VEEM Ltd

ASX:VEE

VEEM Ltd

ASX:VEE
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$1.110 (+3.3%)
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#86
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6
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19
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Reports (3) My Report Forum Investors
Forum Topics VEE VEE FY23 Results

Pinned straw:
Noddy74
Last edited one year ago

I thought Veem released one of the stronger reports I've seen thus far this reporting season. Both the looking backwards result and the looking forwards 'nuggets' lined up to present a very bullish proposition.

Revenue was 'only' up 10% but improved margins and cost discipline saw them flow most of that into profit (and cashflow).

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The Outlook was full of bullish sentiment and light on specifics but a couple of disclosures stood out.

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Gyro sales taking off like a frog in a sock was the main reason I had this company on my watchlist but it just never seemed to happen for them. Suddenly with $11m orders on hand and the Strategic Marine exclusivity agreement in place it might be a case of slowly, slowly and then all at once.

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As @Wini and others have noted significant focused investment can suppress a company's results for a period of time but for right company the backback in the years following the investment can be significant. The key is finding the company who aren't selling perpetual capex requirements as 'Growth'. Veem are yet to prove that's what they are but I think there's enough in this result to suggest they may well be.

Kicking myself I didn't do more than look at it when the SP dropped below 40 cents just a month ago.

[Took a starter position yesterday IRL. Will look to add in SM]
UlladullaDave
Added one year ago

I think these guys need to show a few more runs before I'd start to take a serious look at them. They've capitalised ~$24m over the last 10 years in product development and capitalised a further $10.5m on fixed assets. Despite that EBIT and NPAT are basically they were 10 years ago. A friend's father used to run a shipbuilding company. While he was very familiar with gyrostabilisers he had never heard of Veem. Perhaps what they're doing is not as groundbreaking as they make out.

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BoredSaint
Added one year ago

Hi @Noddy74, thanks for your post about Veem.

Have been following this company on and off for the last few years. Seems like a solid niche company in the same vein as PWR holdings.

I agree the current set of results are impressive compared to FY22 which was quite disappointing. Just wondering if you have any thoughts on the cyclicality of this business? I remember they were having lots of labour issues as a result of WA lockdowns and then shortage of skilled labourers which impacted their business last FY.

Disc: Not held.

6
Noddy74
Added one year ago

Now that PWR has diversified their sector exposure that may not be a bad analogy @BoredSaint

I think those are valid risks you've identified, particular the labor issue. I missed the call and so didn't get a chance to ask them directly but I think the last time I heard them mention it things were improving but far from ideal. I don't think that's a quick fix but clearly they're managing ok (given the result).

Cyclicality is definitely a valid question but I'm encouraged by the fact they have significant exposure to defence and growing exposure to offshore wind farms, both of which clearly have significant tailwinds. Though I'm guessing the Russian-oligarch-superyacht-market is going through a bit of a tough time at the moment!

The deal that they did with Strategic Marine is a pretty significant validator of Veem's tech in my view. Strategic Marine build all sorts of stuff (they're also a competitor with Austal in the aluminium hull market) but the stated purpose of the gyros they've bought is for crew transport to wind farms.

10
Invmum
Added one year ago

Have held this since about 2018, it was doing well pre-covid but then lost its momentum due to the inability to market gyros and service them.

I think of them as having a decent core product that grows marginally every year, although the prop business seems to be growing strongly too now. The gyros is the cream, I still believe they can crack this market but adoption of new tech is inherently slow. Buy and hold!


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