Tekmar Share Discussion Threads

[thomshrike] 16/10/2019 09:45

The stock has so far barely reacted to news of the acquisition, but I see a big buyer in the market right now. I think their participation at the Berenberg Opportunities conference last week may have raised awareness of the stock. Looking good.

[thomshrike] 10/10/2019 15:37

Honestly this looks as a wonderful bolt-on acquisition. The strategic fit is obvious: similar end-markets, large global market share on its niche, proprietary technology on equipment protection. Similar gross margins. Plenty of room for synergies, both in revenues (cross-selling) and costs. In terms of organisation, Pipeshield should be much more informal, so plenty of room to improvement. Interestingly apparently this company is H1-weighted, so a nice fit to H2-weighted Tekmar in terms of working capital management. Founder and CEO will stay, adding his management expertise to the group. I hear that this company was on top of Tekmar's M&A list at the time of the IPO.
Acquisition price looks quite cheap, as previously mentioned.

[imperial3] 10/10/2019 11:03

Thanks jonwig

[jonwig] 10/10/2019 10:45

3.0m cash + 0.75m shares + 1.5m + 1.25m deferred cash = 6.5m.

[imperial3] 10/10/2019 10:35

How much did they pay for this acquisition?

[jonwig] 10/10/2019 09:04

Trying to analyse what they are paying ...

Reasonable to assume that EV = P(6.5 - 1.1)m = P5.4m.

PBT = P0.8m, and depreciation about P0.1m (Co's House) so EBITDA = P0.9m.

Gives EV/EBITDA = 6x.

Plenty of plant/machinery and 25% dep rate. Looks a decent price, as profits are increasing.

(Open to correction. ADVFN can't produce a pound sign it seems!)

[jonwig] 10/10/2019 07:13

Acquisition of Pipeshield:



A lot of detail to take in!

Incidentally, Investors Chronicle had an article last week in which it said that companies making blockbuster M&A deals should be avoided, small accretive takeovers like this one generally led to outperformance.

Website:

[jonwig] 09/10/2019 10:31

Interesting, I thought (dated 30/09):

[jonwig] 02/10/2019 15:21

Not directly relevant, but relevant, everything "renewable" will be sought out:

[thomshrike] 25/9/2019 14:56

Thanks jonwig.
And to that point, I will stress the following: very few people in the financial community - in the UK or in the rest of Europe - know Tekmar and its exposure to Offshore Wind. As Offshore Wind becomes a theme, I'm hoping that more and more people become aware and get involved.
One additional point related to that: Tekmar will participate in the Berenberg Opportunities conference for the first time this October.

[jonwig] 25/9/2019 14:48

@ thom - our posts crossed! I find yours more convincing: an offshore wind thing.

[jonwig] 25/9/2019 14:44

Yes, intriguing, and why now?

One, maybe the HY end which is pending will see a positive surprise. They didn't give a TS last year, but maybe they will this time.

Two, you know my theory, mentioned a few times!

[imperial3] 25/9/2019 14:33

Why the upward movement now,nothing has really changed recently, unless somebody knows something we do not know.

[thetrophyman] 25/9/2019 13:57

Nice big buy, BGF buying more perhaps?

[thomshrike] 24/9/2019 16:18

encouraging performance today, to say the least.

[thomshrike] 24/9/2019 12:57

Thanks jonwig. I don’t know any of the others (aside from the developers) and they are not listed. Note that the developers are not OW pureplays (eg Equinor is the Statoil’s new name).
Other than Tekmar, the only listed company close to being an OW pureplay is Dutch-listed SIF.

[jonwig] 24/9/2019 12:39

Yes, 9,000 and 10,000 is a good size for this.

These are the companies forming the NE Cluster, "Energi Coast". I haven't checked whether any others are quoted, but anyone researching the sector ought to pick out Tekmar.



Other investments such as Orsted have had a good run, and the renewables funds are trading at a premium to nav.

EDIT:

Equinor - Norway, quoted.
Innogy - subs of RWE, Germany.
ABLE - UK, private.

[imperial3] 24/9/2019 12:15

Creeping up.

[jonwig] 24/9/2019 06:46

An excellent article from last week's Economist:

"Lessons from Britain, the world’s biggest offshore wind market"



[Can read foc if registered.]

This shows the trend:

[jonwig] 20/9/2019 11:56

Excellent news, and the FT also covers, making the point that these projects will find ready buyers among pension and infrastructure funds. What neither article says is that outside a 12-mile (or km?) offshore limit, the farms are not within the EU.

[thomshrike] 20/9/2019 08:49

Also important news today:
hxxps://www.offshorewind.biz/2019/09/20/uk-offshore-wind-strike-prices-slide-down-to-gbp-39-65-mwh/

[thomshrike] 20/9/2019 08:39

jonwig, that's certainly true. The discount of UK-listed stocks to peers listed in other european countries is still very steep. Difficult not to see a rush of offers when the Brexit drama is finally out of the way. In fact we've seen how some buyers even decided to anticipate their decisions (eg Greene King, Entertainment One, etc).
In the case of Tekmar, the best example is Dutch-listed SIF. Even though the company has a non-differentiated product that does not travel well and would be much more impacted by delays in the US than Tekmar, its share price has been rallying sharply. Tekmar should catch up.

[jonwig] 19/9/2019 16:17

Thom - it was tongue-in-cheek, of course. But weak GBP? "Buy while stocks last!"

[thomshrike] 19/9/2019 16:04

Hi jonwig, if one day someone should present an offer to buy Tekmar, my view is that it would be one of the big EPC companies, notably Subsea 7, since they have a big presence in OW installation.