I hope they will soon find a way to monitor underwater cables. |
The link to the AGM Presentation is here: |
They have added the presentation to the website for reference and for those not able to attend.
This might seem trivial but the Philippines senate have passed the PCG modernization bill which includes a fixed three year term for the Commandant, including the current one who was otherwise due to retire soonish at 56 after a year and a half. This sort of churn has been a bit of a plague for SRT as the new man needs time to master his brief. From what I heard at the AGM, the National Security Agency are driving the issue and intend to incorporate BFAR's existing system into something bigger. Trump and aid freezes may have an adverse impact but I expect US policy to revert to what it has been to avoid China filling the gap. |
"I think the point about the presentation talking about the profile of contracts with high levels of civil works and none was to prepare investors for possible variations in margins......"
I think that's good point LaV but looking back at what has been posted here about the AGM I cannot see reference to margins on civils. For the benefit of those who weren't there and anyone else who missed it, Simon said they do not add a margin to the cost of construction work as it would be pointless to try to add a surcharge to what the client has to pay.
The key point here is that SRT will make a decent margin on what they can exclusively provide. That is Software and training and the expertise of SRT staff.
Customers know the price of hardware and construction work so trying to inflate for profit is just likely to create distrust. |
 C5
I think your turnover forecasts will be there or thereabouts. There are a couple of points to note though. The initial milestone for Bakamla, £40 something million, will be high margin but the cashflow is split 50:50 with the local partner despite them not having actually done anything at that point. I think the point about the presentation talking about the profile of contracts with high levels of civil works and none was to prepare investors for possible variations in margins so that high nominal turnover may not correlate much with profitability.
I don't think the market will believe the forecasts but a positive point is that they only have five months to get the first year of delivering to a forecast right. That will lend a bit more credence and maybe by the year after all will be forgotten. I expect your £1 will be reached after they deliver this FY. It seems that there is a bit of what the chartists call resistance at the 60p level (one of the rare things I have correctly suggested) but I suspect that will be blown out of the water when the note/contract commencement happens. 75p and then £1 in five months or so. |
I think I can wait a little bit longer!
Be very interesting to see the market reaction on the forecast. Bit of a guessing game with the pbt being the key figure imo, to have a guess at a reasonable rating, although the big revenue jump is bound to get noticed by the Twitterati.
I imagine Pbt will be a lot higher than last year which will exaggerate the growth rate. |
I have revisited post 15498 of Jan 7th. It is unlikely that we shall see a share price of 100p before end of Jan. However, we are still awaiting brokers note |
The brokers note will not arrive until Indonesia is up and running. I am anticipating a forecast which will be underpinned with £300 million of signed contracts delivering in years ending June 2025, 2026 and 2027, with T/O of £80m, £100m and £120m. The forecast will be based on these figures, allowing for upside with everything else. Will the market believe the forecast? |
What will the broker share price target be? 125p? |
Hopefully the broker's note won't be vague about pbt and use ebitda instead, although there can't be much depreciation or amortisation to take off ebitda, seeing as SRT haven't made an acquisition and are not capital intensive in the sense of using equipment for production that needs depreciating.
If there is any sense that the net profit might be around the same level as interims, I don't think there will be long to buy shares cheaply. |
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. |
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