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SRT CEO, Simon Tucker introduces us to the company, the market and where the growth is coming from. According to finnCap forecasts (5 April 22) SRT is looking to increase revenue 5x by FY23 when they will move into a healthy profit.
Watch the video here: https://www.piworld.co.uk/company-videos/srt-marine-systems-srt-investor-presentation-may-2022/
Or listen to the podcast here: https://piworld.podbean.com/e/srt-marine-systems-srt-investor-presentation-may-2022/
Well what we got was a pretty standard webcast with no Chairman. The Saudi contract accelerated plus already engaging in upgrades, the 130 Mill contract hinted at (twice?) and component shortages' while ongoing were not to problematic. Importantly all seems well anyway and the VSL is progressing.
I remember SRT saying some years ago, in a webcast, that an aim might be to get the transceiver side revenue to cover the whole running costs. Perhaps a little ambitious but if one adds in the ongoing revenue from the ongoing data transmission fees (which were non-existent then) there is a possibility that with Nexus this could actually happen. Imagine contract margins dropping straight to the bottom line! Onwards and upwards I think.
Thanks for the info extrader. I don't think SRT will give any specific pointers to this but it will be interesting to see if it is mentioned and how much emphasis is put on it if so. There are 2 points that have interest for me, one is the state of the VSP and the electronic chip situation is the other. As an aside apparently captured Russian amour vehicles have some domestic white good chips as Russia is unable to import the ones it wants! So perhaps there's more for the rest of us!?
The trouble is that SRT can do nothing about either of them. Should get an update on Nexus which SRT was quite bullish about at the AGM. One final point is that the tone may well be different from the quarterly webcasts which in itself will be interesting. I'm looking forward to it as our story now is a good one. If we land 2 contracts in the next 7 months then all our troubles will be over and gosh the prospect of a divi will rear it's head by next March - can't believe it!!!
Hi TT,
My understanding is that Blue book is wishlist (unspecified sources of funding) and green book the better defined /more advanced.
You point rightly to Spain (but I think 61, not 64 ?, at $ 160m)) for which there is also a phase 2 (Spain/France) at $ 200m.
LaValmy earlier acknowledged the overlap, but points to the overarching 'coordination' terms of reference of Bakamla, see an earlier post of his (12 April):
.." think I may have missed the relevant project in the blue book issued by Bappenas. The one that SRT are actively pursuing is with our old pals Bakamla on pages 194 onwards.
This specifies one primary command centre with a back=up and 35 'packages of coastal stations'. All quite vague really, but the total is US$180,000,000 which is the £130 million being talked about.
What connection that has with the other projects on pages 124 and 131 for the fisheries surveillance program I don't know. These two total $162 and $200 million respectively and include lots of different things. But to my mind it would be daft to have and not use the Bakamla backbone. The objectives of the Bakamla project are:
a. To integrate the national maritime early warning system among related maritime security stakeholders;
b. To strengthen coordination among related maritime security stakeholders;
c. To enhance the efficiency and effectiveness of law enforcement in Indonesian Waters and Indonesian Jurisdictions.
It would seem co-ordination would indeed have a spillover effect on the specifications of these other projects. I understand that SRT is in pole position on the Bakamla one though that is no guarantee that the government will chose them. What will be key is what the specifications are in the tender as it is this which pre-determines the winner. The tendering process may start in a couple of months, though I don't know how much information will be easily available - I understand that the tender will be closed to only three potential bidders...."
I'm passing this on in good faith, for greater clarity perhaps you'd be better contacting him directly for any further insights he may have.
ATB
Hi extrader, Just had a look but also noticed No 64 which seems to be a similar project but appears to have Spain as the country involved? Not to sure about the Green Book - just because a project is on it, is it certain to go ahead? I hope it's not just a wish list?
Hat tip to LaValmy for this, which may be hinted at in the webinar (Indonesia)...
.."Talking about over-promising and under-delivering, Bappenas has just delivered the Green book for 2022.
hTTps://perpustakaan.bappenas.go.id/e-library/file_upload/koleksi/migrasi-data-publikasi/file/Blue_and_Green_Book/Publikasi%20List%20DRPPLN%20(Green%20Book)%202022.pdf
No 84 on the list is Bakamla's project for $180 million. Now, of course, that is no guarantee that the project will necessarily go to SRT, but, given that the Germans, UK, Norwegians and French are all providing the finance, it must be binary as to whether it is SRT or not. I don't know how long it will take to contract, months probably but before the New Year, so they will not be able to announce anything until then, but anything in the broker's note or even next week's presentation about their confidence levels will indicate whether it is in the bag or not. My guess is it is...."
SRT CEO, Simon Tucker and CFO, Richard Hurd will present the company, the opportunity, how they are executing on strategy and the outlook.
Wednesday, 18 May, 4:00pm
Join us here: https://bit.ly/SRT_webinar
Good to see the publicity. Not to sure what regular viewers to SRT's usual webinars will gain but I'm looking forward anyway. Now wouldn't it be good if we announced a new contract before the 18th.....
SRT CEO, Simon Tucker and CFO, Richard Hurd will present the company, the opportunity, how they are executing on strategy and the outlook.
Wednesday, 18 May, 4:00pm
Join us here: https://attendee.gotowebinar.com/register/2786437765213338893
You may have caught it by now but if not it's typical SRT (as I now call him!) A really good take on the situation - no showstoppers but he doesn't do that - so no SP action. A really good heads up on a very positive situation once supply chains are sorted. A straight forward presentation.
Did anyone catch the webcast ?
I'll get the replay later, but wondered if there were any quick take-aways ?
S/p (in)action suggests not....
TIA
I too intend to go this year - thoughely enjoyed my first last year, there was a good feel/atmosphere. Should be a really positive AGM with any luck! Because of the small numbers it was actually held at the premises which I thought was a bonus.
That's right SRT runs SRT - I think that was one of the motivations of the name change from Software Radio.
I agree the company is very open with shareholders: possibly the best shareholder involvement I've ever come across - whenever I have had a query, I'll email the website & usually Simon replies personally in a matter of minutes. I think maybe part of the reason for this is there is a very heavy shareholder base among the employees & ex-employees (which is why we often see price moves & volumes moving before RNSs. Bit naughty , but hard to prevent it.
I will try to get to the AGM again this year.
Yes Simon is perhaps a little optimistic but he does do his best to temper it with a dose of realism. I guess it's one reason he does the webcasts which is one of the reasons I'm here as a shareholder.
At the last AGM he said (anonymously) that one of the chief negotiators of one the 'imminent ' contracts told him, at the beginning of the month (September) that the decision to proceed would be made within 10 days. He then said that was 3 weeks ago but that the guy was serious. Should he have shared that - perhaps not - but it's because he tries to be as open as possible that he did. Personally I appreciate this trait.
PS. I only recently realised the ST's middle name is Richard - now that's what I call Cool!
Historically, if Simon has a problem it is in being over optimistic, so in some ways it's nice to see a more cynical view. I think it's important to watch the webcast on Friday. They usually give far more detail than the official RNSs.
Of course one problem with last year's results is one of timing. Project payments are large but are well spread, so the timing of invoices either side of a period end can make a big difference the the figures.
The potential is still huge. It would just be nice to see a bit more of it getting realised.
Simon might have been disappointed with the results but now that's all done with he's bought himself another 61, 122 shares. Would seem fair to infer confidence.
Hi Ecologist, I think it's pretty much as expected but a 7 Mill loss is perhaps a disappointment? All of the potential contracts seem bogged down and the VSP grows all the time but surely they must free up at some point. I hadn't realised the higher effect with slow supply issues on the transceiver business.
I intend to buy into my ISA tomorrow so I've got mixed feeling about the update. However as the song says "What's another year?" Rodney time must surely come!
The update seems to be pretty positive given the pressures that Covid placed on the world economy, including supply issues. I felt quite optimistic reading through the text. That is until I got to Simon Tucker's contribution of " ... I am disappointed with the poor financial results."
Hey ho, spanner in the works by the CEO.
price action shows some of those sells are likely buys
Yes, I noticed that. Two big purchases this morning. I wonder if someone knows something?
UPDATED FEB 2022
Aim-traded SRT Marine Systems (SRT:44p), a global leader in AIS, an advanced identification communications technology used to track and monitor maritime vessels, has now signed a £40m contract with a national coastguard for a national scale marine domain awareness (MDA) system to track, monitor and manage all maritime activity in their territorial waters. A further £30mn of contracts are expected to be signed imminently, too. These awards not only put the business firmly back on track after Covid-19 travel restrictions delayed contract implementation, but support a major ramp up in SRT’s profits to reverse three years of losses.
To put this into perspective, house broker finnCap expects annual revenue to rise seven-fold to £56mn in the 12 months to 31 March 2023 to produce a cash profit of £11.1mn and pre-tax profit of £6.8mn. On this basis, expect earnings per share (EPS) of 4.1p. Moreover, operating cash flow is forecast to rise 13-fold to £7.8mn which should produce free cash flow of £2.5mn after accounting for interest payments (£0.7mn) and capital expenditure (£4.6mn). The estimated free cash flow is forecast to slash net debt from £6mn to £3.5mn by 31 March 2023, thus transferring more of the economic value from debt to equity holders.
Furthermore, profit forecasts are conservative as they exclude “several additional significant contracts from the current pipeline that management expect to sign”. In fact, SRT’s directors have increased their validated sales pipeline from £550mn to £600mn since I highlighted the investment case (‘Making waves’, 6 January 2022) even though the £40mn major contract has now been converted. Please note I still believe that SRT could be making £10m of annual pre-tax profit if three other contracts (two in the Middle East and one in Asia) are converted. These are worth worth £54m of additional revenue.
It’s worth noting, too, that the electrical component supply chain issues that have held back deliveries in SRT’s smaller transceiver business are expected to ease in the next 12 months, thus enabling the group to fulfil its growing order back log and ongoing end-user demand. For example, SRT’s em-trak marine electronics subsidiary has just received a contract to supply commercial AIS Class A transceivers to the Panama Canal.
Trading on a modest price/earning (PE) ratio of 11 for the 2022/23 financial year, and with major MDA contracts now being converted, I am raising my target price from 55p to 65p with the investment firmly risk skewed to the upside. Buy.
Simon Tucker, Chief Executive Officer bought today at 33.1p , approx 9k worth takes his holding to approx 2.8 million
The Placing document says they were willing to take up to £ 7m, but as it turned out they only placed £5m. So institutions somewhat 'underwhelmed'.
PI's buying now , of course, benefit the seller's cash position, not SRT's.....
The placing price pretty much always becomes available to the PI , as it is now