Srt Marine Systems Share Discussion Threads

[pugugly] 03/8/2018 17:43

Transaction allocation today suggests that there may be a sell tip relased - Anyone seen one ?

[lavalmy] 03/8/2018 13:54

I found this of interest:



In the late eighties, when I was training as a Chartered Accountant, one of my construction clients did a lot of work building hospitals, prisons and the like (pre-PFI). Their year-end was set to 31 March, deliberately to enable the various government departments to 'prepay' on account any unspent amounts remaining on their capital budgets. Excellent for my client's cashflow and balance sheet presentation.

I imagine that similar pressures will arise in the Philippines. That doesn't mean that they will not be able to contract for multi-year projects, but that they will have to submit in each annual budget the amount required for a specific project for that year. Unspent amounts, over the three months this new measure seems to allow, will be paid out ahead of 'deliverables', or in other words the BFAR might well find itself encouraging a bit of pre-emptive invoicing. For that, as chance would have it, they seem to have picked the right contractor.

[the oak tree] 31/7/2018 22:46

Not a holder but very occasionally look this up to see how it going, hoping for a bargain!

What happened to the guy that used to post here alot? Think it was prophet maybe. Perhaps just sold up and moved on?

Anyway a quiet thread is a good sign for me.

[lavalmy] 29/7/2018 14:03

As Owenski says, SRT did not deliver any system to Mexico. SRT Marine Systems SAS has never traded. That entity was the bidder.

As to SRT delivering £8.5 million or one third of a four year contract in two weeks, well up to you what you believe. The 'even greater step-up' clearly refers to a previously expected step-up plus this £8.5 million allegedly delivered, now back at the agent, to be redelivered later, but obviously extremely simple to perform if any of that is to be believed.

[owenski] 29/7/2018 12:26

"SRT have delivered a 17,000 system to Mexico"

System????

[countryman5] 29/7/2018 12:20

LAV.
Clearly SRT were awarded the Philo 2 contract. SRT would not have commenced deliveries otherwise. SRT have delivered a 17,000 system to Mexico and 7,500 system to Bahrain. Are there any other companies that can match this? the broker's concern about SRT's capacity for delivery 'on an even greater step-up in revenue' refers to hiring the right engineers and support staff to underpin these enormous contracts. SRT has key partners in each of these countries that provide the installation personnel to undertake the specialist work on the ground, but there clearly needs to be more key people at the SRT end to deliver and manage these projects. I suspect that interviews, hiring and training are taking place.

[lavalmy] 29/7/2018 11:19

C5

The original specs for the Philo 2 contract included many and various requirements which the bidder had to fulfil (these are no longer available on BFAR's website). Amongst the requirements were measures of financial strength, history of successful execution of several similar projects, limits on the size of this contract relative to other outstanding contracts etc. SRT were, and are not, in position to meet any of these bidding criteria.

Even the reduced extant criterion that the bidder be French and have implemented a project covering 5,000 vessels is one that SRT Marine Systems SAS cannot meet. SRT Marine Systems SAS is French but has no experience whatsoever, so their bid necessarily failed. CLS were not in a position to offer 3-d visualisation, hence their bid could not win. Any talk about the French reneging on a loan commitment is just that, unsubstantiated talk. Just because the broker says it doesn't mean it is true.

The broker did say after the cancellation:

'Although management anticipates these revenues to fall into the current year, at this stage we are not changing our FY 2019 expectations as we await visibility on the re-awarding of the contract and further, SRT’s capacity to deliver on an even greater step-up in revenue in FY 2019 than we already anticipated. '

I do not see how they can be worried that these revenues falling into the current year can have any impact on SRT's capacity to deliver. After all, they allegedly managed to deliver them in the space of two weeks in March. One would have thought, what with learning curves etc, that they could do it in ten days next time.

[countryman5] 29/7/2018 09:53

Philippines, Piecing together the jigsaw. Last AGM presentation Nos 4,5 and 6 VSP opportunities. 'Three project opportunities addressing coastal surveillance, fisheries monitoring and port & waterway management. Discussing exact scope and specifications.'
$52 million over three years. 1 st. opportunity Philo 2. Well publicised on this board beginning of Jan this year. About £23 million to be funded by French gov ODA loan. Spec required a french company to be the supplier. LAV has revealed that SRT created a french subsidiary in order to qualify. CLS, the french company that supplied Philo 1 very angry at SRT being awarded contract and persuaded french gov to refuse to honour ODA commitment. Comment in recent Finn Cap research note 'Last week's postponement (Philippines contract) was the result of a European country's UNPRECEDENTED reneging of a loan commitment to a SE Asia country... this led to a rapid allocation of a new budget from internal funds and a new procurement process which should result in SRT having the contract again, albeit with a compressed delivery vehicle.
We know that SRT, having been awarded the Philo 2 contract delivered a vast amount of kit that is waiting in a warehouse in Manilla.
The next stage is the making public of the new Philo 2 contract details. This should soon be available to be seen on the internet and will hopefully include things such as 3D that only SRT can supply. No doubt MR T will be hoping that Philo 2 (Mark 2) will be awarded to SRT by the AGM. If this contract goes to SRT then this puts them in the driving seat for all the other following contracts. This will also allow SRT to become the flagship supplier to all the other SE Asia countries that need to protect their fishing waters.
If Philo 2 comes to SRT, supported by UK gov funding and if Kuwait delivers this financial year plus some early stages from other contracts plus OEM and EMTRAK, I believe £45 million T/O is a strong possibility for this financial year. Much of this at generous margin

[philburt] 27/7/2018 13:08

C5 - Thanks again for the extract from broker.
Is it worth considering pinning this at the top of the thread for future readers?

[yumyum] 27/7/2018 13:08

Thank you Countryman5. Much appreciated.

[glavey] 27/7/2018 13:05

"Seems someone keeps mopping this stock up. Why?"

Perhaps a similar desire to that apparent of the accounting policies.

[countryman5] 27/7/2018 12:32

Further extracts from recent Company note:-
We believe Systems success will come
The key to this business is to understand first the demand driver for the end customer,
second the complexity and scale of the projects, and third the nature of the customers.
These are critical purchases systems. Most countries have Maritime Domain Awareness
systems using 1970s technology, with limited vessel detection capability, no vessel
identification, and patchy coverage of their territorial and EEZ marine areas.
Developments in the past decade have created an enormous global civilian market.
4Technologies such as AIS, new solid state radar, long range CCTV, advanced display
and data processing enable extended range vessel detection and identification.
4Furthermore, both the perceived threat from the sea and the value of the marine
domain (fishing, tourism, minerals) have increased dramatically. In fisheries, the main
demand drivers are: international regulation such as the EU requiring imported fish to
be certified using a VMS system; appreciation that fish catches are reducing, while
countries rely on fishing for employment, +30% of national protein, and exports. In SE
Asia this is a massive driver. Coast Guards, particularly in the Middle East, need to
separate thousands of local vessels from the few with malicious intent.
The systems are very complex, so customers are cautious and the sales process is
laborious and time consuming. The the years of discussion with the customers is a major
embedding process for SRT.
4Many issues need to be worked through on a project-by-project basis, such as: where
will the sensor systems placed when many countries have huge coastlines and poor
internal infrastructure; the legislation requiring boats to be registered and equipped with
a transponder; the support structure and enforcement of that legislation; what does a
vessel owner do if the transceiver goes wrong; the implications of having this new level
of knowledge; what happens when an illegal action is detected etc.
4There may be many departments within a single Ministry all with slightly different areas
of interest who are involved in all of the above and all need to be reconciled and
distilled into a single cohesive project with a defined budget before signing. It is clearly
a long consultative sales partnership process. Many of SRT’s opportunities are at the
tail end of this process now.
The end customers are mainly governments, each with their own procurement process.
Due to a major procurement revolution aimed at stamping out corruption and projects
being contracted without budgets, the buying processes today are cumbersome and
everything must be perfect, or the process is redone.
4Last week’s postponement was the result of a European country’s unprecedented
reneging on a loan commitment to a SE Asia country. Because of the above drivers,
this led to a rapid allocation of a new budget from internal funds and a new
procurement process which should result in SRT having the contract again albeit with a
compressed delivery schedule.
In the end as they are governments, each procurement is done under their own rules

[goodapple] 27/7/2018 09:56

I think we may see a new substantial shareholder on the list before long.

[philburt] 27/7/2018 09:06

C5 - Many thanks for the extract.

[ramnik007] 27/7/2018 08:37

Seems someone keeps mopping this stock up. Why?

[lavalmy] 27/7/2018 08:25

hjb

It is not at all clear what this means. It could be decisions made by the end of 2019, projects started by then (implying decisions/contracts before that) or even the installations finished (leaving transponders to be fitted). Or, of course, it could be just as nebulous as the VSP, a moveable famine thus far.

[hjb1] 27/7/2018 08:15

so where have the 'imminent' orders/contracts gone then? Now we hear it's a end of 2019 deadline, which means 2020 or beyond I expect.

[countryman5] 27/7/2018 07:27

I am anticipating some of the impending contracts to require early staged deliveries. I am anticipating major upgrades of T/O for this financial year, as the year progresses. Wait and see!!!

[lavalmy] 27/7/2018 07:14

Thanks C5

Do you get the sense that 'the end of 2019 as a deadline' means a deadline to start or a deadline to finish a project? I would be anxious if SRT started to increase its cost base in anticipation of future events, given the forecasting record.

[countryman5] 26/7/2018 19:59

Extract from recent Company Note.
SRT is at the forefront of the market because:
4Back in 2005 it recognised that AIS would become the mission critical identification and
data communication technology in MDA systems and set out on a technology and
product development program to dominate this area.
4It also appreciated the demand for civilian-type MDA systems used by coast guards,
fisheries, police and ports for day-to-day management and prevention of illegal activity.
These systems are separate from military systems so designed for large scale civilian
use with relevant functionality: national vessel registration and licensing functionality,
fish catch reporting systems, illegal behaviour analytics and alerts etc.
4The Systems offer is based upon the initial purchase of capital equipment such that the
authority owns and operates their system entirely in-country (governments do not like
cloud-based subscription models), followed by the supply of upgrades and data. Over a
10-year period, SRT’s solution is up to 50% cheaper than rivals.
All about timing
With governments, timescales are indicative, and because of the size and complexity of
the projects there will be many issues along the way (such as the funding source or a
complaint from an interest group to be considered). Cash is a focus as these delay
deliveries and payment.
SRT’s business model remains highly flexible. It has the transceivers and its CEM can
make as many as needed. It buys in third-party components such as radar, CCTV,
servers and PCs as needed. GeoVS is the heart of the Systems offer and is a complex
software application but runs on standard servers and PCs; delivery is shipping a CD with
new releases every 4 months. Installation is done by local partners providing manpower.
4The business model was designed to scale so that the GP contribution builds over a
relatively small overhead.
However, SRT faces challenges in the speed with which the customers want these
systems, as several now appear to have the end of 2019 as a deadline. That appears a
long way off for investors, but we expect SRT will need to hire developers and invest in
the system delivery team who manage the local installation partners to its standard

[lavalmy] 26/7/2018 12:45

finnCap have produced a 10 page report called 'Riding some stormy waters', available inter alia from Research Tree. I don't subscribe.

However, if any one does...?

Probably a lot of guff in any case.

[hjb1] 24/7/2018 16:41

to analyse something it helps to know a little about the subject matter, and clearly it seems Walbrock82 knows very little!!

[lavalmy] 24/7/2018 07:11

walbrock

Missed the mark by about as much as SRT!

[walbrock82] 24/7/2018 06:54

Here is my analysis of more promises ($400m of potential sales pipeline) from SRT Marine:

[countryman5] 23/7/2018 21:04

some unusually large trades in recent days