27.03.2025
This morning Simon Tucker, CEO of the £132m-capitalised SRT Marine Systems (LON:SRT) stated that:
"I am delighted with our operational and financial performance during the first half which is rooted in many years of hard work to build up our technologies, products and global market position.
As we expected we have seen solid revenues from both transceivers and systems divisions and look forward to continued growth into H2 and the years ahead."
Trading Update
The first-half Trading Update for the six months to end-December reported a 476% increase in revenues to £26.2m (£5.5m), while swinging into a £2.8m pre-tax profit against the previous £4.6m loss.
The developer and supplier of maritime surveillance, analytics and management systems and products reported that it had five active nation states as customers for its SRT-MDA System.
It had some £320m systems business under contract, while it has a potential pipeline of £1.2bn of new prospects.
Management Comment
Chairman Kevin Finn stated that:
“With a substantial forward systems contract order book of £320m and a new transceiver product to start shipping in the near future, the Board is optimistically looking forward to the second half and the years ahead.”
That £320m of active system projects, all of which are scheduled for implementation over the coming 2 years, and some of which then have ongoing support contract periods of between 5 and 10 years, which will provide the company with long-term recurring revenues from data and support services.
Finn concluded that:
“Our large forward contract order book of approximately £320m, combined with a developing global market for our technologies which are underpinned by fundamental factors such as national security, navigation safety and marine
environment protection and sustainability, all mean we are optimistic about H2 and the years ahead.”
Broker Views
Analysts Kimberley Carstens and Michael Hill, at Cavendish Capital Markets, consider that:
“2025 promises to be a transformational period for the Bath-based company, a global leader in maritime surveillance systems and navigation safety aids.”
The analysts note that SRT has a strong investment case –
SRT is capitalising upon a Maritime Domain Awareness (MDA) market in its early stages of sustained growth as changes to national and international maritime regulation require system upgrades towards digital systems, which resemble the development of global air traffic control through the 1980s and 1990s.
Its sophisticated and differentiated platform, derived from 10+ years of R&D and accumulated experience, has established a market-leading position with a £1.2bn validated sales pipeline, enabling it to secure multiple significant contracts from sovereign nations, supported by strong relationships with in-country partners.
As sovereign nations build up civilian maritime surveillance and management capabilities (CG, Fisheries, Sustainability) to create integrated systems, the analysts anticipate these long-term strategic projects will deliver multiple successive contract opportunities involving expansions, support and maintenance and data supply revenue streams.
My View
I remain a big fan of SRT and its potential is really quite massive – it is still early days on its development but the pace of order intake is improving (it takes a long time
negotiation with Governments) but the Order Book and potential pipeline is exciting for a £132m-capitalised group that is now bursting into profitability.
Its shares, now up 7p at 53p, have the potential of being kicked up to trade the 100p level upon further items of good corporate news later this year.
Asterisks * denote that Target Prices have been achieved since Profile publication.
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