SRT Marine Systems (SRT:AIM) 48p

Gain to date: 60%

When we flagged maritime identification and tracking technologies kit supplier SRT Marine Systems (SRT:AIM) at 30p a month-and-a-half ago (13 October) we were confident a business which had gone under the radar for years was ready to win the market’s attention.

We probably didn’t expect to see a 60% increase in the share price in a matter of weeks but that’s exactly what has transpired.

WHAT’S HAPPENED SINCE WE SAID TO BUY?

A big catalyst for the surge higher in the shares was provided by first-half results on 14 November. Covering the six-month period to 30 September, these revealed a 300% increase in revenue year-on-year to £18.8 million and a pre-tax profit of £2.1 million compared with a loss of £3.1 million for the same period a year ago.

Chair Kevin Finn commented: ‘These results are now starting to show the benefits of the significant technology, product and market investments we have made over many years.’

Some of this was already known thanks to a trading update but as FinnCap analyst Lorne Daniel observed, the second half is ‘shaping up well’, underpinning his confidence in forecasts for £56.6 million in revenue and £6.8 million adjusted pre-tax profit for the 12 months to 31 March 2023.

Daniel added: ‘After securing a small new coastguard deal (in early November), management continues to expect significant new systems contracts to be announced in the coming months; five in particular worth £200 million are currently in the final stages of lengthy contracting processes.’

WHAT SHOULD INVESTORS DO NOW?

While it might be tempting to take profit after such a strong run, a rating of 12.6 times FinnCap’s forecast 2023 earnings per share does not seem onerous, particularly given the scope for SRT to win some very meaningful new orders in the coming months. In our view investors haven’t missed the boat and the shares remain worth buying.

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