Srt Marine Systems Share Discussion Threads

[eagle eye] 30/5/2018 20:22

goodapple
Share price drivers over the coming months:
1. Have a meaningful contract win (or two) and announce it.
2. Upgrade earnings after finals in July (on second thoughts, maybe not such a good idea as year end will-they-won't-they is a pain).
3. Announce trading update early Oct which makes everyone take notice.
H1 last year was £2.9m, so an easy comparative to beat. Strong evidence of cash collection would be a big plus.
4. Directors buying shares (a big tick for that one).

[countryman5] 30/5/2018 20:22

LAV.

My reading of the RNS, under 'update on progress', is that the French have refused to pay for Philo 2, hence 'This process has continued longer than initially expected due to budget re-allocation by the country's government from a foreign government loan to its own internal funds'.
I believe this is why the fundraising was necessary. If the French had honoured their ODA commitment the money would be in SRT's bank by now. The upside of the french refusal is that the Philippines will not trust the french again and CLS is toast in SE Asia. There are several SE Asia contracts coming.
Clearly the Philippines preferred SRT kit to CLS. What will CLS do about SRT?????
My view is that SRT are not sub contractors to CLS but you might know otherwise.

[lavalmy] 30/5/2018 18:58

I would think, as Papy02 says, inking of contracts, especially the Philippines subcontract. It is their biggest ever (excluding the delayed one) and involves radar, IR camera, catch reporting, satellite (which didn't get a mention) etc. It will also be paid mainly by a reliable source, viz the French government, with some extra from the Philippines.

And then the receipt of payments. Some £5.5 mn, which would give them the resources to start the satellite programme, which would in turn drive the share price upwards.

Lastly, any of this procurement stage VSP could happen at any time.

[papy02] 30/5/2018 17:53

Inking of contracts? Receipt of payments?

[goodapple] 30/5/2018 17:38

So now that the Placing is complete and the latest VSP projections are out there,and the share price has settled around 26p, what's left to drive the share price over the next few months?

[countryman5] 30/5/2018 15:34

The validated sales pipeline of £419 million would have had to pass muster both with the NOMAD and the company solicitor. I feel strongly of the opinion that T/O will soon be in the region of £40 to £50 million. Make your own stab at the share price when this happens.
EMTRAK sales are motoring, assisted by Buoy marker. When the Philippines and other contracts kick in there will be growing annual revenues of satellite data sales..A certain french company is going to be very very angry because SRT is the 'GO TO' company for these contracts both in SE Asia and the Mid East.

[lavalmy] 30/5/2018 15:21

It looks like they scaled it back from £6 million after the share price decline/leak. Whatever buffer the extra £2 million would give, they probably reckon will be made up from the ongoing contracts, specifically the Philippines.

The £30.5 mn of ongoing projects is slightly misleading in this regard, in that some £11.5 mn has already been booked, £5.0 in Kuwait and £6.5 mn in the Philippines from our best guesses.

It is unclear to me whether Kuwait is likely to order all of the transceivers (some $15mn) and call it Phase 1, or order some now as part of Phase 1 and the rest later. But it is clear that they have paid the £3.8 million debt for the system that was booked y/e 2017.

The Philippines has come in higher than I expected at a total of £25 mn. I was anticipating £20 mn or so. A good chunk of the remainder should be booked this year. We will have to wait for the broker's note, but I would have thought that with that, whatever from Kuwait and the run-of-the-mill business, they should not be far away from the £20 mn forecast, a couple of million shy maybe.

Had the Philippines come in earlier, they might well have avoided the capital raise for now, but probably would have needed some later on in the year, possibly obtainable at a higher share price.

Now the four near-term ones have either started (Philippines), will be partially started in a bit with the rest pushed out (Kuwait), or pushed into a bucket of ten in the procurement phase, we don't have a clue about what the likely news flow will be. Then again, we never really have had.

[hjb1] 30/5/2018 14:39

In all fairness, I think that there now is a lot more momentum to proceedings and now at last, we will see the deals coming in and paid for.
Just makes me smile with the vsp now at over £400m , he just can't help himself can he? lol.
What irks me is that the share price was at 35p before the leak and insider selling.So maybe could have got it done for 33p or so?

[pugugly] 30/5/2018 14:29

YUMYUM Good on the surface but a lot of undertow (to use maritime verbage) much jam tomorrw but it may not be realised. (imo)

[hjb1] 30/5/2018 14:29

wow! never seen so much jam...lol!

[yumyum] 30/5/2018 14:11

Very very positive indeed.

Well done SRT.

[effortless cool] 30/5/2018 13:54

£3m raised at 25p per share, £1.15m of loan notes refinanced, and lots of information on project opportunities.

I have added a long s/b to my core holding.

[countryman5] 29/5/2018 08:32

LAV.
Very detailed research, Thank you

[lavalmy] 29/5/2018 08:11

A bit of news from the Far East. Bakamla, the Indonesian Coast Guard, has caught 14 Vietmanese fishing boats in the Natuna sea. Bully for them.

The relevance runs deeper. As some will know, Vietnam was the project of the four on the front burner that was moved to the back burner. This in turn was because SRT was trying to get UK financing from a government space programme fund and presumably the space link was a bit too tangential. At around the same time as the project being put on the back burner, the EU issued Vietnam with a yellow card for its IUU fishing. This was because Vietnam had not put into action various recommendations from the EU about the issue. Remember too that this project was all and only about fishing boats and their catches, practically identical to the PHILO 2 project. Whether the timing of the yellow card had anything to do with the project going ahead, I don't know.

This month the EU sent a delegation to review the steps taken by Vietnam. The Vietnamese have been making a lot of noise about compliance, but most of this seems to be self-certification, i.e. a fisherman swearing blind that he would never, ever go fishing where he wasn't supposed to, and other fool-proof steps like that. This latest seizure by the Indonesians will not go unnoticed by the EU, but I doubt that they would be lifting the yellow card anyway.

The fish export sector is important to Vietnam. However they lack anyone of the clout of Thai Union (John West etc) to force a move by the authorites. The real impetus for reform is that the EU cannot sign the EU Vietnam free trade agreement with yellow card in place on the fisheries sector. So, if the EU does not lift the yellow card, then I would expect the Vietnamese to move ahead with the project even if they have to pay for it themselves.

[countryman5] 27/5/2018 11:22

Thoroughly recommend that investors read detailed email from Mr Tucker of August 31st, last year. LAV has put up a link above in his post 6878

[glavey] 27/5/2018 03:56

Why didn't they raise when the share price was circa 50p? Why raise shortly after the share price was at 20p? Looks like it was lifted out of the doldrums just to try to get a raise away. Then there's a leak. Someone felt it right for this to be out in the open. Clearly not the company. And otherwise too obvious to achieve anything in size. 25-30p? Not much of a discount compared to the vwap over the last month. Wishful thinking? A while to wait for published accounts.

[countryman5] 26/5/2018 19:52

I recognise the size and possible arrogance of CLS and they will be more than disappointed if the tortoise wins the race.(French pride is at stake here together with many other MDM contracts in SE Asia). If team SRT wins the race they should be declared Victor Ludorum and the leader should get a medal for winning against such biased odds. CLS like to announce their contracts just as SRT does. The fact that a result was due several months ago indicates that things have not been straight forward.
CLS could not sub contract the 3D part unless SRT was willing, whereas SRT could quite easily have a silent french partner in order to overcome the french bit. If the French renegue on an ODA funding agreement they will be laughed at within the international community.
You have identified that CLS could eat SRT for breakfast (If SRT shareholders want to be eaten). If CLS are beaten by the tortoise, how will they react? I would not agree to a CLS sale but other SRT shareholders might.

[lavalmy] 26/5/2018 18:46

Why have SRT not announced their victory?

CLS are a private company with no broker's targets to meet, so no need to impress or
pre-empt contract news. SRT on the other hand .....

What do you not understand about subcontracting - i.e. that a company can subcontract bits of a contract that it is unable or unwilling to do itself to another company.

CLS was founded in 1986. SRT in 1987. CLS has a turnover of more than €100,000,000. SRT doesn't. Which is the more successful start-up so far?

[countryman5] 26/5/2018 18:17

LAV,

Why do you think CLS have not announced their victory? How are they going to overcome the need for 3D? I don't buy it that they are the winners.

Just imagine that the company in which you are invested is the victor for this contract and therefore probably for all of the other forthcoming Philippines contracts, will CLS take it lying down or will they become upset?

[lavalmy] 26/5/2018 17:25

C5

Absolutely. CLS will have won the contract, with SRT as subcontractor. The financing for Phase 2 was agreed by the French government in 2015, as Phase 1 was being implemented. They are the majority shareholders in CLS. There is no competition in the bidding. One bidder, one winner. The only reason bidding is done is to comply with both Philippine and French regulations. There are no other French companies operating in this segment. The bidding documents are very specific that the bidder has to be French and has to have existing fishing boat tracking operations in place of a certain size. There is no other possible eligible bidder. SRT are not French and have no fishing boat tracking projects operational, as in none. And not a bit French.

[countryman5] 26/5/2018 17:12

LAV.

I recognise the size of CLS and possibly their arrogance towards the Philippines to the extent that they presumed that Philo 2 would go their way. How will they react, or are they reacting if that upstart from MSN beat them to win Philo 2?
My money is on SRT to win Philo 2.
LAV do you have thoughts on the winner of Philo 2?

[lavalmy] 26/5/2018 16:18

C5

CLS is by far the market leader in long range tracking of fishing boats (and other things such as fish). Nothing has prevented CLS from winning the contract as they are subcontracting to SRT the infrastructure and transponder side of the contract - they used SRT for the transponders in Phase 1 and are obviously pleased with the way it works (now much improved). The bidding document is rather specific about having several large fishing boat tracking systems already operational and no-one else does to the best of my knowledge, at least not French. CLS runs the Indonesian system and the Vietnamese system as well - these are for the biggest fishing boats. I think that bodes very well for SRT as these countries aim to expand coverage. You should read Tuckers reply linked below which explains the difference between legacy systems and what SRT can now do. It ties in quite well with HJB's recent quote of SRT's marketing blurb - 40% cheaper etc



I think it is rather helpful for governments to assist their companies to develop their overseas business, particularly in areas where the developing countries may not see the immediate benefits of this sort of investment or have more pressing needs. CLS had government backing in Vietnam and Indonesia. I am also reasonably sure that CLS suggested to SRT that they too try and get UK space programme support for SRT's Vietnam project - unfortunately that attempt failed. I understand that the UK did pay some £20 million as a grant to Airbus for them to develop a cheesegrater type of RADAR satellite. Possibly instead of bemoaning French support for their businesses, you might find another target closer to home?

CLS is reasonably acquisitive but in very specific segments. I doubt that they have any interest in SRT. Maybe Airbus, Thales etc might in the future.

Expletive

I am not talking about the leak. I am talking about short selling by an insider of some 300-400k shares twice. After the extreme share price drop the second time, then the Standard printed its story which included clear reference to the drop. As I say, this happened twice in three months, at a small scale for small profits by someone who doesn't seem to be very good at it.

[hjb1] 26/5/2018 16:06

so if it was someone who was 'brought inside' then they deserve an even bigger slap then!!

[expletive deleted] 26/5/2018 15:31

LaV,Any leak is not necessarily coming from LBG or FinnCap. It is much more likely that one or more if the institutions they have marketed to, who will all have been brought inside, is the source of the leak.

[countryman5] 26/5/2018 15:16

Lav,

I believe you are right to focus on CLS with regard to the Philo phase 2. I believe that they were awarded Philo Phase 1. I am not sure 'that the entire bidding document was prepared with CLS as the only potential winner'. The inclusion of a 3D requirement prevented CLS from winning the contract, whereas SRT might have found a notional french partner to circumvent the terms of the French loan agreement. I believe that we shall soon hear the outcome of the 28 million Euro Philo phase 2. If it belongs to SRT ,will this have an impact on the market's perception of SRT's potential?,
If CLS has not won the contract, CLS will be spitting 'fromage' at the 'Roast Beef' and will seek to take SRT out. If CLS can not win in the Philippines it knows that its business model won't work for all the other countries that it is bidding for against SRT. If it can't win with the help of a French loan, it is truly stuffed.I for one will never agree to sell out to CLS even at £2 per share.