Hello

Looking at this stock ahead of H1 results. Obviously the stock metrics look great. I think a lot of stockopeeps like this one. Found it tricky to get answer i was looking for from their website as seemed to be having some problems (e.g. couldn't pull down reports etc). I have a few things I'm interested in discussing and getting views on....

1) Who manufactures for them?

2) Patents written down to zero at end 2017 (12 year period of write down). I assume these are design patents as they do not manufacture and they typically have a 15 year life. I'm no expert though! I guess they have written down to zero to coincide with end of patent. This means that their machines are now available to copy - right? I don't know how likely that is in this niche but their high margin provides incentive if somebody want to have a go. Any views?

3) There seems to be a significant second hand recycling market in the US for their sort of levelling and placement equipment. I guess that there is a long-life to these products when well maintained. This is my guess for why sales growth was moderate there in 2017 and perhaps will remain so going forward.

4) Whilst revenues remain US biased Somero are at risk of negative sales YoY in US in anything other than a fairly hot construction market given the presence of significant resale market (in a market already well penetrated with their product)

5) It seems that vendor financing has become a significantly more important component of sales. I don't think there is a regional breakdown of this but given flat sales in US and the $5m pick up in accounts receivables it looks like overseas sales are increasingly financed.

6) If incremental growth is non-US then dollar strength is a negative factor. Do/have they discounted abroad? Also, they will be at higher risk of walk away on their vendor financing

7) Can they really grow in China? China has a history of successfully copying equipment. Somero in the US was protected by patents and a niche that not too many wanted to compete in. This counts for nothing in China. And given 50% of global concrete use in China compared to about 3%…

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