Take more Tekmar: Flash Update
The market reaction to the interim numbers are a buying opportunity
Hi Wizards,
Without any ado, let's tuck in to Tekmar, specifically their H1 26 interim update. TGP.L $tgp.l
The Numbers (Better Than Expected)
Revenue: £16.2m (+31% YoY from £12.3m)
Gross Margin: 30.5% (+180bps YoY)
Adjusted EBITDA: +£0.1m (vs -£0.7m loss HY25) — first positive in recent memory
Loss After Tax: -£1.1m (57% narrower YoY)
Order Intake: £29.5m in H1 alone (vs £10m last year)
Order Book: £30.1–£31.7m (2.5x YoY), heavily weighted to Offshore Wind (77%)
Cash Flow & FCF Update
On the cash side, net cash outflow from operating activities was £2.14m, leading to a standard FCF (operating cash flow minus capex) of approximately -£2.58m for the half year. This was driven primarily by temporary working capital timing -specifically a build in receivables from project delays in the Middle East - rather than any underlying deterioration in the business. Capex stayed very low at just £0.44m, fully consistent with the high-operational-gearing thesis. One-off asset sales (Innovation House and a subsidiary) provided a helpful £4m+ cash boost that strengthened the balance sheet and supports growth plans. Management expects a much stronger H2 on both revenue and cash, positioning the group for positive full-year cash generation as higher-margin projects from the record order book are executed.
We remain on course for robust FCF inflection this year with the FCF yield on Tekmar rising to above 20% by 2028.
Why the Stock Dropped today
If we are to be picky, H1 gross margin was a touch softer than peak levels due to mix, and the Middle East project delays may have caused concern. The latter is probably what led some to sell. But management expects these delays to be temporary. Existing ME contracts (including the large $10m UAE CPS win and other O&G/port projects) remain in the order book and should progress.
As to the offshore projects, this looks like a classic back-end weighted seasonality. The order book de-risks the year.
At 15p post-drop, the market cap sits around £20m. That’s still absurdly cheap for a business with:
Record order backlog and record client order backlog
Structural tailwinds in offshore wind
High operational gearing (incremental revenue drops straight to profit) and global footprint.
Summary
Tekmar remains one of the highest-conviction microcap turnarounds in the Wizard's book. The moat (40+ years track record, switching costs, specification at FEED stage) is intact and widening. The H1 cash flow timing is short-term noise in a project-based business and doesn't change the multi-year setup. Over that time period, we continue to look at business growth trajectory demanding a 5x rerate at stock level.
Good Morning WOW. I came to the same conclusion first thing this morning and topped up my position. I think the market is very jittery atm and you only need to add in a second half weighting or a cautionary note from management and it's enough to spook a few into selling. On thin liquidity in any small cap stock a few sellers will soon move the price - along with those little scamps the brokers/market makers.....! Ps Happy camping and thank you for both this and IDHC all while 'Wild Camping' - superb effort!