Srt Marine Systems Share Discussion Threads

[yumyum] 11/7/2016 20:02

fft/ee,

In my opinion this financial year does look like a slam dunk in terms of increased revenues and profits (which after carried forwards losses are then taxed at 20%).

We do not know what the revenues will be. Period. However, I expect revenue this financial year to be north of £18m. SRT seem more concerned about things going too quickly rather than too slowly. Watch this space. CEO does not put pots of jam on AGM seats without supreme confidence. Let's share that with him and expect the share price to be north of £1 before end-March next year. Personally I expect it before Christmas and likely much sooner.

I do not think the market needs a good set of figures. What it needs is some sort of visibility. We (private investors) are able to see through the fogs of this business a lot better than the 'market'. The 'market' is barely able to do that. To the advantage of any educated buyer right now.

Jam-tinted spectacles maybe....

[eagle eye] 11/7/2016 18:59

fft,
No it certainly isn't as easy as that.
This year doesn't look like a slam dunk deal.
Bahrain is installed, but not sure when the next phase will commence.
The large Far East contract might not deliver that much revenue this year. Phase 1 might complete around Sept. At the AGM the suggestion was that a larger weighting than expected migh fall in Phase 2, but who knows what will fall in the current year to March 2017.
Unless anything else gets dragged over the line, H1 might not be too good (only my view).
I agree overheads likely to rise, but £7m looks high. I think £6m looks a more prudent figure.
Customer service staff has been ramped up ahead of schedule. I think SRT had two strong candidates and decided to take them both on, rather than be scratching around re-interviewing some months down the road.
Margins are higher in project work, so your 40% looks light. I'd suggest margins of 50-55% might be nearer the mark.
Revenue lumpiness has historically been the name of the game here. Can't dispute revenue of approx £30m gives rise to roughly 6.3p of earnings.
Lots of ifs and buts, but the market will want a good set of figures (and further contract wins) before the historic £10m turnover justifies the current £60m market capitalisation.

[crazycoops] 11/7/2016 18:46

That's why I've placed a big bet here fft and have been accumulating since March - that deal completely transformed the company and the market seems not to have valued it properly yet. The market tends to like reported and predictable numbers and SRT's history of over promising and under delivering has probably compounded the mooted market reaction (although some people have wised up over the past week or two). No doubt there is a lot of hard work for SRT in delivering these projects and winning new ones but they have a great foundation to build from.

[fft] 11/7/2016 17:27

Based on the last post, I just want to make sure I am in the right ballpark.Assuming the Indonesia contract revenues pan out at 10m this year, 20m next and 40m in year 3.Also assuming that other business this year only equals last year and that overheads are 7m (they have to increase as support staff taken on). Oh, and gross margins fall to 40%.With 18m turnover, profit before tax this year would be (18-7) * 40% = 4.4m which is EPS of 3.7pNext year with 28m turnover, pbt would be (28-7) *40% = 8.4m which is EPS of 7p.Year 3 is pbt of 16.4m and EPS of 13p.Any extra project wins would obviously increase those numbers.Surely, it can't be easy as that ?

[the prophet] 11/7/2016 12:43

carcosa
Yes, it does, but at the agm SRT said that they would not update the market until they had secured contracts to base an updating of forecasts on. Simon Tucker was mindful of missed forecasts in the past and they don't wish to repeat that again.
So the forecast for the current year is t/o of £12m and ptp of £0.7m. With a current market cap of around £60m, I think the market is expecting substantially more than those forecasts would indicate. Although, as ever, timing is the tricky thing.
A question at the agm to ST was along the lines that if the current order book of £70m is delivered within 3 years, then the t/o has to rise rapidly in that period. 'Yes' was ST's answer!

[carcosa] 11/7/2016 12:37

Current revenue forecasts is £12m for 2017. That sounds a tad understated, does it not?

(Edited to delete stupid statement)

[kinbasket] 11/7/2016 12:10

I'm looking at my Jar of Jam and thinking it's either a very confident or a very foolish CEO that pulls a stunt like that at an AGM.

I prefer the former and I don't expect to wait until October for more news.

Also enjoyed this years trip to MSN. Very worthwhile tour.

[the prophet] 11/7/2016 11:56

still looks good to me, cc, hopefully I ain't cursed it!
I agree, we need further deals to maintain momentum. The directors were all very confident at the agm.

[crazycoops] 11/7/2016 11:53

Looks like you might have spoken a little too soon TP :)

My only concern short-term (and I am here for a few years, so not really a concern) is that SRT typically won't provide a trading update now until October, so the current price momentum might need further deal announcements to keep it going.

[the prophet] 11/7/2016 09:59

break out alert, lovely!

[crazycoops] 09/7/2016 14:34

Blackrock sold out of a lot of small cap holdings pretty indiscriminately when a new fund manager took over. They will be judged on fund performance, not the ones that got away.Instis will buy in here at some point and they'll pay up to do so. SRT is just at the start of an exciting journey IMHO

[countryman5] 09/7/2016 14:24

The chances of an institution getting a stake here are slim. I wonder if those clever people at Blackrock ever check SRT out? In the real world somebody at Blackrock should lose their job.

[alter ego] 09/7/2016 14:18

It seems it's not just Asian waters where Chinese are illegally fishing. Africa is also being plundered according to this BBC article yesterday

www.bbc.co.uk/news/world-africa-36734578

the piece mentions a monitoring system provided by the EU but says:
"The subscription to the satellite system that drives the equipment costs 10,000 euro ($11,000; £8,500) a year and they just do not have the money."

Anyone have any more info on what this system is?

[9degrees] 09/7/2016 08:56

"Jam" "today "is a good idea and may need expanding on as an idea
James Dyson has a Dyson Brand sauce tomato ketchup!"serve with evertything engineered not grown!!good marketing tools .

[techno20] 08/7/2016 22:56

Apologies if this has already been posted, but if not interesting to see progress in Oman. From memory SRT were working with qnective......

Oman’s Almouj Marina boosts safety with new tracking software
Tuesday, 14 June 2016 09:59
Oman’s Almouj Marina, in partnership with Qnective, recently installed a new automatic identification system (AIS) to boost traffic control, collision avoidance, and navigational safety at the Marina in Muscat
Oman marinaAlmouj Marina features the largest breakwater in the world with an overall length of two kilometres, facilitating easy access and offering very safe mooring. (Image source: Almouj Marina)
The AIS control station can view any AIS equipped vessel under coverage range and can display the vessel’s position in real time. The pilot project has been successfully installed and tested at the Marina, and is presently fully operational on two vessels and one control station.
Almouj Marina is dedicated to not just improving its facilities but also adding value to the maritime industry in Oman, according to authorities.
The installing of the AIS falls in line with the goal to boost the safety and security of the operations at Marina.
Located within Al Mouj Muscat development at the heart of Al Marsa Village, Almouj Marina is a premier marina facility and flagship yachting destination accommodating yachts from 10 to 40 metres. Almouj Marina features the largest breakwater in the world, with an overall length of two kilometres, facilitating easy access and offering very safe mooring.

[interceptor2] 08/7/2016 21:24

I think your musings could be on the right track crazycoops, as you say ST has slipped some hints about some work for the major contract being brought forward, and in his podcast which I mentioned earlier he said "2015 was insignificant compared to this year"

So I wonder if the Jam today reference will be a new contract win or exceeding results this year? Both are a possibility imv.

SRT reminds me of THAL at 60p in 2013, which went on to 5 bag within a year after receiving a large contract, unfortunately for THAL additional contracts didn't follow, so SRT looks a stronger candidate with a known pipeline of over $200.0m.

[countryman5] 08/7/2016 21:23

Tension set to rise significantly next week in South China seas. All countries will be focusing on their MDM and security. Vietnam is clearly ahead of the pack.

[crazycoops] 08/7/2016 20:52

Musings:On two occasions ST has slipped hints that some work from phase 2 of the 9 March contract has already begun. I wonder if the AGM jam is as simple as ST knows H1 results will be stellar - i.e. Jam today?Perhaps a follow on to last time's AGM share price guesses(which was before my time), a "guess the H1 revenue figure".

[lavalmy] 08/7/2016 15:43

Indeed AE

They have their processes, however daft they seem to be to us. And rely on analysts, as opposed to doing their own legwork.

I get the impression, though, that they are trying to generate institutional interest, which will benefit us all. I did argue the point with my chartist pal, that they should just get on with the job and let the share price sort itself out. Unless, of course, they have the cash to allow share buybacks if they think the business is grossly undervalued. My pal seems to think that they may have the best interests of us shareholders at heart, so dividends, encouraging institutions etc might do better for us. If a takeover is the ultimate endgame, his argument disappears in a puff of logic, as they will only pay what they, with insider knowledge of the sector, think is fair. But do they really do so? Most takeovers result in value destruction by the acquiror, and I would strongly argue that everyone anchors on the most recent price. So if they can get the price up significantly by attracting institutional interest in order to achieve an even higher price from an acquiror, then so much the better.

Edit: Some, like your pal, anchor on the price they paid!

[alter ego] 08/7/2016 15:40

Sensible attitude crazycoops, we sometimes hear someone saying, "why would anyone be selling now?" but I've just spoken to a shareholder who was thinking of selling "because he was showing profit" after being under water for so long. My advice was to look beyond the share price and understand why it is going up.

[crazycoops] 08/7/2016 15:29

Over the next year or two, SRT might deliver "spectacular growth" rather than "just growth". High operating margins, predictable (increasing) earnings, global customers, huge order book and pipeline in relation to the current valuation - it could become a stock market darling. However, in this crazy, unpredictable economy we find ourselves in, I would settle for just a proportion of those future potential earnings.

As for an exit price, that depends on the valuation vis-a-vis the stage of the journey. If they hit £3 on a PER of 10 with a strong order book, I would be holding on for the value to out. But if they are on £3 with a PER of 120, I might conclude the price had got ahead of itself. Personally, I'm not setting a price target here. For now, I am confident they are undervalued based on the existing business, order book and qualified sales pipeline - I will continuously reassess based on business progress.

EDIT - this was in response to #2909

[alter ego] 08/7/2016 15:27

Agree La V and exactly what Simon Rogers said to me - the II's will wait until they see more reliable revenues ahead and will pay more to acquire a stake as a result. He also added that the name change would mean being assessed by more appropriate analysts (as well as journos)

[lavalmy] 08/7/2016 15:19

Not as yet, Boadicea. They are still in the semi-conductor subsector of the technology hardware and equipment sector. How or when they get out of that, I am not sure. Probably requires some paperwork and you may have reclassifications done every quarter.

The rationale given by Tucker at the AGM focussed more on the journalists (he mentioned the Times) who follow the Tech sector not having a clue what they do, nor being prepared to make the effort to do so. A defence analyst would have a much better understanding.

Separately, later on, Tucker was at pains to emphasize that they are not positioning themselves against mil-spec providers, but rather pitching below that super high-tech (and price) segment, as maritime domain awareness suppliers with multiple governmental users, customs, fisheries etc, not just defence.

WRT to attracting more institutional interest, along with accompanying press interest, which the name change and eventual reclassification is supposed to help, he did say that institutions wanted to see a bit more confirmation of these contracts. Of course, that is the advantage we private investors have. We can position ourselves in the expectation of these contracts, particularly given the Indonesian one. These institutions who adopt a wait-and-see approach are going to have to pay up big time.

[boadicea] 08/7/2016 15:01

Now being rated as a systems integrator rather than just a box maker?

[ramnik007] 08/7/2016 14:52

I'm certainly saving my AGM jam for the next new contract news. There is no use by date on the jam so news should be soon.