CSG’s Slovakian Pivot: Can Local Production and Army Contracts Reverse a 50% Share Price Rout?

Defense group CSG showcases at IDEB but shares trade near 52-week low; short-seller questions output, NATO bans Spanish unit, EU loan deadline looms.

The Czechoslovak Group rolled out its full arsenal at the IDEB defense fair in Bratislava this week, showcasing everything from artillery shells to armoured vehicles. The message was clear: CSG wants to be the go-to supplier for the Slovakian military’s modernisation drive. But back on the trading floor, the reception was far less enthusiastic. The stock closed at €16.22 on Thursday, more than a third below its €25.00 initial public offering price from January.

Despite a 2.35% bounce on Friday that took shares to €16.66, the equity remains dangerously close to its 52-week low of €15.73. The company is sitting on a record €6.7 billion in revenue and a €42 billion order backlog, yet the market has chopped the stock in half since January’s high.

Short-seller doubts over production reality

The heaviest blow came from New York-based Hunterbrook Media, which published a critical report on CSG in early May. The short-seller’s central claim is that the Czech defence group is not a genuine munitions manufacturer — that it mostly refurbishes old inventory rather than building new rounds.

CSG’s IPO prospectus states an annual capacity of roughly 630,000 large-calibre projectiles, of which 80% are the critical 155-millimetre shells. Hunterbrook disputes that figure, estimating actual output at between 100,000 and 280,000 units per year. The company counters that its production will hit 630,000 rounds in 2025, with a 20% increase pencilled in for 2026. A new line in Slovakia is expected to add another 70,000 shells. CSG is considering legal action against the short-seller.

The stock plunged 13% in a single day after the report and has yet to recover.

A narrow NATO ban with limited bite

Adding to the pressure, the NATO Support and Procurement Agency temporarily suspended CSG’s Spanish subsidiary, Fábrica de Municiones de Granada, from certain procurement procedures. CSG dismisses the ban as geographically narrow and says a forensic audit found no irregularities. The group stresses that FMG continues to deliver directly to individual NATO member states, whose national defence budgets are far larger than the agency’s own procurement pot.

The two issues — the short-seller attack and the NATO ban — have fed a broader narrative of governance and operational risk that investors are struggling to shake off.

EU deadline puts Slovakian framework under scrutiny

A time-sensitive factor hangs over the stock: the European Union’s SAFE programme offers defence loans at just 1% interest, provided the contracts involve at least two member states. That window closes at the end of May.

CSG signed a framework agreement with Slovakia in February covering possible munitions deliveries worth €58 billion over seven years. No other EU country has formally joined so far. Romania’s defence ministry has denied ministerial-level talks, while Croatia is still evaluating. CSG argues that the contract does not hinge on any single financing route, but Bratislava would find the package less attractive with costlier credit.

Local production as a counterpunch

Against this sceptical backdrop, CSG used IDEB to pitch itself as a partner for the Slovakian defence forces’ modernisation. The centrepiece is Project Karpat — a plan to expand CSG’s Slovak factories, share technology, and integrate local suppliers. The company showed off the new Pandur 8x8 EVO wheeled armoured vehicle with an active protection system, and the Patriot 4x4 aimed directly at Slovak requirements.

Defence Minister Robert Kali?ák had already floated the idea of a new medium battle tank suited to the country’s mountainous terrain. CSG’s offering includes not just armoured vehicles but logistics trucks from the Tatra-Force range and mobile command posts.

The logic is that local production — and local contracts — will blunt the short-seller narrative and demonstrate real manufacturing muscle.

Governance question lingers

Behind the operational headlines, a shareholder dispute simmers. Minor investor Petr Kratochvíl is said to have triggered a put option shortly before the IPO, with a potential claim of €1.4 billion. CSG points out that a related €275 million claim was settled in the first quarter. The difference between the two figures highlights the uncertainty that still clouds the company’s capital structure.

All eyes on the first quarterly report

All nine analysts covering CSG rate the stock a buy, with a median target of €35.40 and J.P. Morgan’s at €40. That implies more than 100% upside from the current price — a gap that reveals how deep the trust deficit has become.

The next big test comes on May 20, when CSG reports its first quarterly results as a listed company. Investors will focus on margins after IPO costs, cash flow from new orders, and progress on the planned acquisition of a 49% stake in Hirtenberger Defence Systems, which still needs regulatory approval.

For a stock that has lost half its value in four months, the numbers will need to speak louder than any armoured vehicle on display.