Airborne Surveillance Analyst Briefing

1

We Accelerate Growth

Eyes In The Sky – Airborne Surveillance

Take Flight to New Heights

Chern Wai Cheong

Research Analyst

Aerospace & Defense

July 16, 2008

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www.frost.com

1. Frost & Sullivan Value Proposition

2. Market Overview

3. Developments & Trends

4. Total Market Segment and Highlights

Agenda

3

Frost & Sullivan Value Proposition

The Growth Consulting Company

Founded in 1961

10,000+ clients worldwide

including emerging companies,

the global 1000, and the

investment community

Over 1,700 Consultants /

Analysts across 32 global

locations in 21 countries

Offer the exclusive Growth

System including: Growth

Consulting and Growth Team

Membership™

Developers of the Growth

Excellence Matrix – industry

leading growth positioning tool for

corporate executives

Developers of Growth Team

Membership™ proprietary

process to ensure that clients

receive a 360°perspective of

technology, markets and growth

opportunities

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Industry Breadth

Aerospace &

Defense

Automotive &

Transportation

Chemicals, Materials &

Food

Energy &

Power Systems

Environmental & Building

Technologies

Automation &

Electronics Healthcare

Information & Communication

Technologies

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Commercial Aviation

ATM & Airports

Defence Logistics

Airborne Platforms & Avionics

Remote Sensing & Space

Aircraft & Engine MRO

Homeland Security

C4ISR & Autonomous Systems (UV)

Main Focus Areas

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Introduction

Professional Services

Growth Partnership Services

Growth Consulting (GC)

GrowthTeam

Membership™

• Defense Procurement

• Programs

• Partnership Assessments

• Market Entry & Product Strategy

• Competitor Benchmarking

• Business & Corporate Development

• Market Dynamics & Evolution

• Market Challenges & Opportunities

• Market Forecasts & Financial Research

• Market Demand Assessment

• Competitive Analysis & Profiling

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www.frost.com


2. Market Overview



Agenda

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Market Overview

Market Coverage – Asia Pacific

JapanSouth Korea

Philippines

Taiwan

New Zealand

Australia

Singapore

Malaysia

Indonesia

Thailand

Japan

Philippines

Taiwan

New Zealand

Australia

Source: Frost & Sullivan

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Market Overview

Asia Pacific Military Expenditure Analysis

Total Military Expenditure Market Share Analysis (Asia Pacific),

2007

Australia

17%

Japan

40%

South Korea

22%

Taiwan

7%

Thailand

2%

New Zealand

1%

Philippines

1%

Singapore

6%

Malaysia

2%

Indonesia

2%


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Air C2ISR Supply Chain Overview

Market Overview


System Integrators

Local Foreign

Ministry of Defense / Procurement Agencies

OEM / Suppliers

Hardware Software

MROService Providers

ArmedForces

Navy

Air Force

Army

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Market Overview

Air C2ISR Market Definitions


Market Definitions (Asia Pacific), 2007

Reconnaissance

C2ISR

Land Systems

RadarsSensors(EO/IR)

SurveillanceIntelligence

Sea Systems

Air Systems

Command Control

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Market Overview

Air C2ISR Platform Definitions

Airborne Early Warning Aircraft

Maritime Patrol Aircraft

Combat Aircraft

Air C2ISR Platforms

HelicoptersUnmanned

Aerial SystemsAerostats

Air C2ISR Platform Definitions (Asia Pacific), 2007


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Market Overview


Air C2ISR Technology Overview

Airborne Early Warning

Aircraft

Maritime Patrol Aircraft

Combat Aircraft

Airborne Platform

•Grumman E-2 Hawkeye•Boeing E-767 AWACS•Boeing E-737 AEW&C•Saab ERIEYE AEW&C•Lockheed P-3 Orion•Dirgantara CN-235 MPA•Beechcraft King Air•Boeing P-8A Poseidon•Fokker F50•Nomad•DHC-8•Lockheed F-16•Boeing F-4 Phantom II•Grumman F-5•Boeing F-18 Hornet

Radar•Lockheed AN/APS-145

•Northrop AN/APY-2

•Northrop MESA

•Saab PS-890 ERIEYE

•Elta EL/M-2022(V)3•Thales Ocean Master

•Raytheon SeaVue

•Raytheon AN/APY-10

•Galileo GRIFO

•Raytheon AN/APG-73•Northrop AN/APG-68(V)9

•Raytheon AN/APG-79 AESA

EO/IR Sensors•Northrop Night Hunter II

•FLIR AN/AAQ-21 Safire

•FLIR Star Safire II

•Raytheon AVES

•Lockheed LANTIRN•Northrop LITENING

•Raytheon ATFLIR

•Lockheed Nite Hawk

•BAE Systems ATARS

•Lockheed IRST•Thales Damocles

•Lockheed SNIPER ATP

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www.frost.com


2. Market Overview

3. Developments and Trends


Agenda

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Development and Trends

MARKETMARKET

DRIVERSDRIVERS

NetworkCentric Warfare

NetworkCentric Warfare

Rising TerroristThreats

Rising TerroristThreats

Technological Advancements

Technological Advancements

ModernizationPrograms

ModernizationPrograms

Market Drivers


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MARKETMARKET

RESTRAINTSRESTRAINTS

HighProcurement

Costs

HighProcurement

Costs

Long Shelf Life of Radar and

EO/IR Sensors

Long Shelf Life of Radar and

EO/IR Sensors

Lack of LocalExpertise

Lack of LocalExpertise

Tight DefenseBudgets

Tight DefenseBudgets

Market Restraints


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Industry Challenges

Industry Challenges

Understanding the NeedsOf Armed Forces

Understanding the NeedsOf Armed Forces Information SuperiorityInformation Superiority

Changes in GovernmentAdministration

Changes in GovernmentAdministration

Narrow Significant Technology Gaps

Narrow Significant Technology Gaps


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www.frost.com


2. Market Overview



Agenda

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Total Market Segments and Highlights

Air C2ISR Platform Analysis

Airborne Early Warning & Control Fixed-wing Aircraft Analysis

(Asia Pacific), 2014

Boeing 737 AEW&C

26%

Boeing 767 AWACS

9%

Grumman E-2 Hawkeye

54%

Saab Erieye AEW&C

2%

Gulfstream G550 CAEW

9%


Singapore selects Gulfstream G550 CAEW

Thailand acquires Saab 340 ERIEYE

Boeing’s 737 AEW&C for Australia

and South Korea

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Maritime Patrol Fixed-wing Aircraft Analysis (Asia Pacific), 2014

BN-2

6%

P-3 Orion

62%

F50

2%Falcon 900

1%

Gulfstream 5

1%

Beechcraft King Air

6%

Nomad 22B/22SL

3%

F406

1%

F27-200

1%DHC-8

6%

Saab 340

1%

Boeing 737-200

1%

P-8 Poseidon

5%C 212

1%C 235

1%

YS11

2%

Boeing targets Australia, South Korea,

Thailand forP-8 Poseidon

South Koreaseeks CN-235

for Maritime patrol

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Combat Fixed-wing Aircraft Analysis (Asia Pacific), 2014

F-16

17.3%

F-18

4.9%F-2

4.6%F-4

16.4%

F-5

29.5%

F-CK-1

5.1%

Gripen

0.6%

F-15

12.2%

A-4SU

0.2%

SU-27

0.2%

A-7E

0.7%

SU-30

1.1%

Alpha Jet

1.0% AV-8

0.4%

Mig 29

0.8%

Mirage 2000

2.5%

Hawk

2.2%

Beechcraft King Air

0.3%


Singapore’s F-15SGsto be equipped withSNIPER ATP pods

Australia buying ATFLIR for its

F-18E/F Super Hornet

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Air C2ISR Revenue Analysis


AESA technology willdrive the increase in

revenue for theradar market

High definition and digital imaging will

drive the EO/IR sensors market in revenues

1.5

2.0

0

0.5

1

1.5

2

2.5

Rev

en

ues (

$ B

illio

n)

2007 2014

Year

Air C2ISR Revenue Forecasts (Asia Pacific), 2007-2014

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Key Industry Players

• Boeing

• Lockheed Martin

• Northrop Grumman

• Raytheon

• Galileo Avionica

• Thales

• FLIR Systems

• BAE Systems

• Saab

• L-3 Communications

• Elta Electronics

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Conclusions

• Key strategies in maintaining high quality products at lower costs is to

invest in local research and development to produce C2ISR capable

platforms and systems.

• Joint ventures and strategic alliances between local and foreign defense

contractors would enable better market penetration.

• Acquiring advanced technologies would enable armed forces in this

region to effectively combat rising terrorist threats.

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