SRT Marine Systems (LON:SRT) – sensible £3.95m fund raise to boost working capital
This £97m global provider of integrated maritime surveillance systems and digital navigation safety transceivers has announced a £3.95m capital raise @ 50p a share – which looks totally sensible to me.
The raise price was at 50p, a near 14% discount to the closing price last Thursday night.
The company intends to use the net proceeds of the Fundraising to facilitate accelerated growth through provision of working capital for the company's systems and transceivers divisions.
CEO Simon Tucker commented that:
"In the last few years, SRT has transformed its prospects as demonstrated by a 265% increase in revenues to £30m last year, a current forward contract order book of £160m, and a pipeline of new system contract prospects which has grown to £1.4bn from which we have also recently announced a further award notification.
This fundraise is timed to support this acceleration of our business."
Analysts Kimberley Carstens and Michael Hill at finnCap have a price objective of 100p out on the shares, almost double the current market price.
The analysts consider that with the profitability expected this year and next, there is plenty of room for upgrades as a track record continues to be established.
They are expecting the group to more than double its sales in this year to end March 2024 at £70.9m (£30.0m est), while adjusted pre-tax profits will explode from an estimated £1m loss in the 2023 year to an excellent £7.3m profit this year.
Looking further ahead for the 2025 year, £104.8m of sales are estimated by finnCap, the group’s broker, with profits leaping to £11.8m, taking earnings up to 6.2p.
The group’s customers include national security and safety agencies such as Coast Guards and national fishery agencies as well as individual vessel owners.
Its products and systems provide customers with enhanced maritime domain awareness in order to solve problems that include maritime and border security, illegal fishing, marine environment protection and navigation safety.
These shares at 51.20p, after the funding, are still very cheap and are certainly not for selling yet – we have had a good ride so far and there is obviously so much more to come.
(Profile 14.09.20 @ 39.5p set a Target Price of 50p*)
Filtronic (LON:FTC) – firm hold for further recovery
Last Friday morning’s Trading Update from this high-tech products supplier showed some positivity.
The company, which is involved in designing and manufacturing for the aerospace, defence, telecoms and critical communications markets, informed shareholders that its supply chain issues have started to ease, while its opportunity pipeline is still building.
CEO Richard Gibbs stated that:
"Throughout the year our primary markets have remained robust, and we enter the new financial year with a strong order book, a significant number of promising development programmes and opportunity pipeline that has doubled during the course of the last year.
Notwithstanding the disruptions caused by shortages of electronic components, we believe that we are continuing to make the right investments in the business to capitalise on the exciting near-term opportunities in our core markets.
We have been encouraged by the closing of two new telecoms infrastructure contracts early in our new trading year and will look to build further momentum as the year progresses.”
Analysts Michael Hill and Kimberley Carstens at finnCap now have estimates for the year to end May this year, showing a slight dip in revenues to £16.3m (£17.1m) while it might only show a £0.1m adjusted pre-tax profit against £1.5m previously.
For the current year they look for a partial recovery to £0.8m profits from £20.5m sales.
The brokers have a price objective set on the group’s shares at 20p.
We should get a bigger picture of the group’s progress on Tuesday 1st August when the group reports its finals.
The group’s shares, which have been up to 17.34p in the last year, are currently 14.50p valuing the group at £31.3m.
The shares are a firm hold for further recovery.
(Profile 04.02.22 @ 11.6p set a Target Price of 14.5p*)
And finally – a blast-off at Boohoo
Boohoo Group (LON:BOO) – sniping shareholder comments not good
I profiled this £473m capitalised group in early March this year when its shares were 55p, stating at the time that the market still questions the real value of the group’s shares.
Several readers have questioned me why I didn’t put out a Target Price on the shares – the simple answer was that it was not as yet a company that I wish to suggest that investors get stuck into, it still has some proving to do, especially with its ‘Exciting Growth Plan’.
The shares have subsequently fallen to the current 33.5p level.
I have to say that I am not enamoured to a company that takes a 26.6% stake investing in a recovering business and then attempts to chuck out the ‘recovery team’ – at the same time blaring on about its own online retailing skills (while probably not mentioning its own massive loss-making).
I will await more positive corporate moves before making any Target Price pointers.
(Asterisks * denote that Target Prices have been achieved since Profile publication)