Tp Share Discussion Threads

[eastbutwest80] 02/2/2017 21:12

I am a new fish to this but went along to the G&IF on Tuesday and watched Mr. Kings' presentation as well as spending a considerable amount of time speaking to the staff on the stand afterwards. I was suitably impressed as they seemed to be one of only two companies (them and Angle PLC) attending that had a clear strategy for the future which is refreshing considering they also have a graph pointing upwards shwoing the progress from the last 12 months.

I obviously wasnt the only one who noticed this as they had the busiest stand there by far, I had to wait to speak to someone the first time, i spoke to another investor there about the huge cash stockpile who had some interesting ideas about what they will do with it (nuclear acquisitions?!)

I agree with PA that the engineering side (submarines and engineering) seems to be the most exciting and to read here that the goal is £100m, it would appear that the manufacturing arm will be expected to give the most ROI for company. The services side seems like an annoyingly simple model - "take MOD redundant staff and sell them back to the MOD". If it is as easy as it was presented then £100m should be a doddle! I also notice on Linkedin that they are recruiting for this part of the business and I quote "nice people only!".

I spoke with Mr Kings very briefly and then Phil Curtis (Commercial Director) and Nick Pilditch (Sales Director) at seperate times who all gave me a very well versed and professional pitch. The comments on here about nuclear and aerospace seem to fit hand in hand with the impression I was left with from my visit, maybe its the fact that they are sales guys but I couldnt help but come away with a good feeling. My own background in aerospace tells me that these guys will be a perfect fit and if these are the new management team mentioned in previous posts then I think the company is in good hands (I see the "nice people theme").

I havent been following TPG long enough to know much about the Corac days but the management team that I met seem to be very aware of what needs to be done and the supporting evidence is that this is well underway, NP spoke of data collection to make decisions and the culture change of the business. All good stuff, they were also very honest about the past and spoke openly about the factors behind last years results and the new Edison update. You can tell a lot about a company going through change from the management team.

Does anybody know what market share TPG have of the sub work and the heat exchangers work? I imagine they are both quite specialist? How do you even start getting into nuclear engineering from oil and gas? There are huge differences.

My only concern that I did not really find any clarity on was the submarine business for the future, although SK's presentation implied that there were other technologies being investigated with H2 (Hydrogen), there was no mention of products or applications. Maybe I just didnt understand but could somebody fill in the blanks for me please?

All in all, I will be watching these very closely; i'm tempted to jump in now but I like to fully understand the business first.

Sorry for the stupidity on my part but I am eager to get my head around these guys.

*Edited for H2/Hydrogen clarification

[pavey ark] 02/2/2017 18:00

Further snippets gleaned from the presentation slides (I would be most grateful if there are additional comments/observations on my comments from those who attended).

I noticed that the four units were put under two headings "services"(MS and D&T) and "Engineering" (Maritime and Engineering)

The engineering part is obviously the more important and interesting in this context.
1. The large BAE contract was a design contract so it looks like this was for design work on the new Dreadnought class (Trident) boats.
2. "Design contract for new overseas submarine class."
I could find no RNS for this so under £500k but very significant if it is ,as I suspect, initial work for the new Australian fleet of 10 (+2)submarines.
3. In 2017 they are looking to get the contract for the system build for both of the above, first of class boats.
4. They are looking to develop "hydrogen opportunities" for fuel cell driven AIP systems that appears to be the must have on all new non nuclear submarines.

All of the above together makes things look very good for the Maritime unit and I think that few here have really absorbed the significance of TPG's long standing French customer winning the massive contract for the Australian submarines.
I said more than once that the TKMS contract won in August was more significant than the £1.6m value as this manufacturer is a leading specialist in AIP(fuel cell) and I suspect that TPG will be able to supply more than the bog standard AC unit to these boats.

Add to all this the prospect of D&T reducing losses (profitable?..steady lad !)and the opportunities that they see in nuclear engineering, things look good.

[pavey ark] 02/2/2017 13:42

Seems I'm "a day late and a dollar short" today.
Was a bit miffed with TPG that they hadn't given us the info on the recent (considerable) machine purchases only to find it on "latest News" on their web site.
I then went to post this info only to find it was there on the BB.

I did Google Titanium/aerospace industry last night and was surprise to discover that the UK has the second largest aerospace industry in the world after the US but when you then consider RR and BAE it does make sense.

It is highly unlikely that these machines were bought on spec and management will have contracts/work for them or the be very sure that these will follow.

I have said many, many times that this engineering unit has been put together for next to nothing and now looks to be taking off.
Even with the new paint shop and these new machines the unit looks to have costs c.£3.5m

Just for starters I wonder if Southampton can push some previously outsourced work their way and as the company has said they are looking to the nuclear sector.
Nuclear power stations are being upgraded to keep them going and they have a very long standing and close relationship with BAE the company that builds the UK's nuclear submarines.

I have said in the past that they would buy a small specialist engineer as they wanted to break into the aerospace sector but it looks like they have found a way in for not much cash.

My only niggle is the £100m turnover by 2020.
I certainly agree that this can not be achieved with organic growth alone so I wonder if management has their eyes on something quite substantial ?
This would not be a problem for me as they have certainly shown that they know what they are doing but it does rather go against what has been said regarding small/cautious bolt on acquisitions.

Was the £100m target specifically mentioned in the presentation ?

I notice in the slide presentation and in srichardson8's post the £50m MoD contracts appear to be over 5 years (?)

[rolling ronnie] 02/2/2017 12:49

Simon King's presentation Slide Deck

[timojelly] 02/2/2017 12:45

'This investment by the TP Group subsidiary reinforces the Group's status as a major Tier 2 supplier to prime contractors in industrial, energy, process and defence sectors. It also springboards the Engineering business into a new area of physically large, highly accurate workpieces, predominantly in titanium, for nuclear engineering clients throughout the world.'

[timojelly] 02/2/2017 12:31

Cheers, was a copy and paste job.

[bullster] 02/2/2017 12:10

timojelly,

Nice find , there is some good information in the article.

p.s. edit your post and put capital (T)'s in the link address hTTp




Sod it, i've done it.



"According to TPG Engineering’s Commercial Enterprise Director, Phil Curtis, the company has made a strategic move to increase its machining capabilities to secure new customers in nuclear engineering and to achieve additional, larger and more complex work from existing clients."

[timojelly] 02/2/2017 11:22

Sorry try this, http://www.mtdcnc.com/stories/machine-tools/tpg-engineering-powers-into-nuclear-energy-market-with-large-machine-duo-from-ward-cnc?keywords=&AspxAutoDetectCookieSupport=1#.WJMF3abGd5A.twitter

[timojelly] 02/2/2017 11:21

AspxAutoDetectCookieSupport

[pavey ark] 01/2/2017 17:04

srichardson8, the profit margin has always been a bit of a concern since they "picked up" the heat exchanger business.
Large conventional heat exchangers are a commodity business and this management were smart enough to move themselves up the chain, hence the nuclear sales.

At this stage it really doesn't matter were the heat exchanger was going as long it was into a nuclear environment.
Few companies at this level are "fit for nuclear" accredited and even fewer have the contacts that TPG has.

Nuclear subs or refurbishing nuclear power stations the margins will be much greater.

I was very taken with your snippet about the new machining centre and it looks like management is looking for a slice of the aerospace market.
It helps to be on the very best of terms with the biggest defence/aerospace company in the UK

qackers, thanks for that, disappointing but at least we had people on the ground.
Simon kings can be confident about any acquisition being earnings enhancing from day one as it is almost certain that TPG will be able to add to the t/o order book from their contacts.

[qackers] 01/2/2017 16:49

I don't think they were filming.
Couple of points I just remembered. They are bullish on the nuclear work because the £1million invested in this area puts them ahead of rivals. They are getting enquiries from oil & gas companies. Not sure what for but don't think anythings going down any hole. Any work will be paid for.
Can't help re GE division or nuclear.

[srichardson8] 01/2/2017 16:36

I will just add that he quite clearly said that it was for a GE division (ex Alsthom) and was not for nuclear power plant. I don't think I misheard. Part of the brightness in the heat exchanger conversation was clearly that profits on them for the oil and gas business has been disappointing but that (let us say) some kind of nuclear related held out much better prospects.

[pavey ark] 01/2/2017 16:25

Thanks to all who attended and reported back.

Just asked the PR company to chase up the video of Simon kings speaking.
Shares posted the video of last years presentation the day after but the person I spoke to thought that she didn't see any filming going on but would check.

Did the people attending see any cameras there ?

[qackers] 01/2/2017 15:39

Great post srichardson8. I was at the presentation and would say you have done a very thorough report.
I managed a quick chat with Simon Kings afterwards. Any acquisitions should be earnings enhancing from day 1.
Sounded very bullish but no one knows why the share price isnt higher.

[croasdalelfc] 01/2/2017 14:04

To me the contract is more likely for Hinckley Point which GE won a £1.9 B contract in Dec 16 - via a contract previous won by Alstom.But I wasn't at Cenkos meeting so ... I could be wrong ;)

[croasdalelfc] 01/2/2017 13:51

Hi AllJust a small point - no criticism intended here -Srichardson - 'They are also very excited about the potential of the heat exchange business in relation to nuclear power. This is for GE (ex Alsthom) and is not for a power station. I assume it must be for a nuclear sub?'Alstom power division was purchased by GE and is now part of GE Power - ex GE Energy I think. The RNS states GE Oil and Gas which is a separate division. So maybe the RNS was wrong or maybe the link to GE nuclear (part of GE Power) on the part of posters above is a little off

[pavey ark] 01/2/2017 13:22

Central costs have been a very reasonable £1.1m for some time.
My "amateur forecasts " have been far better than anything you've come up with and the man you don't rate has produce a business that is worth TODAY many times the £11m he paid out.
But none of this matters as I am perfectly sure that there are very few people ,if any, who rate your comments as anything other than mad rambles and totally worthless drivel.

If you ever had a point it is now lost .
You have been totally wrong here, added nothing to this board and you have been left floundering and lashing about while we all sail on.

Most would consider you more than a little unhinged so lets leave it at that but be assured that this is the most charitable assessment of your mental state I can come up with.

For everyone else I've just been a run along the beach while considering srichardson8's post.
Much to consider as a new light seems to have been shone on a number of issues.
Things look very positive but as I said much to ponder.
I've always gone along with the 50% growth theory and few would argue that if achieved this would be a tremendous investment but things are stirring and without getting excited we may be moving up a gear or two.

[paulgo] 01/2/2017 13:03

TP, given that the bias of your posts hasn't changed since you could buy these shares at 1.85p (happy to say I did) and they now cost 6.25p, I would argue that no, your posts don't have any merit.

Your only motive is to try and depress the share price with your droning negativity......good luck with that one.

[the prophet] 01/2/2017 12:21

chorister
hardly 'obsessed', but that does not matter anyway. What matters more is do my posts have any merit? Each to their own on that, but I have re-posted the bits of the Edison report that our resident guru wish I had skipped over. it's not my info or thoughts, it's the views of paid for research outfit Edison.Yes, there are plenty of positives in the report as well, as is only to be expected, it is paid for research and they want repeat orders, but I do feel Edison do a reasonable job and it's a service to investors.
There are also plenty of negatives or things to watch out for, amongst them -ve operating cash flow forecast to be £1.2m this year, options to be repriced, ie price slashed, margins under pressure and the possibility of a fund-raise. They all strike me as points investors should be aware of in the report, rather than PA's glossy view.

Finally re investors losing money, well, for a lot of investors and a lot of institutions that has certainly been the case since cartmell has come on-board, I won't go through it all again, but one has only to check the share price history and the history of fund-raisings to see that is the case, factual. I'm pleased to say I'm not one of them to any extent, as the last of mine went at 18p a long time ago.

My view, fwiw, is that bad management are able to screw up even good opportunities. I don't rate Cartmell, his past wrt to vega has been somewhat buffed up in the latest Edison report. Again, I won't go through the detail again.

I note in the excellent report from srichardson that TPG are looking to do away or drastically reduce the central overheads, that is a welcome move. I suggested that yet again yesterday, only yet again to be poo-pooed by our know it all amateur forecaster. There could be a decent business in here, but there are, imo, a number of issues that need to be addressed.
I look forward to seeing what happens and commenting as I feel appropriate!

[pavey ark] 01/2/2017 11:46

srichardson8,thank you very much for such a detailed report from yesterday.
Just to let you know I have a fairly large holding in TP group and because of that I follow it very closely but you threw in a few facts I wasn't aware of.

1. The GE order,if for a nuclear sub, is very significant and opens the door to all sorts of future orders (the house broker obviously knew this and were very positive on the prospects for the engineering unit, now I know why!)

2.The £100m T/O target for 2020 is news to me and I agree that it is unlikely to be achieved without acquisitions but it does show the ambition (potential) of the group.

3. The machining centre purchases for £1m would explain some cap.ex hinted at in the broker's report,I spotted it but didn't understand where it was coming from.
This is the sort of way I expected the cash to be spent and with our nuclear power station being overhauled and new nuclear submarines being built it looks a very shrewd way to spend a million.

I now look forward to seeing the video of Simon kings presentation (Shares Mag. put it up the day after his last presentation so should be up today)

Again, thank you very much for the info.

[nw99] 01/2/2017 11:21

SR thank you for your detailed explanation of the meeting .
All looks good I will be increasing my stake .

[chorister] 01/2/2017 11:19

The Prophet - I don't know you, so don't know if this is fair, but to be honest you come over as a bit obsessed - may be because, if my memory serves me right, you originally promoted the idea that Corac / TPG was going to benefit from a US$100bn market with the DGC.

These days the impression you leave, at least to me, is that you would love it if the company went bust and everyone lost their money so that you could say 'I told you so'.

I'm certainly well happy with what the market has decided so far.

[srichardson8] 01/2/2017 11:15

I listened to the 15 minute presentation by Simon King at the Cenkos conference yesterday and spoke to him, briefly, and Phil Currie, at length, afterwards. I don’t know this company at all well; this is designed only to give some impressions and may well have horrible errors but I shall delay reading the two broker notes (Beaufort and Edison) until later and have desisted from looking again at the recent trading updates.
The driving idea behind strategy is to follow projects from concept until decommissioning. There are currently 200 staff in five locations, the HQ in Farnborough, submarine in Pompey, heat exchange in Manchester and then Bristol and Slough. The MoD has cut 20,000 civil servants and is intent on increasing business for SMEs from 20% to 30%.
The submarine atmosphere control (AC) business is buoyant. Excepting the US, China and Russia other markets can be tapped. They should supply AC to a client central to the Australian project to fit a new sub class (10 subs planned) with combined hybrid fuel cell (hydrogen) and diesel propulsion. The £50mn MoD contract negotiation, if realised, would be spread over five years. The timing of this contract being formalised is key as there is a good current business outlook in servicing an existing sub class which they hope will then be boosted by what would be entirely new business. The spin off from this business in waste energy conversion with high-speed turbo machinery seems to have potential. The tie with Spirax, which was a commissioned project on conversion of waste to energy from Spirax steam trap offtake, was a one-off research project but could produce further royalties if Spirax can sell the product. If you don’t know Spirax, it is a world leader in this area, a brilliant blue chip company.
They are also very excited about the potential of the heat exchange business in relation to nuclear power. This is for GE (ex Alsthom) and is not for a power station. I assume it must be for a nuclear sub? They have purchased two machining centres at a cost of £1mn. These products are (I believe) partly or all made from titanium (non corrosive) which is famously difficult to machine.
D&T should be ‘near break even’ for the 2016 accounts and possibly profitable this financial year. The sharp drop in admin costs - which looks to me to be the main reason for the interims moving into profit - was not very clearly explained BUT they seem to be making each centre responsible for its own P&L and alluded to the erasure of central costs. The exit of the CFO may be related to this but the implication was that admin costs would be more stable and under stricter control.
The company target of £100mn revenues by 2020 looks incredibly optimistic and could certainly not be achieved without acquisition(s).
The main risks seem to be 1) the execution of their projects 2) physical and human constraints on production for heat exchange and 3) the actual formalisation and timing of the MoD contract.

The company is debt free, cash generative and has £9mn in cash but one might speculate that a large fund raising could be required on an acquisition or acquisitions targeting additional revenues of say £20-40mn (my speculation) to get closer to the 2020 target.
But the business feels good and growing, is run by a junta of three directors one of whom (S King) is ex Navy and has high defence security clearance. The marketing man in the booth also seemed really switched on. And though I don’t personally know the ‘Vega story’, that is the kind of model they are aiming at and it was very successful as I understand it.
A positive take.

[pavey ark] 01/2/2017 10:44

The house broker increased their EBITDA predictions by 33% ( Mid-December)due to the significant increase in the order book which was materially ahead of expectations AND the lower losses at the D&T unit.
It should be noted that Edison and Cenkos have NOT factored the MoD contracts into any forward estimates/forecasts.