Green AIM stock Tekmar extends rally
Shares have doubled in 2019, but it operates in a fast-growing market and the City is optimistic.
3rd December 2019 14:44
by Graeme Evans from interactive investor
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Shares have doubled in 2019, but it operates in a fast-growing market and the City is optimistic.
Environmental, social and governance (ESG)-focused investors may want a closer look at Tekmar (LSE:TGP) after results from the specialist in offshore wind cable protection today extended an impressive 2019 share price performance.
The Newton Aycliffe-based company was recently awarded the Green Economy Mark by the London Stock Exchange, to acknowledge that it generates more than 50% of revenues from products and services that contribute to the global green economy.
The ESG recognition has raised the spotlight on a company that only joined the London stock market in June 2018 and has doubled in value to 160p since the start of this year.
Source: TradingView Past performance is not a guide to future performance
Today's half-year results, which included a record order book of £15.9 million and revenues growth across all five of its divisions, prompted analysts at house broker Berenberg to increase their price target by 20p to 180p.
They highlighted attractive longer-term prospects, with recent reports suggesting that global offshore wind power capacity will increase 15-fold over the next two decades.
Berenberg added:
"Given Tekmar is the clear market leader in offshore wind cable protection, this provides an attractive long-term growth driver for the business."
This optimism is underpinned by a positive cash balance of £3.9 million at the half-year, which should help the company to secure further acquisitions to expand its product offering into other markets.
Tekmar's products have protected billions of euros worth of assets in the offshore wind, oil and gas, wave, tidal and interconnector markets since 1985. Revenues are likely to be split 60-40 this year between offshore wind and subsea, such as protection for major oil and gas pipelines.
Today's results showed record half-year revenues up sharply to £17.1 million, with underlying earnings of £2 million compared with a loss of £800,000 a year earlier.
The Tekmar IPO in June 2018 made James Ritchie one of the youngest CEOs on the London market at the age of just 28, having previously led a 2011 management buy-out. The company, founded by Ritchie's father in 1985, listed with a market capitalisation of about £65 million, but endured a rocky start to life in the first few months of trading.
Shares have rocketed since then from 80p at the start of this year, with confidence helped by the company's estimated 70% share of the offshore wind cable protection market. Tekmar's top five customers represent more than 50% of sales.
The subsea diversification strategy, which has included the acquisition of three businesses since the IPO in 2018, has also been significant in supporting growth and offsetting revenue delays in some European offshore wind contracts.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.