Investors in SRT Marine Systems (LON:SRT) the globally operating group have endured ups and downs over the last year or so.
They are probably praying that things are beginning to go their way now.
The Business
The group is an established leader in the growing global market for maritime domain awareness, providing technology-driven solutions for coastal and EEZ surveillance, fisheries management and monitoring and navigation safety and efficiency.
SRT customers range from government agencies such as Coast Guards, Fishery Authorities and Ports & Waterway authorities to commercial and leisure vessel owners.
Recent Performance And Orders
The group’s shares, which were trading progressively by June of last year, when they touched 63p, have subsequently been down to as low as 10.35p by the end of May this year.
Along the way it has taken on board a major new equity investor and operating partner in the shape of Ocean Infinity – which recognises SRT’s special abilities and co-ordinating technology with its own special products and services.
Recently SRT has secured a mega-contract with Kuwait for the protection of its marine borders – worth a staggering $213m and covers a 12-year period.
That contract is for a ‘state-of-the-art’ national maritime surveillance system for the Kuwait Coast Guard and other relevant agencies.
The system will incorporate a broad range of sophisticated sensor systems, USV's, Ai Analytics, augmented reality and integrated command & control systems as well as new supporting civil infrastructure.
The contract forms a 12-year partnership with implementation expected to take up to 2 years, followed by 10 years of support, training and maintenance.
When announcing the contract news at the end of last month, CEO Simon Tucker stated that:
"Winning this landmark contract is a huge honour and achievement for SRT and reflects our many years of technology and project delivery capacity investment.
This system will undoubtedly be amongst the most sophisticated maritime surveillance system in the world, incorporating several significant innovations along with full integration and digitisation of surveillance and command and control which will provide a powerful tool to enhance national security and maritime safety and environment protection and sustainability.
We look forward to working with our new sovereign partner to deliver this contract and more in the coming years."
Following a recent £31m finance package, the group subsequently raised £8.5m of fresh working capital @ 35p a share, backed by Ocean Affinity, which is a marine technology company specialising in the development and deployment of robotics for large-scale, subsea data acquisition.
The Ocean Affinity Connection
Ocean Infinity is developing a range of innovative technologies to transform operations at sea, enabling people and the planet to thrive.
Employing more than 500 technology and data specialists located in offices and operations centres across Europe, South East Asia, North America and Australasia, Ocean Infinity owns and operates a fleet of advanced robotic lean/uncrewed ships.
As well as over 20 robotic ships currently in operation or in-build, it has a fleet of subsea robots that it can deploy from the ships or on a stand-alone basis, to deliver a wide variety of outcomes for its clients.
Over the past year, SRT and Ocean Infinity have started to explore commercial synergies such as the use of USV's in maritime surveillance systems and bathymetric surveying to enhance fisheries management.
OA CEO Oliver Plunkett stated that:
"We're excited at the possibilities for SRT, and Ocean Infinity, founded on our investment in the company.
The burgeoning partnership we have formed allows us both to better serve our clients in the maritime data and services market.
We firmly believe in the company and its management to deliver as well as in the commercial opportunities for us to work together for the benefit of both businesses."
Latest Contract News
Yesterday morning SRT announced that it had received a notice of award for a contract worth $9m from a Middle East sovereign Coast Guard.
This contract, which is expected to be signed and commence during December, is with an existing long-standing SRT customer who is now undertaking an upgrade to its system to integrate more sensor systems and related new functionalities.
The upgrade will integrate multiple command centres and ministries, enabling them to integrate all maritime data within a single secure platform that is fully owned, controlled and operated by the customer in country and thus share a common national operating picture and digitally co-ordinate operations.
Simon Tucker stated that:
"This is a typical example of the long-term partnership SRT builds with customers and how the build-up of customer MDA system capabilities and capacity is a long-term multi-contract program.
We look forward to delivering enhanced capability to their existing SRT system and working with them to fully operationalise them."
Broker Views
Analysts Kimberley Carstens and Michael Hill at Cavendish Capital Markets are probably holding back any views on SRT until the 15 months results to end-June are released on Monday 2nd December.
They do note that SRT benefits from an established market position with multiple reference government-backed customers, strong relationships with in-country partners, and differentiated solutions that reflect over 10 years of investment.
My View
Considering the massive amount of overvalued companies within the technology sector, I believe that SRT stands ‘head and shoulders’ above others within its field.
It takes time to develop such impactive systems and then go out and sell into a global marketplace – but that is just what SRT has done and it is not that far away from reaping its rewards.
Already we have a certain confidence that the group’s 2026 trading year will show a significant profit – and that is just what investors should now be anticipating.
Its shares are currently trading at 44p, valuing the group at less than £100m.
(Profile 14.09.20 @ 39.5p set a Target Price of 50p*)
(Profile 10.11.23 @ 39.75p set a Target Price of 60p)
(Profile 25.04.24 @ 22p set a new Target Price of 35p
*)
(Asterisks * denote that Target Prices have been achieved since Profile publication)
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