RE: Simon Thompson tip today13 Jul 2020 16:30
IC article today
''Work has recommenced on SRT’s flagship Philippines fisheries management system project. A significant cash payment has been received on the contract, too, thus allaying any cash flow concerns. The revised project plan is to accelerate implementation to make up for as much of the time lost due to the Covid-19 lockdown as possible.
There has been good news from the Middle East, too. Two new national vessel tracking systems awards and a smaller system upgrade had been delayed due to Covid-19 lockdowns, but final contract negotiations are expected to conclude imminently with the projects commencing in the coming months. The Philippines and Middle Eastern contracts are worth over £100m in revenue to SRT, or more than five times its annual revenue in the last financial year. I estimate that these contracts should contribute upwards of annual revenues of £50m and operating profit of more than £10m. Also, SRT’s transceivers business, which made £8.1m in revenue last year, is performing better than expected with sales higher than in the first quarter last year.
When SRT reports annual results on Monday, 7 September 2020 I would expect further positive news on contracts and analysts to reinstate estimates. Based on my financial models, the £64m market capitalisation company should be in a net cash position by then, too. The strong profit recovery in the 2020/21 financial year is still being materially undervalued. Buy.''