CSG Management Fires Back at Short Seller With Production Guarantees and a May 20 Earnings Deadline

Czech ammunition maker CSG refutes Hunterbrook Capital's claims of inflated production, releasing detailed data to defend its growth story as shares tumble.

The Czechoslovak Group (CSG) is fighting a two-front war: one against a bearish hedge fund that has shredded its stock, and another against the market's growing skepticism about its growth story. The ammunition maker's management has now gone on the offensive, releasing detailed production figures and financial clarifications in an effort to halt the slide.

Hunterbrook Capital struck hard on Monday, sending shares at the Amsterdam exchange into a tailspin. The short seller accused CSG of inflating its artillery shell production capacity, claiming actual output fell short of the 600,000 units the company had previously communicated. The stock briefly touched a 52-week low of €15.73 before staging a modest recovery. By Tuesday, the shares had clawed back to €17.12, though they remain deep in the red.

The management's rebuttal was swift and data-heavy. CSG confirmed it produced roughly 630,000 large-caliber rounds last year — a figure it says Hunterbrook misinterpreted due to the company's fragmented manufacturing footprint across multiple sites. For the current year, the group plans to expand capacity by about 20 percent, powered by a new production line in Slovakia. The medium-term target remains to breach the one-million-shell threshold.

Hunterbrook also raised red flags about hidden liabilities and the status of a subsidiary. CSG addressed this head-on, pointing to an outstanding receivable from pre-IPO sales. The company booked the full €275 million payment in the first quarter, with selling prices based on independent valuations, according to management.

The short-seller assault landed in an already fragile market. CSG pulled off the largest IPO of a pure-play defense company earlier this year, raising billions. Since then, the stock has been in freefall — down roughly 33 percent in the past month alone and nearly halved from its all-time high.

Yet the operational picture tells a starkly different story. The order backlog stands at over €15 billion. Revenue surged 72 percent last year, with an adjusted operating margin of 24.1 percent. Moody's upgraded the company's secured debt to investment-grade Baa3 in February, while JPMorgan analysts praised the "extremely solid" balance sheet. They expect net debt to fall to 0.7 times operating earnings by the end of 2026.

The stock's woes are compounded by speculation about a potential ceasefire in Ukraine. Market participants worry that an end to hostilities would puncture the defense boom. CSG's leadership dismisses this scenario outright. A halt in fighting would not cancel orders, they argue, but merely shift demand from ammunition to broader modernization programs. European rearmament and alignment with NATO standards remain structural drivers.

All eyes are now on May 20, when CSG releases its first-quarter results. It will be the first financial report since the IPO to include the retroactively booked listing costs. Analysts are bullish: all nine covering the stock rate it a buy, with an average price target of €35.40 — more than double the current trading level. The numbers will provide the first real test of whether management's promises can outgun the short sellers' doubts.