Software Radio Technology (LON:SRT) , the company that makes maritime communications systems and tracking equipment, has received orders from two Chinese customers totalling US$300,000.
The orders are important for SRT because they mark the latest steps in the company’s efforts to make serious headway in the Chinese market, where regulators have implemented rules requiring an anticipated 550,000 vessels to be fitted with Automatic Identification System (AIS) devices by 2015. The Software Radio Technology share price gained 2% to 38.38p on the news.
The orders are for SRT’s Class B products and are destined to fill demand from local authorities which are fitting AIS to their fishing fleets. China’s is in the process of building the world’s largest AIS network. Last year SRT renegotiated a distribution deal in China after realising that the market offered much broader scope to sell its range of identification and tracking technologies.
The company freed itself from an exclusive one-party deal and has signed a distributor agreement with a new customer whose sales channels access new segments of the Chinese market. At the time, the company said it had become apparent that the market opportunity created by a national mandate programme was considerably larger than the 220,000 vessels originally estimated in September 2009 when SRT announced the receipt of an US$18m order from its strategic partner.
Worldwide there are believed to be mandates in effect which require approximately one million vessels to be fitted with an AIS device within the next four years. SRT estimates that 80,000 such devices have now been fitted, with more mandates expected in the future. Last year the company added the Class A AIS device to its range in order to capture market share in areas where regulatory requirements demand even tighter standards than those covered by the Class B product.
Earlier this year, Simon Tucker, the chairman of SRT, raised eyebrows in the City by delivering a well-received live investor webcast to existing and prospective private and institutional investors. Commenting today, he said: “Last year we recognised that the China market opportunity was bigger than we expected and took action to broaden our customer base. These orders are the first we have seen from these new customers and given the market opportunity we expect to see more in the future.”