Welcome to our new product “Friday Takeaway”
This will delve a little deeper on individual companies and focus on non-house stocks under £200m market capitalisation to help raise awareness
| Index | Thurs | Weeks change % |
|---|---|---|
| FTSE 100 | 8,149 | +1.0% |
| FTSE Small Cap | 6,767 | -0.6% |
| AIM All Share | 725 | -0.5% |
SYS.L Short Learning Curve
TGP.L Time for Change
| Price | Results | Largest Shareholders | Value |
| 28-29p | Y/E March | Gresham House Asset Management 26.30% | New Team |
| Spread: 3.5% | Report July | Mr. Heejae Richard Chae 15.75% | £11m raised at 33p |
| 52 week High/Low: 40/ 28p | Report Interims 3rd Dec | Canaccord Genuity Group 11.40% | Interim momentum |
The new board since June is lead by Heejae Chae, who owns circa 16%, and was formerly with the £414m market cap company IP Group plc. The evolutionary mission is to renew the product development and service strategy to focus on Artificial Intelligence and Machine Learning. The development Team are ’seasoned’ engineers from AWS, JP Morgan, Validus and McLaren. There is a strategic partnership with a £3bn company, Softcat PLC, which endorses and adds credibility when SYS engage with new clients. It raised £11.3m at 33p in June 2024, to fund internal transformation, strengthen the balance sheet and working capital to drive organic growth while seeking M&A opportunities.
The funded plan is to become a high-end, end-to-end data solutions provider to small and medium sized businesses that are seeking to benefit from the AI/ML opportunity. It’s won the second largest contract in its history, totalling £2.2m of revenue over three years, providing cyber security managed services for a challenger bank. The Company’s bespoke innovative technical solutions enable clients to drive productivity, mitigate risk, increase resilience, and sustainability. The trade and assets of Crossword Consulting Limited (CCL) were recently acquired for £311,000, with a conditional further cash payment of £127,000. CCL’s turnover was £2.25m with a majority of it from customers in the FTSE 100, FTSE 250 and S&P presenting cross-selling opportunities.
The finals reported in March 2024, included impairment charges and exceptional costs and reported a loss of £6.6m with a reduced EBITDA to £2m down from £2.1m. The interims to September are due on Tuesday 3 December 2024 and should show improvement, but there is a time lag from investing and generating returns.
Comment: Progress is being made along the J-curve, but it’s not at the bend yet.
| Price | Results | Largest Shareholders | Value |
| 7-7.25p | Y/E September | SCF GP LLC 31.77% | Time for wind |
| Spread: 3.5% | Report March | Schroders 14.84% | Funds available |
| 52 week High/Low: 12p/7.125p | Report Interims May | J O Hambro Capital Management 9.2% | Low Rating |
Tekmar’s Offshore Energy and Marine Civils Divisions supplies a range of engineering services and technologies that support and protect offshore wind energy production. Wind power generated 32.4% of the UK's electricity, exceeding the 31.7% produced by natural gas. The UK government has allocated over £380m to boost wind power with £160m in offshore wind power hubs and the increased supply from wind farms is expected to more than halve UK electricity prices in the next decade.
Subsea Protection Systems are critical as they safeguard cables and SURF products (umbilicals, risers and flowlines that go above the water) from external forces in both hostile dynamic and static environments. In over 35 years, it has supplied 9,000 protection systems protecting £billions worth of subsea assets. The current order book of £24.1m is a balance of better-quality and de-risked work across the energy and subsea markets with an estimated gross margin of 31%.
Tekmar recently won contracts for a combined value of over £1.5m, to provide specialised offshore grouting services (waterproofing). It is in partnership with EPIC (Engineering, Procurement, Installation, and Commissioning) contractors. The contracts are in the Middle East, with existing customers and are expected to be completed in the current financial year to September 2025.
The interims to March 2024 reported improvements with an adjusted EBITDA of £1.8m, compared to £0.6m, on a slight increase in turnover to £16.2m and gross profits margin of 33%. The Interim cash is £2.7m, with net debt of £3.6m of which £3m is a Covid loan. Although equity may be preferred if it was less dilutive, a £18m SCF Capital CLN facility is in place from its major shareholder, with conditions, but is available to drive organic and acquisitive growth.
Comment: At the current valuation, the timing seems also to be in investors’ favour.
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