CSG's €58 Billion Slovak Contract Under Scrutiny as Short Seller Attack Deepens

Czechoslovak Group faces investor skepticism, internal disputes, and regulatory hurdles despite record revenue and a €42 billion order backlog.

The Czechoslovak Group (CSG) is facing a perfect storm of investor skepticism, internal disputes, and external regulatory hurdles, even as its operational metrics hit new highs. The defence holding, which staged Europe’s largest defence IPO in January, has seen its Amsterdam-listed shares tumble roughly 53% from their late-January peak, closing Friday at €15.98. The sell-off has accelerated over the past month, with the stock losing around 36% of its value in that period alone.

At the heart of the rout is a scathing report from short seller Hunterbrook Media, which has challenged both the transparency of CSG’s internal dealings and the scale of its ammunition production capacity. The firm alleges that the company produces far fewer artillery shells than it claims, relying instead on refurbishing old stockpiles. CSG has pushed back forcefully, insisting on a vertically integrated production network that delivered approximately 630,000 rounds last year. Management is targeting a 20% production increase in 2026, underpinned by a new manufacturing line in Slovakia.

That Slovak connection has become a flashpoint. CSG is defending a controversial framework agreement worth €58 billion with the Slovak government, describing it as a seven-year potential arrangement rather than a firm order book — a structure it says is standard in the defence industry. But a ticking clock adds pressure: Slovakia is using the European SAFE programme to secure cheap financing for the deal, and that exemption expires at the end of May. If Bratislava fails to find a partner state by then, financing costs could rise, potentially delaying future orders for CSG.

The short seller’s report also zeroes in on a €275 million receivable from related parties, which CSG management dismisses as misleading. The company says the sum stems from the sale of non-core assets ahead of the IPO and was fully settled in the first quarter of 2026.

Beyond the noise, the operational picture remains robust. Revenue surged 72% last year to €6.7 billion, while the order backlog ballooned to €42 billion. Management is guiding for 2026 sales of up to €7.6 billion, with an operating margin of 24% to 25%. Nine analysts currently rate the stock a buy, with no sell recommendations in sight. JPMorgan has set a price target of €40, citing a solid balance sheet, while Moody’s upgraded CSG to investment grade (Baa3), pointing to improved corporate governance.

Strategic expansion continues apace. CSG has agreed to acquire a 49% stake in Austrian defence firm Hirtenberger Defence Systems, bolstering its mortar ammunition portfolio. A separate partnership with Poland’s state-owned PGZ will focus on developing new propulsion systems for unmanned platforms and rockets, opening doors to future EU and NATO defence programmes.

Yet the headwinds are mounting. A minority shareholder exercised a put option just before the IPO, now demanding €1.4 billion for a 10% stake in CSG Land Systems. Separately, NATO’s procurement agency temporarily suspended a Spanish CSG factory, which the company describes as a procedural measure linked to an internal investigation against an agency employee.

All eyes are now on May 20, when CSG reports first-quarter earnings. The release will include IPO-related costs incurred since the start of the year, and investors will scrutinise whether operating margins can hold steady despite those one-off charges. If the stock fails to find support at its recent low of €15.73, further downside could follow.