Trading Update On Two AIM Listed Stocks; SRT Marine Systems Plc & Coro Energy Plc

       

SRT Marine Systems Plc

SRT Marine Systems Plc (SRT) is a United Kingdom domiciled manufacturer and provider of high-performance, proven turn-key MDA solutions for both ship and shore based marine tracking applications. The company manufactures and provides technology for maritime ship tracking and turn-key solutions apparatus to marine companies and organizations across the world having a demonstrated expertise in AIS transceivers. The company’s equipment and solutions are used by individual ship owners, dock authorities, maritime infrastructure providers, coast guards and other security agencies to reinforce their maritime domain capabilities. The Applications of these technologies comprise of tracking commercial and leisure ships; sustainable fishing; anti-collision solutions for large ships; search and rescue; waterway administration, port and coastal security applications; pollution control and administration; and environmental protection and preservation.

The shares of the company are listed on the AIM segment of the London Stock Exchange where they trade with the ticker name SRT.

Trading Update

The company on 04 October 2019 came out with a trading update for the six-month period ending on 30 September 2019.

  • The revenues of the company during the first half of the current year increased year on year by 10 per cent to £3.5 million from £3.2 million for the same period last year, while delivering an estimated half-year loss before tax of £1.5 million compared to £1.3 million half-year loss before tax for the same period last year. As on 30thSeptember 2019, the company had a cash balance of £1.7 million in hand
  • The company’s transceivers business, which manufactures and provides AIS transceivers equipment to the leisure and commercial shipping businesses worldwide, was the one to generate the majority of the revenue for this six-month period, with a period on period revenue growth of 15 per cent. The company’s systems business, which provides turn-key maritime surveillance equipment and intelligence gathering systems for coast guards and the commercial fishing industry, also made a good progress during the six-month period by delivering on £32 million worth of the company’s active contracts.
  • During the second half of the year, the company expects to see its transceivers business to continue to grow and it also expects to announce some major new product and application launches; the company will be providing marketing updates in this regard which is scheduled for November 2019. In the company’s systems business it is expecting to complete and deliver on a number of project milestones that it has set out for its current active system contracts and also for a number of new system contract opportunities which it expects to formalize and commence implementation shortly.
  • The company is in the process of developing more than one system contract opportunities of various sizes which have achieved satisfactory progress during the first half-year. In particular, a subordinate of these contract opportunities, which the company hoped to formalize into a contract during the current financial year, has achieved good progress towards commencement as expected during the second half of the year.

Stock performance at the London Stock Exchange

Price Chart as on 04 October 2019, before the market close (Source: Thomson Reuters)

On 04 October 2019, at the time of writing the report (before the market close, GMT 11.05 AM), SRT shares were trading on the London Stock Exchange at GBX 40.90.

The stock has a 52-week High of GBX 47.91 and a 52-week low of GBX 25.15. The total market capitalization of the company was £63.85 million.

Outlook

The company continues to make good progress in focus areas in its target markets of AIS transceivers equipment, integrated maritime surveillance equipment and intelligence gathering systems for coast guards and the commercial fishing industry. The transceivers business of the company continues to grow due to the recognition of quality and performance of products that it has received from the marketplace.  The company also expects this demand to accelerate as it launches some new products in this segment and markets them later during the year. The company’s various R&D and operation teams have given a good performance in delivering the technologies and physical installation of the company’s complex systems in existing contracts – in particularly the world’s single largest fishing monitoring system contract in The Philippines for the company’s client BFAR. The first half of the year also saw a lot of activity and progression was made on a number of pending deliverables. The company shall provide updates to shareholders regarding these issues during the second half of the year with the management feeling comfortable regarding meeting its guidance and market expectations.

Coro Energy Plc

Coro Energy Plc (CORO) is a United Kingdom based explorer and producer of natural gas. Its business is focused on Southeast Asian oil and gas assets.

The company has gas exploration and production assets situated offshore, off the coast of East Java in Indonesia, on the east coast, and in Italy in the PO valley region. The East Java asset is of particular interest to the company as South East Asia is a growing gas market where supply of the commodity is declining whereas demand and prices are increasing.

The company’s assets in South East Asia are the Bulu PSC, the Duyung PSC and the Malaysia Block 2A. the assets of the company in Italy are; Sillaro, Bezzecca, Sant’Alberto, Rapagnano, Casa Tiberi, Sant Andrea, Laura and Marciano.

The shares of the company are listed on the AIM segment of the London Stock Exchange where they trade with the ticker name CORO.

Trading Update

The company on 4 October 2019 announced that it has commenced drilling of the Tambak-2 well in West Natuna basin, off the coat of Indonesia, in which the company holds a 15 per cent interest. The total time required to drill the well, core, create log and test conducting is estimated to take around 33 days, after which the drill rig will immediately be shifted to the Tambak-1 well location.

Financial Review

The company on 12 September 2019 came out with its interim results for the six-month period ending on 30 June 2019.

  • The company has made a loss before tax from continuing operations for the interim period of US$4.7 million while for the corresponding interim period in 2018 the loss before tax from continuing operations was US$1.9 million. This loss for the interim period was mostly on account of corporate costs including ongoing business development activities in the South East Asian region.
  • The loss from discontinued operations of the company for the interim period was US$7.7 million, whereas the loss from discontinued operations for the corresponding period in 2018 was US$1.0 million; this loss was primarily on account of non-cash impairments totaling US$5.2 million (the loss value on this account for the corresponding period in 2018 was $nil) and a deferred tax expenditure of US$1.3 million (which in the corresponding period of 2018 was $nil).
  • The Cash and cash equivalents carried forward in the books of the company as on 30 June 2019 were US$11.43 million which includes US$401,000 relating to discontinued operations.

Source – Company’s interim financial results statement published on 12 September 2019

Stock performance at the London Stock Exchange

Price Chart as on 04 October 2019, before the market close (Source: Thomson Reuters)

On 04 October 2019, at the time of writing the report (before the market close, GMT 12.20 PM), CORO shares were trading on the London Stock Exchange at GBX 2.85.

The stock has a 52-week High of GBX 3.65 and a 52-week low of GBX 1.78. The total market capitalization of the company was £22.45 million.

Outlook

During the six-month period the company continued to execute on its South East Asia growth strategy through acquisition of the Duyung interest in that region which has increased the company’s resources further. A near-term exploration and appraisal drilling of these assets will provide necessary data to evaluate and derisk these assets.

With high value acquisitions made in South East Asia, the company is well positioned to create significant value for its shareholders. The assets in Italy meanwhile continue to perform well, with higher revenue realization due to higher prevailing gas prices in Q1 2019. It is also worth mentioning here that the management has decided to completely divest from its Italian assets and channelize its resources to its south Asian operations where it sees greater growth and value creation potential.

The company during this interim period also raised further financial resources which improved its liquidity position further. The company raised this funding through the successful issuance €22.5 million worth of Eurobond.