SRT Marine Systems – Cavendish Capital Markets analysts say group reaching ‘inflection point’

SRT Brokers – Cavendish Capital Markets – analysts Kimberley Carstens and Michael Hill say group reaching ‘inflection point’

Following completion and activation of the inter-government project finance agreement, SRT Marine Systems has announced commencement of its 10-year €167m Indonesian Coast Guard contract.

The two-phase project comprises system implementation worth c.€140m, expected to take two years, followed by an eight-year support, maintenance and data services period worth c.€27m.

The project commences with immediate shipping of the first batch of equipment and software, which together with other milestones, aggregate to c.€50m.

After customer approval of milestone delivery, cash payment follows approximately 6 weeks later, paid directly by the finance agreement.

We expect to reinstate forecasts following completion of this initial shipment, which may fall either side of the June year end.

Today’s announcement means the company is delivering on five active projects worth £334m with consummate revenue and cash receipt over the next 12-36 months, with further significant upside in the medium to long term, underpinned by management confidence in conversion of the £1.2bn validated sales pipeline from both new and existing customers over the next financial year.

As geopolitical tensions rise, SRT’s AI-driven integrated national maritime surveillance, intelligence and communications system is excellently positioned to meet the growing demand for maritime domain awareness, safety and security by sovereign agencies.

After years of developing its product and prospects, SRT has reached an inflection point with multiple concurrent revenue and cash-generative contracts from multiple sovereign customers with decade-long strategic plans.

Long-term market fundamentals and the company’s respected technologies, products and market position underpin SRT’s next phase of growth.

They concluded their note:

“As sovereign nations build up civilian maritime surveillance and management capabilities to create integrated systems, we anticipate long-term strategic projects will deliver multiple successive contract opportunities involving expansions, support and maintenance and data supply revenue.”