Saab's platform could become a standard for rapid deployment.
- Stock Performance: With a 5-year average annual return of ~12% (vs. 8% for the OMX Stockholm 30), Saab has outperformed peers, signaling investor confidence.

Risk Factors: Overreliance on Swedish government contracts and geopolitical uncertainty in key markets (e.g., Ukraine) pose headwinds. However, the diversification of its customer base and product line mitigates these risks.

Conclusion: A Stock Built for the Modern Defense Era

Saab AB is a prime example of a company capitalizing on the structural shift in global defense spending. Its focus on portable, modular systems like the NLAW and RBS 70 NG, combined with long-term framework agreements and a robust order backlog, makes it a compelling investment for those looking to profit from sustained military modernization. For investors seeking exposure to a company at the nexus of innovation and geopolitical demand, Saab offers both stability and growth potential—a rare combination in today's volatile markets.