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" then I'm afraid we have never looked more vulnerable to a bid."
From a share holder point of view, is the above possibility not a good thing? (ie SP must go up). Or am I missing something?
Not great either way. We have world class tech with a big moat (currently) ; operate in a global duoploy; market trends are in our favour; we have a very large order book with some of the world's largest & most exacting OEMs......and yet. the company is struggling with concerns over financing and operational competencies....
If s/o , be it private equity or a global automotive supplier wants to buy a plug-in-and-play niche global tech business geared to very large global markets, then I'm afraid we have never looked more vulnerable to a bid.
The question is have SCE been able to ramp up production this quarter ? If so debt funding or a small equity raise should be no problem or not required at all.
If not and there are still production issues then 15p is likely to come into view quickly.
Patience is wearing thin among a pretty loyal investor base. If they raise, then Bundred has to step down, as he has consistently over-egged the pudding & doesnt appear to have had a close enough oversight on Johnson.
If you were OEM 10, you would want to know before awarding the 100m contract that ST was confident of financing its expansion. Therefore Johnson et al must have had to present detailed funding arrangements to them. The question I'd ask is what is it that they said on the finances that gave OEM 10 confidence to pull the trigger, notwithstanding the fact that the contract kicks in down the road?
Reputationally, another lowball equity raise will not only effectively destroy the share price leaving ST highly vulnerable to a takeover. It will also destroy Bundred, Johnson, & the new CFO's reputation. The markets are largely not to blame for the share price being where it is - the blame lies squarely with Bundred and Johnson and the board for their inept handling of things. Let's hope that message has finally got through !!!!
I think we will see another fund raise. A big reason why companies float is to raise money. AIM is in many ways a vehicle for this sole purpose.
If they don't raise this way then it has to be another. Why would they choose to increase debt if they don't have to.
The caveats to this are significant though. The last raise was a shock and killed the sp. The sp is so low now that, even if they could generate enough interest at 25p, the markets know that the sp will fall and be 15p in a matter of days. This begs the question as to whether a raise is viable.
It's a big question this and one that has to be well answered for the sp to move forward. The company will.move forward the sp is different.
you make a substantive point. in the past, both the chairman & johnson pooh-poohed queries about the robustness and rigor of the manufacturing process when pressed but as we know they fell flat on their face with the process issues, and we as s/holders have ended up paying for it as they threw several millions at trying to rectify the problems. so if teh oems are satisifued johnson would do well to explain the owners of teh company, what it is that has given oems comfort to award another 100m contract. really not helpful that he cant be more granular about this!
frankly, it has been a relief to get a proper coo on board and a new cfo. however, it is crystal clear that trust has been damaged, and that concerns remain about (1) depth of operational management skills (2) ability to expand & scale up production without more ****-ups (3) capability to produce at run rate needed to satisfy customer base w/o **** ups (4) quality control- again something that one of their recent rns mentioned as an issue
(5) finances: all very well trumpeting an 100m euro order if the cash is running out......shareholders were upset by the nature & timing of the last raise, they will be doubly furious if johnson & bundred pass the cap round again, having
used up a portion of the last fund raise to resolve operational issues of their own making.
I think the sp here is now driven by issues relating to financing the expansion plans (and the poor market conditions). The manufacturing issues are not that surprising and, we believe, are resolved.
On this forum there is plenty of discussion about order book and new capacity building plans. The share price however will be nowhere near where it ought to be until it is clear that the present manufacturing process is under control and able to produce at its intended output without lots of poor quality or wastage at the same time. I need some convincing that they now have a process that if scaled -up the new equipment will be reliable. If they don't then how do they know with lead times what equipment to order? For me the reports on getting on top of manufacturing issues have been vague - and insufficient in relation to what is needed to provide assurances. I have noted that they suggest that customers are sufficiently assured as to progress on some of these matters. Is it not overdue that shareholders were also similarly kept in touch?
Https://thebrakereport.com/porsche-911-upgrade-surface-transforms-braking-kit/
"Porsche 911 Upgrade: Surface Transforms’ Braking Kit
The Brake ReportThe Brake Report
October 31, 2023
Surface Transforms has announced the launch of its new Porsche 911, 992 GT3 RS Steel Brake Disc Upgrade Kits. This state-of-the-art upgrade promises to bring unparalleled braking performance to the iconic Porsche model.
Why It Matters
Braking systems are the lifeline of high-performance vehicles, especially those in the caliber of the Porsche 911. With this upgrade, Surface Transforms aims to redefine the braking experience, emphasizing precision, control, and unmatched braking power.
Key Points
Direct Fit: The Steel Replacement Kits are designed for a seamless fit without the need for any modifications to the vehicle.
Precision Crafted: Every component boasts superior engineering and precision, ensuring optimum performance.
Consistency & Reliability: These kits guarantee a reliable braking performance that’s consistent, whether on a race track or an open road.
Enhanced Features: Customers can expect the same robustness, durability, and enhanced thermal management that they’ve come to associate with Surface Transforms.
Bottom Line
Surface Transforms, as one of the few companies globally specializing in carbon-ceramic brake discs, utilizes unique Carbon Ceramic Technology. Unlike competitors using discontinuous chopped carbon fibre, Surface Transforms employs continuous carbon fibre in a 3D matrix. This results in a stronger, more durable product with enhanced heat conductivity—leading to superior braking performance. Their technology not only guarantees reduced braking system temperatures but also offers benefits like weight savings of up to 70%, extended product lifespan, consistent performance, minimized brake pad dust, and corrosion resistance.
For those eager to upgrade their Porsche 911’s braking performance, pre-orders are now open. Visit Surface Transforms’ website for further details."
May be wrong, but are we not due a trading update before the end of the month, so either either tomorrow or early next week. There appears to be a bit of buying at this level, so maybe the update will be positive and no mention of another cash raise.
I just read the Master Investor report. Nothing we don't already know and the unambitious price target is not accompanied by any timeframe. Perhaps if you're on a 1-3 month time frame a potential 20% gain is a target. However, from 25p I would be looking to hold for many years and to multi-bag from here.
But the positive thing is that if articles like Master Investor's drop into investors' inboxes it will hopefully increase the general interest out there.
Not exactly ambitious,....but at this point I'll take any positive vibes out there. What would be good nmow is to see our new execs writing some cheques for shares
By Mark Watson-Williams, who has an initial target of 30p which he states ""will be left well behind".....
Https://masterinvestor.co.uk/latest/surface-transforms-definitely-not-to-be-stopped/
He concludes:
"This group has such incredible scale-up ability and prospects, unfortunately they are not as yet being recognised in the group’s share price at the current 23p.
Gradually the brakes on the group’s share price will be released and then my own Price Objective will be left well behind.
I now set a new Target Price of 30p, which I believe will soon be easily achieved."
From 100p per their latest research note - here's extracts from their summary FYI:
"£100m of new activity secured
Surface Transforms has announced that it has been selected as a Tier 1 supplier of its market leading ceramic automotive disc brakes to the global automaker described as OEM 10. The Group will be the sole supplier to this existing customer for an extensive range of new electric vehicles. The lifetime revenue for discs for this range of vehicles is expected to exceed £100m, with production commencing in 2027e. Given that start of production is beyond our current forecasting period (2023e-2025e) our estimates are unchanged at this time. That said, we lift our medium-term DCF-based valuation to 120p from 100p. Surface Transforms is trading on a 2024e EV/Sales metric of just 1.9x vs. a UK growth companies industrial technology sector metric of 2.2x. We believe this award is a significant endorsement of the Group's technology and the ability of this management team to fully implement the ramp up in production currently underway.
Major new business award - Surface Transforms has been notified, following a fully competitive process, that it has been selected to supply more than £100m of brake discs for a new and extensive electric vehicle range. The Group will be the sole supplier of the carbon ceramic brake disc on both axles for a new vehicle range from OEM 10. Fit will be standard on some models in the range but an option on others. The manufacturing plan should see series production start in 2027e and run for seven years. The customer has been working closely with Surface Transforms during a period of well reported ramp up challenges (see H1 comments below). OEM 10 is clearly happy to award substantial new and follow-on business in this context. "
"Zeus forecasts and valuation -
The start of production for the new OEM 10 activity (2027e) is beyond our current forecasting horizon (2023e-2025e) and therefore our estimates are unchanged at this time. We will update capex for Phase 3 capacity expansion (which may impact 2024e-2025e) with further announcements from management. That said, our DCF based valuation takes a more medium-term approach; with secured orders now exceeding £390m (from £290m) we lift our valuation to 120p from 100p. "
Thanks Washerupper, see there was a delayed £70k sale which was the cause of the drop along with another few trades so a lot of selling, guess someone expected a big rise after the news and decided to sell up. Don't think there will be massive dilution, but a small raise may be needed
I think you’ve done well. With capacity and orders in place to achieve profitability, products in demand and strong margins, this should see a significant re-rating over the next 3-6 months. This assumes that there is not a significant dilution to raise capital, but it shouldn’t be needed.
Seems strange that it is dropping today by so much with little apparent volume and after yesterday's good news. Have not been invested here for a while as thought cash worries might drive the share price down which it has and I guess a small raise may still be required, but at 24.88p which I paid for about £4k worth of shares today, the risk/reward profile for a 2 year hold seems way overdone
It should be pointed out that Cavendish only retained the same forecast price because the start of this new contract falls beyond the time period of their current target price.
What happened to this companys contracts with us military.
rivaldo do your magic and see if they are still supplying them please
Worth noting that today's contract award is for "a range of new electric vehicles".
Cavendish (Finncap) have retained their 120p target price. They summarise:
"Contract from major OEM boosts order book by >£100m
The company has gained its largest supplier nomination contract to date, worth over £100m. This is not only significant for its size but also because it is with one of the largest global automotive OEMs. This boosts the value of SCE’s lifetime contracts to over £390m. This is a major endorsement of the company’s unique product offering and its value to OEMs. Today’s award is for a range of new EV models. We make no changes to our forecasts, as production is scheduled to start in 2027, beyond our forecast horizon. We see significant upside to the valuation, with the shares highly attractive as they are yet to reflect the potential for SCE to be a future large-scale tier-one manufacturer with its unique carbon ceramic brake discs. Today’s news is a big endorsement offering significant potential upside in this scale-up opportunity that would be realised as progressive milestones are achieved."
"Valuation.
We see substantial upside to the valuation over the next few years as SCE scales up capacity to be a large-scale manufacturer of its unique carbon ceramic brake discs. With recent technical glitches now overcome, the shares offer a unique opportunity. We retain our 120p TP, which is based on a £75m revenue footprint being achieved in 2025, resulting in a target P/E of 15x. Further endorsement by a world-leading OEM provides testament to SCE’s unique and valuable product attributes."
Share price still at 12-month lows and whilst marked up 13% is still below sp level of 4 weeks ago. Time we saw management team investing their own monies (not the non-execs) now as presumably they are out of close period now with this announcement.
Now they have to convince investors that (1) the oft-mentioned transformation to generating profits is upon us (2) there wont be another crucifying fund raise that crushes the life out of existing s/holders (3) no more mishaps from management.
Management team still has a lot to do to restore confidence among investors
Excellent news. Start of production in 2027 I see! The sequence of these deals is important as well.
Surface Transforms Tech. always knew they had a great invention that would definitely ensure the company had great prospects. I'm surprised it had not been bought out. They are probably extremely pleased they held out for a large contract.
Good luck to all long term investors. GREAT INVENTION.
Superb news - a £100m contract win from OEM10, "one of the world's largest automotive OEMs".
And won in an "intensely competitive" process, no doubt against Brembo.
Yet more superb validation from a customer who will have examined the product and SCE's financing and production plans in huge detail.