 Back and thawed out in sunny southern Sicily to a very welcome 21ºC.
Firstly it was great to meet up with fellow shareholders and management and other staff.
I don't have any worries about OI's position. SRT's period of vulnerability would appear to be over and the disposition of the other large shareholders would seem to counter-balance OI's stake and then some. On that subject, a person closely connected with a large shareholder was musing about where the share price might eventually end up and it made C5 sound like a pessimist. There was also the comments from ST about where the company will be in 20-30 years time with neither himself and Neil active - not quite a succession plan, but an indication. There was also a firm resolve and belief that no further warrants would be issued. So I lose no sleep about it.
As has been mentioned, we await the commencement of the Bakamla contract and concommitant broker's note within a few weeks. I suspect that the current share price belies a lack of faith that it will go ahead, so when it does I expect significant action. Simon did mention that it will take performance to overcome the company's reputation as a serial misser. And that some institutions' interest was mildly piqued by the unexpectedly good half year results (as I was). We will see how long it takes. Apparently the broker was there. Did anyone talk to him?
Apart from getting the other UKEF cover to substitute for OI's guarantee, I don't expect any further news before financial year-end. Simon was clear that projects have to go through budget processes and that at the earliest others would start next calendar year. That doesn't mean that they would be entirely invisible to us before that, of course. I also think that Kuwait doesn't seem to operate under quite the same rules and happens more at the whim of the ruler. And there they are trying to ensure that there is a sufficient period between the project being signed and actually commencing so that UKEF has the time to issue cover.
The impression I got was that they expect to be able to charge more for projects once Kuwait is up and running. Overall project margins do and will continue to depend on the amount of civil work entailed, but they hope at a higher level. Here OI comes in handy as does the fact that it is SRT opening doors for them rather than the other way round. OI's offering is not easily compared to others like construction costs and SRT sees potential upside from including OI's rather unique robotics in SRT-led projects and increasing their margin that way too. |
Another highest 9 week close ☑️
Added twice this week, alongside my 6 previous buys between 40-53p
Waiting to start buying at 60p+ next. I'm not selling these buys so they'll provide long term support |
Really good recall Integer. I think it helps us form a sound understanding of the relationship between OI and SRT. I’m also pleased to have met you. |
Thank you Integer. |
Thanks for your notes - I think its pretty important to have things represented reasonably accurately. |
Countryman - On the point "HOWEVER, OI wants to eat SRT as soon as possible (despite saying in public that it would wait two years!.)"
This may well turn out to be true but I assume it's a personal opinion?
How OP responded during the meeting to the question do you want to buy SRT was (according to my notes):
"No, I would feel quite ill, as in 2021 we bought 3 companies and I still feel stressed about it. Our investment in SRT was for two reasons. Collecting marine data and for SRT to visualise it for customers/coastguards. There are so many companies interested in this data. It's about creating the relationship with SRT so that we can more easily put a proposition together to take to (potential) customers as we have done recently. The second piece, is that we think there is value in being a shareholder in SRT. Hopefully, the market pricing will catch up and SRT will be a really good investment. I put a chunk of my money into SRT and I can see what other listed investments have achieved in terms of share price growth. Today there is no plan for us to buy/consume SRT. I'm not going to tell you that in two years time we won't think about the world differently but who knows what is happening. Today, we like the relationship, we like the position we are in and we can help each other....." |
Good to meet up with you again Owen and thanks for adding some really useful information to the collective knowledge. |
ST did state at the end of the presentation I think during Q&A that revenue payments were coming in and cash and they wouldn't need to raise. Important to hear that.
Also, looking to target ROCE of 25% and growth rate of 20% P.A..... That gives a flavour of where their profitability will sit.
Gross margins on projects in the 20's up to 30%
Margins on AIS side including X100 in the 40 - 45% region, with AtoN sitting as an outlier at 80%
DAS as a standalone business is ongoing, with port authority demands seen as a growth area, Louise has a lot of input in developing a package of items including a kind of Geovs approach to utilising the data, this seems to be shaping up to be an area of project activity rather than just selling a few AtoNs.
OP from OI is impressed by what SRT have actually built from scratch, enough obviously to take a stake including punting his own money, there are synergies between the two companies and the ground work that SRT have done seems to open doors for OI to be involved, also, OI are a data centric company and thus have a natural fit to SRT's Geovs core offering.
OI's stake and board position in SRT seem to be a really interesting part of this journey.
To outsiders, SRT has been a serial disappointment, however, SRT now has multiple projects running - currently over $200m - and is now in a different financial situation, the wider market is not up to speed with the situation here.
OI came up with 21m to fund the Kuwait bond, everything moved at such speed - unlike the usual historic SRT government signing grind - that SRT were unable to raise the money elsewhere in the time scale. Kudos to OI for the support, the UK gov. really doesn't have the vision or nimbleness to support these companies, a lot of noises and little action. Without OI stepping up, I'm not sure that Kuwait would've been lost, but it sounds like a massive delay would've occurred.
It feels like Kuwait is quite a showcase project and SRT's reputation could possibly have taken a dent if it had not proceeded at the required customer pace. Think this project is going to showcase SRT and so is critical.
Countryman bangs on about all things SRT like he's their PR guy - good for him and good to meet up with him again - he's often said about others looking in on Kuwait and wanting to keep pace with what they have, actually, it's sounding like he's on the money here.
In my view, the next catalyst for the share price is likely to be Indo spades digging the ground, think the market is going to start waking up especially when the brokers note is out with a couple of years of hard figures and over $300m of contracts under way. Estimates are for broker note issued in Feb. therefore Indo likely to get UKEF finalised within late Jan. early Feb. - we shall see.
Slow roll out on X100, they really want to get this right and so are widening the beta testing pool in the real world marine environment to make sure all works well, good to meet the project guy behind this and access the thinking wrt quality etc.
Personally, I don't think SRT are jam tomorrow anymore, I told Oliver about the pots of jam on seats at a past AGM, he thought it was hilarious.
Great day out, good to meet the SRT team and shareholders again, thanks to AE for his excellent write up, just my two penneth worth. |
They must have had a lot of applicants today - Linkedin now only showing 7 posts available.
It must be something to do with the stormy weather! |
Blimey - hope thats not the next issue. That would be one of every issue you could possibly have overvthe years, wouldn’t it ? |
Linkedin currently showing 27 job openings at SRT. The search for talented new staff continues. |
rubberduck - thanks - I missed it - right down at the bottom of the directorate change notice:
'Mr Plunkett owns 425,000 Ordinary Shares in the Company in a personal capacity, representing 0.17 per cent of the Issued Share Capital following admission of the new Ordinary Shares as announced on 14 November 2024.' |
OP this morning deciding how to win SRT??!! Quite bizarre nonsense.
Someone needs to go into writing movie scripts.
The truth is that I have raided my wife’s piggy bank and am planning a hostile bid.
There we are, another piece of fictional imaginary facts and unsubstantiated musing. |
Thanks guys esp ae and C5 for filling us in about the AGM and especially the feel of the place. I hope to some day attend as I'd love this to stay independent and become a unicorn. |
Sharepad shows Oliver Plunkett holding 425k shares dated 2/12/24 |
I don't remember reading of a holding for Plunkett? I'm assuming that even if he bought them before being appointed to the board, he would have to declare when he became a pdmr? We have to assume that he and OI would be a concert party in any negotiations, and therefore his personal holding is of interest to shareholders.
PS thanks all for interesting reports!
PPS ref mention of China - this is an interesting backgrounder. Seems they may take the loss of soft power caused by intrusive fishing seriously after all. Perhaps srt should sell them a system for reporting catches? |
Observations
- There is no cost escalation clause in their contracts but SRT is relaxed about this as costs have not risen significantly and the have 'contingencies'
- SRT are justifiably angry about the ECGD response times - come on UK Gov if growth is your main objective get this sorted
- Recruitment is an issue. There has to be a better way than Linkedin
- Bullish sentiments in all areas including X100
- For next AGM can we have a roving mike as difficult to hear the questions
- OI.As I have been here for a long time I asked Oliver about his intentions towards my daughter. All I really got was no immediate plans but realistically they have almost a blocking stake.
- subsea looks like a growth area and this is where SRT's ability to link sensor info together is the golden nugget. The GeoVS acquisition was a game changer
Lots of other stuff but well covered by alterego and countryman |
OI might well prefer to wait, in case SRT cannot reorganise the PB in time. Then OI can get more cheap shares - as per the existing agreement.
Thank you all for the AGM feedback. |
AGM. Random thoughts.
Good turnout, About 50 (excited) shareholders. ST in top form. New NED Oliver Plunkett, CEO Ocean Infinity, was there.
He was surprised at the numbers in attendance. I suspect that he was even shocked by what he saw. He is obviously bright and there appears to be good chemistry between SRT and OI at all levels. HOWEVER, OI wants to eat SRT as soon as possible (despite saying in public that it would wait two years!.) OI has a problem. In effect it has set SRT free. Kuwait has given SRT the cash flow and credibility, which SRT desperately needed. A year ago, nobody was talking about Kuwait. The first stage is now up and running and Kuwait is VERY pleased. SRT and OI kit will be its new toy, its pride and joy. Kuwait likes to boast about things and Saudi is in the firing line. ST was giving hints about the potential of Saudi spend. I am expecting serious numbers (Four or five times Kuwait spend and Kuwait has only just started). O P admitted that SRT does not have a competitor, unless it is in China somewhere and he knows the enormity of the potential market. Oliver Plunkett said that he had bought SRT shares on his own personal account.
How is OI going to capture SRT, together with the management team? The longer he leaves it, the more it is going to cost. I believe Macbeth said ‘If it were done when ’tis done, then ’twere well It were done quickly’. I think that Mr T knows he does not need to do a deal, any time yet.
The long awaited Brokers note is still awaiting the start of Indonesia. Did anyone hear the potential size of the Indonesian fisheries? I believe it started with a five, and it was not $50 million. We have no serious institutions on the shareholder register but the brokers note will probably make some desperate for a slice. OI and institutions face the same problem, where can they buy shares? In the unlikely event that SRT needed more funding, there will be a queue of potential buyers at well over a pound. I suspect that this morning Oliver Plunkett is trying to decide how to win SRT. Good luck with that one. Every day that you leave it, SRT gets further away. |
Hi alter ego - Thanks for this - made me feel like I was there (geddit?);->
.."They even have a mobile control “room”, a van full of servers that can collect data from remote locations and feed it into the system until more permanent arrangements are put in place..."
This bit (echos of Terratrucks blanketing Los Angeles suburbs, providing temporary, mobile hotspots) and later reference to use of StarLink makes me wonder whether SRT shouldn't invite 'playmate of the month' Elon to take a small stake...?
Thanks again
ATB |
alter ego,
Thank you for your excellent post.
As always, you are usually first out of the blocks :-) |
Thanks AE very much appreciate you taking the time to update us |
A quick addendum - Most of us know that ST (not SRT) was accused of some corrupt behaviour in relation to the contract in Philippines. it is assumed that this allegation was politically motivated involving large fishing companies who had enough influence over the ombudsman (with family connections to the fishing firms). St has always refuted these allegations and said he is now asking for the facts to be examined by a court as they are false. We have to wait an watch this space but it clearly rankles ST who won't go there until it's settled. |
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