Strip Tinning Share Price (STG)

All in all, very impressive Presentation. Some points to take away:

Very impressive Gross margins now being achieved in the Glazing Division, 40% during 2024. "Glazing division Gross Margins improved from 3.6% in 2022 to 28.7% in 2023 (and reaching 40% in 2024)" and "Further improvement in Gross Margins expected from continuing operational improvements."

"Major BT nomination still expected in H1 and further Glazing PDLC wins expected" They also mentioned that there was a possibility of a further large nomination win in H1.....

"Lifetime sales value of all nominated business now is £53m which supports the expected growth to 2026 and beyond. So additional nomination wins will only enhance this, and I suggest lead to a positive re-rate of forecasts

"Two major PDLC wins announced for Glazing division – lifetime sales value £18.6m – with more to come"

I was also impressed by Mark Perrins and how he presented. Seemed on the ball to me.

Https://www.proactiveinvestors.co.uk/companies/news/1046462/strip-tinning-reports-2023-results-eyes-major-growth-with-new-automotive-and-ev-technologies-1046462.html

Balanced opinion

Note that 2024 is a "transition" year as Singer Capital put it this morning.

Overall STG are forecast to make a £2.2m loss before tax this year, compared to a £1.5m loss last year. Even 2025 is forecast to bring a £1.2m loss.

EBITDA worsens this year to a £0.4m loss.

Net debt increases to £5m this year, up from £2.6m, and then worsens to £6.1m in 2025.

STG looks extremely "promising" as so many companies do, but as is so often the case it has a long way to go to deliver in terms of becoming (1) profitable and (2) cash-secure/generative.

Particularly as it looks like it'll need a fundraising at some point for working capital etc to support growth.

FY23 results show a much-improved financial performance with sales of £10.8m (FY22 £10.2m, +6%) and adj. EBITDA of £0.1m (vs a £2.2m LBTDA FY22a), in line with our expectations. This is the direct result of management action on productivity, pricing, quality and service. FY24e will, as expected, be a transition year given the lead times on new contract awards, but the business is in excellent shape to return to growth from FY25 onwards. Our forecasts show sales doubling over the next 3 years with recent nominations and a building pipeline of opportunities providing strong visibility on this growth. After the two recent new nominations in Glazing, which in aggregate bring £18.6m of revenue, the total lifetime sales value of all nominations held by the company is now £52.7m (over 5x FY23 sales). Management remain confident in converting in the near term (1H24) at least one significant opportunity in the renamed Battery Technologies division (previously EV) with a meaningful pipeline beyond that. In what is a well-managed succession plan, CEO Richard Barton will become Deputy Chair and hand over the reins in June to current group MD Mark Perrins. We think the current share price substantially undervalues the value creation potential with an inflexion point in growth in sight. No changes to forecasts or recommendation. BUY, TP 75p.