Srt Marine Systems Share Discussion Threads

[lavalmy] 10/9/2018 18:24

CLS are up to something:

'KINÉIS, new major player in French NewSpace, launches the first European constellation of nanosatellites and democratizes access to global connectivity (IoT).

With the support of CNES, CLS: Collecte Location Satellites, announces the creation of a new subsidiary, Kinéis.

Kinéis aims to become a major player in NewSpace and allow, by 2030, several million objects to be connected wherever they are on the surface of the globe. Professionals and the general public will have access to a global satellite location and connectivity service, very easy to use and very affordable. The basis of this connectivity: a constellation of nanosatellites, unpublished, developed with strategic partners: Thales Alenia Space, Nexeya, Syrlinks. This constellation will be put into orbit as early as 2021.'

2030? Similar to something I read this morning from the TUC about workers looking forward to four day weeks by 2100. If they are still in a job...

[lavalmy] 10/9/2018 16:00

No worries, Effortless.

It is a bit surprising how short these tender periods can be. Tucker said that the Philo 2 bidding period would be five weeks. Might even be less.

It should lift sentiment a lot. Not only will a delayed/cancelled contract restart (and possibly people might assume the the Indonesian one may do likewise - I don't expect anything until after elections next year). The cash flow implications are enormously positive. Simon will not be hiding the candle under any bushels either, largest MDA contract ever etc.

Ousting of the entrenched provider will also be a huge positive, given their existing footprint, particularly in the ASEAN region.

How much of all that will be understood by the wider market as opposed to afficionados here remains to be seen.

[effortless cool] 10/9/2018 14:26

"Fireworks soon"

I just added 2x50k shares. I'll blame LaValmy if it all goes wrong.

[countryman5] 10/9/2018 11:28

LAV. We look forward to seeing the details when you locate it.

[lavalmy] 10/9/2018 11:01

I would expect the Philippines bidding documents to be available very soon. They have announced a tender for maintenance, power, fire protection etc



They are in a hurry with bids to be opened on 26th September and the contract completed within 70 days. A real give away is that this document is the fifth edition dated August 2016, as was previous Philo 2 documentation.

Fireworks soon.

[extrader] 10/9/2018 09:53

Hi all,

Re takeover possibilities, the nationality/political links of any potential buyer might be a deal-breaker to some existing or prospective customers...

Would Philippines and VietNam be happy (for instance) with a Chinese suitor....or the Arabian Gulf countries with an Israeli hitech buyer ?

ATB

[cliffpeat] 09/9/2018 18:24

CM5 "I suspect that there are many more that would like SRT as a bolt on."

Like FLIR? - who took out Raymarine (and paid shareholders for it at a time when it looked as if the shares were worthless).

[countryman5] 09/9/2018 11:15

What will be the trigger for a takeover attempt of SRT?. I concur with LAV that it would have to be a generous agreed bid in order to get the very few major shareholders (Including the BOD) to consent. But as they say 'everybody has a price'.
SRT will not be alone in bidding for the increasing number of MDA contracts. We know that CLS won Philo phase one and no doubt will be bidding for Philo phase 2 (Mark 2). No doubt there will be others. I suspect that CLS has other Countries under contract where SRT are now appearing as a better alternative. I understand that JRC, who now source some of their AIS kit from SRT, have won some historic port contracts and may be coming head to head with SRT on other contracts. Would JRC want their AIS supplier to fall into hostile hands? Then there is Airbus, who I believe have had success globally. If SRT is seen as having the winning formula (CLS does appear to be purely satellite and V. expensive), logic would dictate to take them out. Logic might also dictate to take them out whilst the share price is low. £1 might win now whereas it might take considerably more if the contracts start to run. I think it is safe to say that SRT'S competitors know much more about SRT's capabilities than we the humble PI's. The companies that I have mentioned have large wallets. However, I suspect that there are many more that would like SRT as a bolt on.

[alter ego] 08/9/2018 18:40

Top quality post LaV. It would be good to see a small British company achieving success without being swallowed up by a foreign buyer. Might not suit all shareholders but suits me just fine.

[lavalmy] 08/9/2018 17:44

I think it is rather unlikely that SRT will be the subject of a bid, even though it would suit my circumstances for a variety of reasons.

Firstly, this MDA business is currently small and is unlikely to be huge in the next say five years. The link between MDA in general and AIS as a technology essential to it is as yet invisible. Simon mentioned a couple of times that the Philo 2 project would be the world's largest MDA project ever - valued at all of €28.5 million. Peanuts really.

Secondly, potential suitors, Airbus and Lockheed were mentioned, tend towards mil-spec in the jargon. Military specification, very accurate, very expensive, very few targets etc. SRT is aiming at civilian uses, large numbers of vessels tracked cheaply.

Thirdly, SRT may end up being valued more highly on the stock market than an acquirer may pay, although there is no guarantee that mad valuations might not be offered. SRT is a low cost operation. If you layer in big company costs, it becomes much less profitable. Much has been made by Tucker of the fact that their clients value (or will do shortly) their information being theirs and no-one else's. That value disappears if a Lockheed or whoever buys it.

If an acquirer could increase the market by having existing relationships or the clout to have legislation adopted to force boat owners to buy AIS, then yes, it might make sense. The reality seems to be that countries are being forced (via e.g. the EU's carding system) or are finding out themselves through security issues that adoption of AIS based MDA systems is worth their while. Barring some sort of 9/11 boat event, I cannot see anything that would hasten the adoption by the leisure market, and if it were in the US, they would not be happy with an open technology. So the progress being made by SRT is probably likely to continue, maybe 500,000 boats tracked in five years.

Lastly, the point of view of current and future shareholders. Lets say in two years the price is above £1. Some one offers £1.50. If Tucker says he reckons that the business could be worth £2.50 five years on, then I would be happy to back him. Persey and Laing may well have one eye on the inheritance tax bill and not want to sell. Horne and Rogers, having been invested for so long, might want to cash in. But I don't think that any bidder would have much chance without an agreed bid, both because of the concentrated shareholder base and the necessity of hanging on to relationships which have been nurtured on our behalf by SRT's assiduous staff

[yump] 08/9/2018 12:05

fwiw in my experience takeovers happen unpredictably and never with the companies you think might be in the firing line.

Certainly never with companies where you'd like one to get you back to your purchase price (for my part, not talking about SRT here).

Any of CNA, INTU, SAGA please - although have averaged down so in theory its just patience needed !

[countryman5] 08/9/2018 09:30

It won't be a phone call, it will be a RNS. However I would expect to see a stake building exercise first to suck out shares from unsuspecting PI's, prior to a bid. Watch out for a series of 100,000 purchases. I guess that any T/O will have to pass muster with the very few major shareholders, who are well represented at Board level. My understanding is that 75% of shares must consent to a new owner.

[goodapple] 08/9/2018 08:24

C5: If you were to get the phone call, what would your price be?

[countryman5] 08/9/2018 08:18

The attempt at takeover, when it comes, will come without warning.
Why would anybody seek to acquire SRT?
It is the global leader in a new, high tec,industry with generous margins. Read post 7248 and see the potential for recurring revenues.
Should potential purchasers strike when it is loss making and the share price is low, or wait for large contracts to start arriving?
Who would be interested?
The obvious would include CLS, JRC, BAE and Airbus.
Would they succeed?
That depends on price and the hand full of major investors who control about 40% (LAV included)

[piedro] 07/9/2018 12:38

FWIW - a survey of the SE.Asia defence situation

Maritime Security & Coastal Surveillance APAC 2018-19 Market Report

[lavalmy] 07/9/2018 12:11

Steady on C5. I do like to keep an eye open, but that is all. And I very rarely contact Simon, maybe once a year, as I think he can use his time more profitably for us.

Like you, keeping an eye out for the BFAR.

[countryman5] 07/9/2018 12:04

I understand that LAV is a major shareholder and no doubt he took the opportunity to drill down in depth with Simon. I value LAV's ability to do research in depth. I suspect that he has an extensive understanding of the markets in which SRT operates. I am looking out for details of the new Philo phase 2 contract. If anybody sees it on line I am sure that there will be great interest here.

[owenski] 06/9/2018 21:22

Good to see everyone again and not much to add.

It's worth going to this AGM as some issues do require a face to face.

So, here we are again, the patient ones with our 2 year old Jam, opened or un-opened, and stuffed with AGM cakes - that woman is amazing.

2 years since our tongue in cheek 'jam today' not just tomorrow presentation gift. Mine is still un-opened.

Will it stay on the shelf another year? I'm thinking SRT will be successful one day and very famous and that my un-opened jam pot might be worth something at an auction.

Anyways, as said, not much to add to the previously well covered posts. But, having a face to face with different directors is useful as it fleshes out a lot of detail, and being able to speak to the employees one can see a professional company hard at work and very busy because things are building up, that is the impression.

Useful to go over details of the status wrt Indonesia and Philo and why they are different and to gain some confidence of why Philo is looking positive for resumption soon. I suppose that's why talking to different people at SRT helps. La-V has covered this in previous posts.

Tend to forget AtoN amongst the - wait for the bigguns to arrive - but visiting the new warehouse it helps underpin some credibility to physically see a crate of the things at $2500 a pop being packed off to Australia for a new order. But it wont be RNS'ed as it's "part of the ongoing day to day orders that the company receives".

All the posts here from the AGM are good, but I like kinbasket's @ 7243, because seeing physical stuff being packed in a warehouse is a more potent thing than just hearing about orders, we've heard the story for a long time now but the money is illusive.

So to tour round the warehouse and witness staff busy loading crates speaks more.

Looking at written signs on crates and or explanations of what is going where is more tangible than an informative presentation.

Seeing an expensive radar boxed up repatriated from a country where a project has stalled for the moment and being told it's part of a batch being collated for sending to the ME for a large project has more credence when the stuff can be physically seen.

Stock levels for the 'old' class 'A' are shifting - remember the EU waterways from way way way back, well they're still ordering, they seem to put regular orders in - think it was about 50 for the most recent order - not RNS'ed - just part of the day to day business.

When things drag on for a time and projects get 'delayed' etc, then it's reasonable to get jaded, interestingly, one long term shareholder was very vocal about that and ST doesn't duck the bullets, understands the investor's concerns, the underlying gut feel is the log jam should burst soon and we will start to swim in jam, maybe even choke on it. lol

It seems entirely credible to me that Philo resumes probably later this calendar year, plus some ME news.

All well and good except payment can and often is a nightmare so headline figures with massive trade receivables isn't encouraging either, this is why the UKEF facility is so important, it transforms the cash flow short term.

Agree with La-V, probably got to the stage where SRT might announce news but investors may have got jaded and want to see real cash in the bank. UKEF plus possible other financial players will smooth that path.

Core clearly isn't paying the wage bill but is growing, had a bad hiatus this past year with production shifting to Ireland and some bad teething troubles but all now sorted and operational again but it did add to the poor recent reported figures. AtoN might still prove to be a dark horse that speeds up at some point. Meantime, as we all know, we need the projects to kick in, odds are looking good imo, lot of stuff going at MSM, lot of external drivers behind these countries as well.

As said, everything's been well covered by the other posters, so nothing new to add.

Have come away with some confidence that we'll be rewarded for our patience shortly and I guess that's what it all boils down to - confidence.
The jam pot is talking to me in my sleep. Keep the faith fellow jam aficionados.

[eagle eye] 06/9/2018 13:10

SRT AGM Notes

The formal part of the meeting, led by Kevin Finn, took about 10mins.
Simon Tucker presented and took questions for 1 hour 45 mins.
Good to see Owenski and Alter Ego again. Great to meet LaVal at long last.

Notes below are drawn from personal conversations and Simon's presentation.

Core business was was £5m last year and is likely to grow about 20% (to about £6m) this year. Overheads are circa £6.5m, so £13m revenue, based on 50% margin is required to break even. Ideally core business would cover base costs. Unfortunately we aren't there yet.

Alter Ego (in his post) commented on the Scottish Fisheries business opportunity he discussed with Louise Coates. For the record, the Chinese variant cost about $200 and has a short working life expectancy vs SRT's model at $550 which last 3-4 years.

With regard the satellite initiative, SRT has spoken to people like Clyde Space and it can take up to 2 years to build. With satellite data costs falling dramatically, maybe better to outsource the issue. I spoke to several directors about this and gathered the topic wasn't top of their agenda.

The UK Export Finance facility is a big ticked box.
With invoices underwritten by guarantee, this allows for accelerated payments. Cost vary depending on contract, but costs about 6% of invoice which may be inbuilt as a cost to the customer. HSBC and Santander are keen. British banks aren't interested.

I spoke to the new Chairman, Kevin Finn. He has a background in Marine Engineering and has particular experience in dealing with Middle East contracts. He did go through one of his real life experiences in this area which I won't detail here.
I think his skill set will be of particular help to Simon in the verification and support of complex national projects. Mr Finn says he will buy shares in SRT at the appropriate time. He is aware he is an insider and the purchase will need clearance from FinnCap. Maybe the reason why he hasn't yet purchased. We shall see in good time.

I had a good opportunity to chat with Neil Peniket.
Staffing at GeoVS in Cardiff is gradually being increased from 16 to about 24 over the coming year. Lots more features are being added to the system. Questioned about about the robustness of GeoVS, Neil says it has been stress tested to establish it's processing capacity and it has proved exceeding robust.
There is an encryption option available (128 bit) which prevents boats being seen by anyone else's satellites/systems. You don't even get a green triangle. Nada, nothing.

Thanks to everyone who made the day so successful, plus a special thank you to whoever baked the cakes. Yes, the legend goes on.

Best wishes
Eagle Eye

[lavalmy] 06/9/2018 12:49

One thing that hasn't been mentioned yet is future recurring revenues. Simon doesn't squirm very well but had to show his moves as a result of a question about the scale of potential satellite revenues in five years. 500,000 boats @ $10 per month was where the needle seemed to point, but he was visibly averse to giving any forecasts, understandably so. I reckon that $10 per month is still optimistic (and have frequently posted on that topic in the past), all the more so with falling satellite costs. OTOH, with encryption no one else can do it except for the client - and there they seem to show little interest in trying to buy or do little bits of the system themselves.

500,000 boats and we're all laughing before the recurring revenues build up.

[philburt] 06/9/2018 12:10

Yes, I'd like to echo those thanks for all the useful feedback provided by various attendees. It really is what makes this group so valuable.
I also continue to hold, and will look to add when I have the means....GLA & DYOR as always!

[oldscallop] 06/9/2018 11:44

Thanks to all who attended for your informative posts. Sounds like a good day was had. I continue to hold.

[barrieb] 06/9/2018 10:16

Many thanks folks for your reports, I very much appreciate them as they give a good feel for what is happening on the ground.

Really thought I was going to make it this year but it was not to be, so really hoping next year will be my first visit as what they are achieving on a world stage for such a small country company really is a heck of an achievement! Lets just hope things work out for them and of course us as well.

These are still a very important part of my portfolio and I am determined to stick with them if I can right to the end, or an enormous explosion in the share price that I simply could not refuse.

Hope TP is still ok even though we don't hear from him now.

[eagle eye] 06/9/2018 08:37

Yes, the new Chairman did address the meeting.
I had a good chat with him to find out what he brings to the table, plus asked when/if he will be buying shares.
Thanks to everyone who has posted already.
I will post later today, but won't go over what has already been reported.