Tekmar Share Discussion Threads

[imperial3] 22/8/2019 09:42

Jonwig.

Thank you.

[jonwig] 22/8/2019 09:05

At the AGM yesterday there were (I think) five shareholders and five directors from a total of fifteen perople. Not good, but fairly typical of a small company: you only get a full house if there are "issues".

JR began with a short presentation which was essentially the same as in the Annual Report. There was no update on forward guidance.

Voting was simple: we were given a slip on which to vote. A pleasant change from the usual readouts. There were no questions on the resolutions.

No-one else wanted to ask questions, so I asked, basically, two.

1) Gross margins and the sector mix. O&G tends to have lower margins (I found out why later), and is a bit more unpredictable, as investment tends to dry up below a price of $50/bl. however, OW is strong enough to provide a healthy order book. They confirmed guidance of 35-41% gross margins. OW is predicted to grow at 20% pa for the coming years, they expect their order book to follow suit at stable margins.

2) Negative operational cashflow and increasing receivables. At first sight this looks a textbook case of overstretch, with receivables increasing by 113% against revenues by 20% ('18-'19). Aside from contract assets, past-due debts were £1.5m. Cash at YE was £4m. "Are you comfortable with this?"

SH responded that their debtors were all large corporations who would not be defaulting on payments, and reiterated the "strong balance sheet" from the AR. She also said that receivables tended to peak at the year end, so the inventory cycle was a wide one.

I'll reserve judgment on this, as we all know that growing companies burn cash, even when profitable. But the corollary to this is that funds need topping up at some point!

The high point of the meeting was the tour. The Engineering plant manufactures all the polyurethane components, The raw materials are cheap, but the key point is that they know how to make a superior product through mixing and temeperature controls. hence the high gross margins. O&G components, however, need a very tight tolerance (1mm was mentioned) and need to be individually tested, hence the lower GMs.

Subsea Innovation is a few miles away and is the source of their inventions and design work. This was really impressive, and a huge machine for cable laying (designed and built in-house) was being tested. They mentioned the London Array where the previous installer has made a mess of the cabling, so Tekmar had to be called in to put things right. Also the Chinese could easily copy the hardware but were hopeless at interpreting sea bed conditions, and the best way to deliver a solution.

In summary, they appear to be right at the technical front of the sector with a leading edge advantage. I also noticed going around that they put a lot of store into efficiency and safety. In view of the impression that they are an outstanding example of British business innovation, I'll shelve my financial concerns for now.

[imperial3] 21/8/2019 11:30

Anyone attend the AGM? Any reports that could be interesting?

[imperial3] 20/8/2019 08:35

Now that is encouraging.

[jonwig] 20/8/2019 07:08

New contracts, Taiwan:



Interesting that they've put revenue numbers in: £4m.

[thomshrike] 19/8/2019 10:42

Right. My guess is that the seller at Berenberg started to accept lower prices due to lack of liquidity.

[imperial3] 19/8/2019 10:19

Share price still weakening.Disappointing.

[imperial3] 16/8/2019 10:59

Fair comment.We may learn more from the AGM.

[thomshrike] 16/8/2019 10:53

Berenberg has been managing a block seller for the last few days. Probably just market driven: market is down, oil&gas sector is weakening, small&midcaps underperforming. There have been some reports about possible delays for project approvals in the US. All in all the stock looks very attractive to me.

[imperial3] 16/8/2019 09:52

In spite of the positive news recently of contract wins,the share price has been weakening.Puzzling.

[thomshrike] 15/8/2019 09:36

Thanks. Because the client is TechnipFMC, it is fair to assume that the contract is relevant both in terms of size and reputation for Subsea Innovations. It is another data point that indicates that Tekmar is being successful at extending their competences into the adjacent business of oil&gas.

[imperial3] 15/8/2019 09:23

Again,it does not say how much it is worth.

[jonwig] 15/8/2019 08:58

Subsea Innovation announces contract win in Norway with TechnipFMC -



Lots going on, then!

[thomshrike] 13/8/2019 14:32

It's still more than 1% of annual revenues. And more relevant for being in Taiwan.

[jonwig] 13/8/2019 14:25

@ imperial - 20 turbines, Hornsea 2 is 165. So not much, I guess. But footholds are a help!

[imperial3] 13/8/2019 14:12

It does not say how much it is worth.

[jonwig] 13/8/2019 12:57

Tekmar selected for Formosa 1 Phase 2:



Although it's clearly another impressive win, I wonder how China will view a company which works with the Taiwanese? (TFK Kable is Polish.)

[thomshrike] 08/8/2019 17:00

Thank you jonwig!

[jonwig] 08/8/2019 10:27

Subsea Innovation delivers new Launch and Recovery Systems to global clients:

[jonwig] 08/8/2019 07:12

Ørsted's H1 results. Includes:

We were selected as preferred bidder in the auctions in both New Jersey with our Ocean Wind project (1.1GW) and New York with the Sunrise Wind project (880MW) which we own in a JV with Eversource. Subject to final investment decisions, the wind farms are expected to be completed by 2024. We are very pleased with these awards and are well on track to reach our ambition of 15GW offshore wind capacity by 2025 as we continue to pioneer the global offshore wind industry.

[rambutan2] 02/8/2019 21:25

Win is for 346 cable protection systems for...

[thomshrike] 02/8/2019 12:48

The company says that it was expected, so that guidance in unchanged, but I would add that this is a significant positive in terms of de-risking the backlog.
The company also makes an interesting point that AgileTek and Ryder participated in other parts of the project, supporting their claim that it can more market share across the value chain. Especially relevant because it means that these businesses can also access large-sized contracts.
Always nice to see such a nice share price performance in such a bad market day.

[jonwig] 02/8/2019 11:35

Yes, a single contract of £5m against FY 2019 turnover of £28m.

Conceivably could add £1m to after-tax profit.

[imperial3] 02/8/2019 11:21

£5 million contract win encouraging news.

[dplewis1] 02/8/2019 11:09

Seems like decent news here?