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." |
YumYum
I would say that people would be in a bit of a quandry. The share price has gone up very sharply and they might feel that they have missed the boat. And on the other hand, three more contracts are expected to start soon, all of which will be positive, Bakamla extremely so.
I don't know if it is completely true that institutions won't buy unless there is a forecast, but I doubt that they will be joining the party at this stage. A few weeks from now and they might start looking. |
'mobile' sensor might be Ocean Infinity?
Anyone have an opinion/knowledge on rule of thumb/whatever... where there is transformational news, share price jumps, profit takers pile in, share price pull-back, share starts to rise again, second wave of profit takers offload.....what happens next ? Easy sellers have gone and share price rises to a new equilibrium level ? |
C5
I think Cavendish is behind a registration wall rather than a paywall. I am on it and don't pay. |
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