SCT - Scott Tech

[Snoopy]

Whether $1.80 or so represents a bargain could depend on the depth of one's vision. For those looking short term, say as far out as the FY 2016 announcement, there might be no compelling bargain. Those looking further ahead, mindful of the difficulty of easily picking up shares in an illiquid company if/once profitability bounces, might be paying very sensible prices.

I agree with the above comment by U.S., which is why I am not selling!

At the road show, Chairman Stuart Mclauchlan said that the most profitable part of what SCT currently does is the repeat installations of meat industry robotics. But oddly, Robotic Technologies Limited and NS Innovations Pty limited, the meat industry robotics joint ventures both report their contribution to Scott Technology's profit as 'Nil' in AR2015 (page 38). This does not line up against what the Chairman said in the road show!

Subsequently at the special general meeting to approve the JBS merger, Chairman Mclauchlan revealed that the meat industry robotics profit was generated because the actual engineering work was farmed out to the parent Scott Technology company, and not kept within the respective joint venture. IOW, there is 'transfer pricing' going on. That makes the true profitability of meat industry robotics less than transparent. And it makes it very difficult to guess what sort of profit a 'scaled up' meat industry robotics program might generate. That is my cautionary note, and why I don't like overpaying for SCT shares! The one's I bought at cash issue time for $1.39 late last year are looking good though!

SNOOPY

[sb9]

Not fully conversant with industry trends that SCT supplies to, however fact that JBS decision to invest further is a vote of confidence as far as I'm concerned. Happy holder for now, see how it plays out over next 12 months.

[sb9]

https://nzx.com/companies/SCT/announcements/281889

Very positive acquisition in my opinion.

[Snoopy]

https://nzx.com/companies/SCT/announcements/281889

Very positive acquisition in my opinion.

So the acquisition in Germany has finally been revealed:

A brief history of Somako, recorded here before the old website is wiped away!

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SOMAKO COMPANY HISTORY

Founded in 1981 by Manfred Hirsch and Ludwig Attig in Oberderdingen, plant and automation concepts and designs and electrical control systems for chipless metalworking were initially created.

Today SOMAKO is with over 100 employees at locations in Germany and Portugal, a leading provider of flexible production lines and special machinery for various industries the sheet metal working industry.

The area SOMAKO control technology is a competent developer and supplier of control systems and electronics for many plant engineers of different industries at home and abroad.

As new business SOMAKO took over the BMD molding technique for molding plants and sand preparations of DISA of 2007. This area is dedicated to the supply of spare parts with original BMD replacement parts, service, plant modernization and plant expansions.

In order to respond quickly and efficiently to customer requirements, 2009, the new service area "Task Force" was set up.

Encouraged by the success of the BMD-molding technique, this field was in 2013 transferred to an independent Gesellschft. At the same time new molding machines and plants were included in the sales program.

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Scott's announced today that they have employed 36 ex Somako staff, so the 'new' Somako is rather smaller. No mention of any secondary Somako branch in Portugal any more.

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"The total consideration, including the necessary investment in working capital, is expected to be less than €1million. We expect annual revenues for Scott Technology GmbH to be approximately €8million and we have already secured several contracts for automated systems that provide confidence we can achieve our business objectives for Europe."

Price paid is a price revenue multiple of 8. Sounds OK.

"The agreement is for Scott’s fully owned subsidiary, Scott Technology GmbH, to acquire selected business assets, consisting of plant and machinery, stock and work in progress, along with all the intellectual property which includes the designs and drawings for past, current and future projects."

"We are negotiating a lease that enables Scott to operate from the existing premises in Kurnbach, Germany. Scott Technology GmbH commenced trading in April 2016."

SNOOPY

[ari]

https://www.nzx.com/files/attachments/236821.pdf

[Snoopy]

https://www.nzx.com/files/attachments/236821.pdf

Who is it ARI? A $5m order, with possible multiple orders to follow fits the bill of a meat processing robot line. Is someone in NZ raising capital to do it?

SNOOPY

[sb9]

Who is it ARI? A $5m order, with possible multiple orders to follow fits the bill of a meat processing robot line. Is someone in NZ raising capital to do it?

SNOOPY

Sounds very positive...

[sb9]

Looks like the big seller(s) lot at 180 has been filled in. Will be interesting to see how it goes from here...

[sb9]

Marching on the way to $2 mark....

[Snoopy]

Marching on the way to $2 mark....

It is interesting that as SCT hits $2, nothing has really changed since capital raising time when some shareholders were balking at paying $1.39. Hopefully those shareholders are off the register now. Personally I think the medium term prospects of SCT are very bright. But I don't see any quick turnaround in profit fortunes here. So in the short term I think SCT is staring to look overdone at $2. Maybe new shareholders are willing to take a longer term view?

SNOOPY