 Some rambling thoughts from a long time shareholder.
This board has always had some dedicated posters. There used to be Prophet, who did a lot of research. He has been replaced by Lav, from Sicily, I believe. I remember about four ‘Names’ having a meeting with Simon at MSN. I believe AE was there. I still drive the same Toyota Auris which took me to MSN, in the early days. I used to note the RR car of Simon (not a roller) parked outside. I remember him talking about the cars he was once shown in the extensive garage of a leader from one country, he was visiting. He must have clocked up more air miles, than most. I suspect that he has met numerous World leaders, and he has the PR to carry it off. He is a superb salesman. I bought into his vision. I remember when Geovs, which was a university spin-off, was bought. Simon has always managed to find the money to keep the company going, during its growth stage. No mean feat. My understanding is that the loan company (soon to be made redundant), which underwrites SRT’s finances is a group of high worth individuals, of which one is a major shareholder. I remember when the BFAR /IMEMS contract with the Philippines was announced. I believe that it was about $32 million. This was a very major news story. I remember the company headcount stood at 48. Now I suspect it is nearer 148, and fast growing. One of the problems with SRT is MR. T. He is the face of the company and everybody only wants to deal with him. He needs one or two very able salespeople to do the ‘donkey’ work. I remember, not long ago, when the company issued a VSOP (Validated Sales Opportunity Pipeline) of $400 million and people ridiculed it. That figure is now a reality. The new figure is now in excess of $1 billion and that is also ridiculed. SRT has many attributes, apart from the team. It is the global leader in a new high-tech arena. It has Warren Buffet’s ‘economic moat’. This means it is difficult for others to compete with. I suspect that the recent contract win had Airbus, Leonardo and others competing. SRT is now competing and winning against global large defence contractors. SRT will be coveted, but fortunately it is controlled by a handful of large shareholders who appear to have a long term vision. It is obviously a potential takeover target, but not yet! Where are future sales coming from? The Philippines has lots of potential, both fishing and coastguard, with China and IUU fishing the main drivers. I believe that the US navy is a great fan of SRT. It knows about the company because of its base in Bahrain. I suspect SRT comes highly recommended to numerous coastguards on various continents, of which we know little. It would be good for the Philippines government to sort out the politics of its large fishing fleet. This will allow the Supreme Court and Ombudsman to allow the monitoring of fishing and allow BFAR to move onto the next stage of development and utilise World Bank loans, which have been agreed. Global fishing, with financial support from the World Bank, has so much potential. I look at Saudi, its wealth and its enormous coastline and I recognise that there is so much potential in years to come. Another key to SRT’s future is the ‘follow on’ contracts. Once a country selects SRT for its first contract, it feels obliged to continue for future contracts. Another key feature of the SRT approach is the selection of reputable in country partners. They supply the team with the screwdrivers! Invariably they have a good relationship with the various governments. They understand how these various governments work. So very important. I should not forget Louise and EMTRAK, DAS and Nexus. This is such an exciting company to be part of. |
C5......they seem to omit overfishing. Indeed they need to control better their maritime domain. |
Maritime Fair trade Oct 7th
Filipino fishermen are grappling with declining fish catches in the West Philippine Sea as geopolitical tensions, rising fuel prices, and climate conditions like El Niño took a toll. The Philippines’ exclusive economic zone, which is being claimed by China, has experienced a significant drop in fish catch, as reflected in official statistics. |
Well, if you read the article (quoted in extenso) you haven't had to pay, so can be 'glad' for free...
;-> |
I read on LSE that Investors Chronicle recommends HOLD.
I’m glad I’m not paying for such insightful genius. |
AE
I imagine that it will be similar to other recent contracts where a milestone is verified delivery of whatever to the country 50% and once installed 50%. And generally they start with the control rooms where the software is at. So 50% of what goes in to the control rooms may be payable rather quickly, the software component very high margin. The other 50% of that depends on them having the control room ready with anti-static flooring and the rest and that could be a bit longer. But given that SRT will have to pay for the other stuff, probably mainly from Dell and the like, the net effect of that first 50% is likely to be neutral. |
I would hope that SRT will seek to make delivery of some high margin elements like software early in this project. If we assume they get paid on completion of a milestone, then some decent and profitable revenue should ensue. |
No crystball. ST did used to say things like that about Saudi. But it was never the case nor will it be. |
Nothing up front? I thought there would be up front payments. |
Crystball
None. |
Sorry YumYum. Wildly inaccurate on my part. |
LaValmy, I do not believe we are ALSO waiting. It is all agreed, so just a final sign-off timing. |
Does anyone know how much of the 218m dollars will be paid at the start of the contract? |
I saw this the other day.
gomspace.com/news/gomspace-provides-an-end-of-quarter-update-on.aspx
These muppets are also waiting for their export finance to come through but:
'Based on the contract signed in December 2023, it was agreed to launch the first satellite already in the Summer of 2024. To ensure momentum on the timeline, the parties agreed to start the assembly and launch of the satellite immediately and the satellite was successfully launched on August 16, 2024.' |
Blackrock trying to buy any shares in a small cap like SRT is pretty unlikely.
I think that the institutions to whom ST was referring at the time were more small cap funds and they may well have a requirement that a forecast has been made, even if that forecast is a loss. No forecast at all does suggest a degree of uninvestibility.
I expect that to rectified very soon and can easily see either this FY or next double digit EPS.
As to the financing, SRT is a bit of a black box, but once the long awaited contracts start, the significant working capital tied up in these should unwind quickly. The broker did say that the initial working capital requirements for this new contact could be met from existing arrangements, but they always say that |
Over 300 trades (small) today. I never realised that there were so many punters watching SRT! Is Ocean Infinity working closely with SRT? |
I doubt that serious institutions will worry much about analyst coverage - they all have their own research departments: a Blackrock waiting on a note from Cavendish would seem almost preposterous.
A greater problem is surely the lack of liquidity? With so many shares tightly held it's difficult for an insti to acquire a stake that would move the needle without pushing the price way up against itself. I assume OI had the same problem, and I wouldn't be surprised to see the same solution repeated.
I'd far rather they were obliged to buy in the market like the rest of us, but whether that happens depends on how strong ST thinks his finances are. |
Back in the day, certainly in Saudi Arabia, a PB was viewed for internal credit purposes as 'a delayed discount'.
Kuwait also had 'form' in this regard.
Hopefully, things have improved somewhat.
GLA |
AE
They have had performance bonds for other projects as well. As far as I am aware they can be for around 10% of the contract value, so in this case $20 million or so (the ten years of maintenance is unlikely to be included). If your information is correct, it might cost $2 million but would have been costed into the project anyway.
Edit: UKEF does have a scheme, guaranteeing 80% of the value of the bond. This can reduce the amount of restricted cash which secures the bond (a lesser amount than the bond itself) to zero. It doesn't seem to be as bureaucratic as the inter-governmental loan business. |
Afaik those bonds are for a % of contract value to cover completion issues. Think actual project financing is a separate issue although bond cost might be in contract amount, agreed before signing. |
I'm interested in the requirement of this (assumed Kuwait) contract for a performance bond. This is a common feature of construction contracts to ensure the contractor fulfils what they have been paid to provide. There are all manner of organisations willing to provide the finance and rates charged can be eye wateringly high, as much as 10% of the value of the bond.
I'm presuming SRT will seek Government backing in the form of a UKEF bond to reassure the client. DAK if this how it will occur? Given the lengthy gestation of the UKEF loan to Indonesia is the timescale feasible? How much does the Government charge for such finance? Anyone with experience here?
Would there be an alternative that is affordable? |
And simply on ships.
Edit. I didn't spot this bit in all the excitement.
'as well as further projects as this ambitious customer grows their capabilities in the future.' |
'mobile' sensor might be Ocean Infinity?
yes and/or drones |
Funny isn’t it. The analysts etc get paid a mint to issue frequent price targets up and down by a few % on FTSE stocks as if they’ve done lots of tricky calculations and then get stuck when forecasts are likely to be multiples of previous values.
I imagine they’ve been thrown into panic because it must be tempting to give the previous exact high as a target, but we might be into no-mans land now, so they might need more complicated calculations. |
Cavendish merely report the announcement and then say
"Given the substantial size of these contacts and consequent extreme effect on forecasts, TP and forecasts remain U/R until further updates, precise implementation and revenue profile are clear across today’s $213m contract and the $180m SEA contract, which are expected in the coming months." |
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