Tekmar Share Discussion Threads

[mwainw1973] 01/7/2019 22:24

That they are ;-)

[thomshrike] 01/7/2019 21:41

Tekmar is an asset-light business. They are essentially an engineering and assembly business. Capacity is not an issue to them at the moment: they hired a number of engineers in the last FY and currently have enough spare capacity to even tackle the oil and gas business. If they would need more capacity, they have more than enough net cash on the BS to pay for the capex. They definitely do not need to raise equity.
A roadshow at this time is business as usual: meeting institutional investors every semester after coming out with numbers.

[jonwig] 01/7/2019 20:28

ram - in fact, why debt? Equity would be more fitting, no? When I hear of a company "roadshow" I usually associate it with a softening-up process ahead of a fundraising.

Mere speculation, of course!...

[rambutan2] 01/7/2019 20:25

Thanks jonwig. Was unable to post.

[rambutan2] 01/7/2019 20:22

With the mkt opp growing at pace, perhaps some friendly ie non bank debt would be useful? Whatever, BGF are not just opportune mkt buyers, but growth backers.

[jonwig] 01/7/2019 20:08

The Economist this week has an article about renewables in the USA. Despite Trump's best efforts, progress is on a par with most other developed nations, with the most populous states in the vanguard.

Separately, I read that offshore development is hampered by poor port facilities for handling turbines on the E Coast. This is just published:



And this is the FT cited by rambutan:

Donald Trump expends a lot of energy complaining about renewable wind power. The US president has called wind farms ugly, unreliable and has linked the noise they make to cancer.

He should save his breath. Renewable energy in the US has far too much momentum to be halted by barbed quips. Wind power already accounted for nearly 7 per cent of all US electricity generation last year, according to the US Energy Information Agency. The next phase of growth will come from offshore wind farms.

That is good news for Danish wind farm specialist Orsted. Formerly known as Danish Oil and Natural Gas, the group has shed much of its fossil fuels related businesses in recent years. It focuses on financing and building ever larger wind turbine arrays. Its next growth area is the nascent US offshore market. After buying Deepwater Wind, a US offshore wind developer, last year it has won new contracts. Most recently, New Jersey selected Orsted to develop a 1,100 megawatt offshore project — enough to power half a million homes.

This follows another even larger Orsted-partnered project off Massachusetts and Rhode Island, due to begin operations in the next five years. There will be more to come. Although US installed wind generation capacity has grown at a compound annual rate of over 9 per cent since 2013, almost all of that sits onshore. Texas is one of the largest wind generators.

Offshore projects could dot the waters on both of America’s coasts in the decades ahead — potentially providing another 2,000 gigawatts (2m megawatts), according to the US Department of Energy.

Partly because of its expansion and partly due to the scarcity of rivals in pure offshore wind power, Orsted’s valuation has soared over the past year. Its enterprise value to forward ebitda is 14 times, half again as much as rival EDP Renováveis, which has a similar portfolio.

Increasingly oil companies with stronger balance sheets, such as Norway’s Equinor and Shell Energy, part of Royal Dutch Shell, have begun to compete in offshore tenders.

All lost out to Orsted on the New Jersey project. They should not be discouraged. Losing one contract will not come as such as a blow given the size of potential deals from US offshore wind in the years to come.

[rambutan2] 01/7/2019 19:45

Likewise am surprised to see BGF buying. Hmmm.

LEX in FT bullish on offshore US wind today.

[thomshrike] 01/7/2019 19:37

@jonwig: no no, BGF buys in the market like everyone else. No dilution here. I am curious to see how much more they will buy.
@mwainw: Lol, definitely not.

[mwainw1973] 01/7/2019 19:20

Very civilised of you

[jonwig] 01/7/2019 18:59

BGF have increased again to 5.09% - header updated.

I'd have thought, after thom's comment, that they would take new shares in companies rather than buy in market?

@ mwainw - don't ask, don't be nosey!

[mwainw1973] 01/7/2019 18:03

So you work for Tekmar?

[thomshrike] 01/7/2019 17:31

In case you have not had the opportunity to meet him, I can tell you he is quite impressive. Very articulate and dynamic. And certainly very mature for his age.

[jonwig] 01/7/2019 16:40

Found it, thanks!

The one with no hair is the youngest (and the boss).

[imperial3] 01/7/2019 15:19

From their website."FY 19 Roadshow Presentation Document June 2019." Well worth a read.Impressive and encouraging for the future.

[thomshrike] 28/6/2019 08:42

jonwig: exactly. In fact, not only it is a low tech product, but also they minimize the work that they do in the territory (only a final assembly, for local content purposes).

[jonwig] 28/6/2019 08:28

The China one wasjust a bit of a concern - that they'd have to share their technology. But if, as you say, these are low-tech products, it will matter less.

[thomshrike] 28/6/2019 08:21

A few comments heard from people that had the opportunity to meet mgmt this week:
- yes, Tekmar can participate in bids anywhere in the world. Those recently announced projects in the US and Japan will be won by them.
- they now have a subsidiary in China, that can be used to sell products there too. These are typically lower technology products. They have good relationships with at least 3 big local operators.
- India and Australia could quickly become large offshore wind territories. Not included in anyone's estimates.
- the o&g capex cycle is booming and their main concern is in fact to choose projects that are sustainable for the LT and do not take up too much capacity. Their level of penetration is still very low and they would expect to grow even in a downward cycle.

[thomshrike] 26/6/2019 16:00

I also saw BGF as a positive surprise. They are typically more early stage (see the portfolio on their website), which to me gives a good indication of the pace of growth that they expect for Tekmar.

[jonwig] 26/6/2019 14:32

BGF Investments has 2,155,000 shares (4.25%).

I didn't know these, but they look interesting, good people to have on board:



"BGF is an investment partner for growing companies in every sector of the economy. We provide the tools you need to grow, from funding to expertise, while letting you set the course.

We believe in the power of brilliant businesses to drive innovation, generate progress and deliver prosperity. And we thrive in our role to help make that happen."

[thomshrike] 25/6/2019 08:09

Numbers look quite ok to me:
- 2019 was in line with estimates (GM are indeed down, but that's an expected reflection of mix).
- Company says to be on track to meet 2020 estimates. This is the key point. The company also flags seasonality (weighted towards H2), but that's totally understandable given timing of installations (weather-related).
- Backlog is again up strongly. Orderbook is up 33% yoy and their key "market visibility" metric improves from 38.1m to 50.0m in this semester alone.
- Net cash positive at 4.2m. Plenty of optionality here.
The company will be doing a roadshow in London this week.

[jonwig] 25/6/2019 07:36

Here are the FY results:



Definitely cloud-free unlike the interims. Potential revenue growth looks strong: maybe 44% in terms of 'market visibility'.

Current year (adjusted) eps of 6p needs to be seen in context of expected 10p in 2020 (broker view).

Gross margins are 35% (down from 41% in 2018). For me, that's an important number and I'd hope it stays around there.

[jonwig] 24/6/2019 06:52

£100m fund to boost UK-based supply chain for offshore wind:

[imperial3] 21/6/2019 18:40

Final results June 25th.

[thomshrike] 21/6/2019 17:43

Hi jonwig, I would put it the other way around: I don't know how they could not be involved. Their product is by far the best in the industry, said to have no more than c.70% global market share only because many clients require dual sourcing. Additionally, where I would certainly not expect them to find meaningful competition is in countries where the industry is nascent such as the US. Also Tekmar's products travel well (as opposed to those of listed peers like SIF).
Additionally this week Siemens Gamesa announced they got their first offshore wind preferred supplier nomination in Japan. The offshore wind industry is indeed emerging in other countries around the world. I would expect Tekmar to end up being involved there as well.
Note that Tekmar will present earnings next week. Fingers crossed.

[jonwig] 21/6/2019 17:01

I don't know whether TGP's partnership with Ørsted extends beyond the North Sea, but this could be significant:

"Ørsted selected as preferred bidder for New Jersey’s first offshore wind farm"



TGP thinks they should be into this ...

"Tekmar are the market leaders in the design and supply of Cable Protection Systems in the Offshore Wind industry.
Now on our 8th Generation of product, we've revolutionised the connection and protection of submarine power cables."