Tekmar Share Discussion Threads

[imperial3] 09/9/2019 13:05

Pity they don't issue a RNS for this major contract win.Could kick start the share price.

[jonwig] 09/9/2019 09:41

Tekmar selected for Changhua offshore wind farm by Jan De Nul:



Taiwan again. "Major contract win" - a lot of companies would issue a full RNS for one of these. Not doing that fits in with their stress on cost-saving.

[thomshrike] 02/9/2019 09:50

Hi Jonwig, I think that mgmt recently said that the main bottleneck would have been engineering skills (in fact same for the whole industry), but that they made some hires and will be fine with the current capacity for some time. But it's always a good question for analysts to ask them next time they roadshow.

[jonwig] 01/9/2019 20:53

A Telegraph article is notionally about the revival of Grimsby, but is really about the offshore wind industry. This caught my eye;

The Danish group Ørsted has based its gleaming new hub beneath the [Hull] Dock Tower. The control room is like a military logistics centre with rows of screens, measuring the wind speed, yaw angle, rotor RPM, and so forth, of every turbine 75 miles out in the North Sea.

The company employs 170 staff in Grimsby with a further 500 contractors. “When we advertised for six apprentices we got a thousand applicants,” said Darren Ramshaw, the regional head of operations. The local one-man caterer that supplies the Ørsted canteen – Deli-licious – has expanded to twenty people.

The hub manages the Hornsea 1 wind farm, the biggest offshore cluster on the planet. The array is being erected at a staggering pace, one giant turbine every couple of days.

Installation out at sea is lightning fast. “They put up the tower, the nacelle, and blades, in a single day. The team switches it on the next day,” said Matthew Wright, Ørsted’s UK managing-director.

Hornsea 1 began in April and will be finished later this Autumn with 174 turbines providing 1.2 gigawatts (GW), comparable to a large nuclear reactor but built in a fraction of the time. Hornsea 2, 3, and 4, are lined up for the early 2020s. Together they could potentially produce 6.2GW.

Ørsted has other operations at Race Bank a little further south, as has Equinor. Innogy is building Triton Knoll nearby. The scale is huge and it all requires an army of skilled workers.


From our visit, I doubt TGP has at present the manufacturing capacity to handle such a volume of business. Will it inevitably become part of a much larger group?

Reasoning, forecast turnover:
2019 - £28m
2020 - £40m
2021 - £46m
They are, I think, at full capacity producing the current £40m. 15% yoy thereafter is the problem.

[jonwig] 27/8/2019 16:28

The 34,000 reported early morning could have been the rumoured 'big seller' at work. But I'd be cautious about interpreting buys/sells. ADVFN's algorithm just compares with mid-price and is quite unreliable as a buy/sell indicator.

[imperial3] 27/8/2019 15:49

Tipped,more buys than sells apparently,marked down, perverse.

[shallwe] 27/8/2019 09:47

Nice to see that The Share Centre have Tekmar as their 'share of the week'.

[thomshrike] 26/8/2019 17:30

Thanks jonwig.
Pls note that the second article (Taiwan) is old.

[jonwig] 26/8/2019 14:35

Orsted-Taiwan project in doubt:



NB - written in January, so maybe outdated.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~

@ imperial3 - yes, I appreciate that, but the corollary is that I shouldn't post the full article. I'll see what I can do about a summary of key points when time allows.

[imperial3] 26/8/2019 14:06

Jonwig.

You have to be a subscriber to read this.

[jonwig] 26/8/2019 12:49

Orsted's expansion plans and barriers to entry:



[I added a comment to the article.]

[thomshrike] 22/8/2019 15:00

jonwig, I honestly do not know the range of prices. Those names would make sense, esp. Edison, but I would venture to say that Numis is the most likely candidate in the ST (and hopefully so because they reach more potential clients than any of the others).

[jonwig] 22/8/2019 14:33

Thanks for the appreciative remarks.

Maybe not well-known in the investment community, but certainly high-profile in the industry. (If you have 100% of the market in some areas, it can't be otherwise! And their remedial work, as I mentioned.)

Stingy management? Yes, polyurethane waste is weighed and billed to the customer. There's a possibility it could be sold on for hardcore on European roads. And the lunch catering was, shall I say, not extravagant.

Broker coverage - the obvious candidates would be Edison, Equity Development or Hardman. But they are company-sponsored, of course. Thomshrike, how much does a basic report cost here? £10,000?

[thomshrike] 22/8/2019 13:47

imperial3, that is a key point. I agree, there are just so many potential investors that never heard of the company. I will give you an example: it doesn't even ever show on peer tables in notes written about other offshore wind exposed companies across Europe (such as SIF).
This is related to their low market cap, in 2 ways. Large brokers tend not to be interested in the company as it is too small for most of their clients. On the other hand, being covered involves fixed costs (more significant to smaller companies) and management is stingy (which is a good thing, don't get me wrong).
Finncap almost started covering the company (I no longer think it will happen). Future candidates would be Numis or N+1 Singer. Hopefully it will happen soon.

[imperial3] 22/8/2019 13:07

Could do with raising their profile.They do not appear to be well known within the investment community.

[toinifinity] 22/8/2019 11:31

Jonwig - many thanks for a very informative post. This share price tends to trickle down on no news,as now, and so I'll occasionally average down my break-even price (got a little carried away buying on the way up post IPO). Happy LT-Hold

[thomshrike] 22/8/2019 09:51

Jonwig, thank you so much for your feedback. Those insights from the tour are of particular interest.
I am also vigilant on CF. My guess (just a guess) is that mgmt has strategically chosen to trade stable margins for longer receivables days. That said, market consensus (essentially Berenberg...) points to a strong CF reversal in H1 - as SH apparently also hinted at. It's important that this materializes.
Given the large contracts that were converted recently, I would assume that FY2020 revenue guidance is relatively safe, regardless of the US or the o&g market. Maybe we will even see a better mix.

[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.