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So that highlights from the 6m announcement for me:
“Operating loss1 increased to £4.6m primarily due to £2.5m of non-repeatable outlays to overcome technical challenges.
H1 technical challenges NOW OVERCOME (my emphasis).
Cash at 30 June 2023 was £4.5m (31 Dec 2022: £14.9.m)
Additional furnace capacity in place and increase in proprietary know how. (So we “own” the IP how to make these furnaces work?)
Strategic investment programme for c.£75m capacity progressing well, with capital expenditure of £4.8m (H1-2022: £2.8m). Phase 2 target of £50m capacity will be available in 2024
Strong order book unchanged
Healthy prospective contract pipeline increased to £420m”
They are expanding capacity to £150m. Yes, we have had bumps in the road. But this has always been a share for what happens after 2027/28 or even later.
Believe in the product. Believe in the people who developed it. Hope the changing management team can tweak the system to maximise the £££.
This is still a company in a duopolistic system with c.10% of the market, top-level OEMs as customers, 60% gross margin etc. Repeat, 60% gross margins with a market leading product and only one competitor!
I’m as disappointed as anyone in the share price but on many levels this is an astounding company to be able to buy at this price if you can hold for 10 years.
100pc agree
Was amused by your comment about nothing happening here till "2027/28/ or even later". Presumably you are discounting the fact that the share price has barely budged in the previous 10 years, apart from cash raises? Huge disconnect between the commercial progress which while painfully slow, has finally gotten us a clutch of OEM customers and contracts, and the share price. It is not as if this company has just been around a short while and still finding its feet. The problem is that management's credibility has taken a huge knock over surprise fund raises, slippages in profitability, and concerns about cash position. Ultimately these are failings of operational management (and not just bad luck).Let's hope Isabelle and the COO can help instill the plc culture needed to change perceptions. IMV, the clock is ticking. If they can't deliver significant meaningful progress over next FY reporting period, they will be vulnerable to an opportunistic bid.
FTM, you say the share price has barely budged in the last 10 years. Well in the last five it has been anywhere between 10p -to 80p. That's not a share price that has "barely budged". Of course, you may have bought in at higher prices (I started there).
I have always considered this to be a long-term investment (for me that is 10 years+). I first bought in 2021 so I have a long way to go. But the reason I highlight 2027/28 is that, by then, there will be a nine-figure capacity (over £150m, perhaps £250m?) and crucially by then SCE will have multiple contracts being supplied and paying at the same time. Until that capacity is built there will remain significant restraints on revenue.
Any reader of these pages (or ADVFN for that matter) will hear you frequently complain about the management (capital raises, content of RNSs etc). I am not here to defend the management and I would agree there have been a few mis-steps along the way. But I feel you're overly critical of them. The installation and commissioning of the new furnaces is something that has not been done before. The fact it went slightly askew and required about £2.5m (is that correct?) to fix them is not unexpected. But they have put that right and, crucially, own the "interlectual knowledge" about how to fix them. I view the complexity of producing this stuff as a benefit (a Buffett moat).
I acknowledge the fact that Kevin Johnson, David Bundred etc have designed a fabulous product against a monopolistic supplier. That product is aligned with the future of motoring (lighter, greener, more suitable to EVs etc) in a market that will only get bigger as CCB start appearing on non-supercars. They have hooked some major fish already. The new board members and NEDs have some impressive credentials and I would also give David Bundred/ Kevin Johnson some credit for realising the need for them when it is always easy to cling on yourself.
You're correct that the company is not "new", but it is still young in its growth trajectory. That might be the result of a preference to grow slowly and deliberately without basically going for broke too early on.
I repeat that this is a company with 60% gross margins with a market leading product and only one competitor. Nothing is certain but that is a great investment opportunity for the patient.
Responding to recent postings(by Guitarsolo & Fevertreeman).
Not long after I acquired as a long term investment in SCE shares in early 2022 I attended a Capital Markets Day at the company's HQ & factory in Knowsley i April 2022.
As a chartered Chemical Engineer with some experience with furnaces early in my career I was particularly interested to learn about the production process as a whole but had some concerns about the change that was planned for the production process and at the open meeting I asked management whether the feasibility of the new process would be tested prior to installing it on-site as I thought it ought to be. I recall clearly that idea was quickly Poo-pooed and passed over. I much regret now that I was perhaps too polite in not questioning their response.
It led me on a subsequent occasion when problems with the new process became evident to outsiders to contact the CEO personally by email to be informed on his behalf by a colleague of his that I be would be getting the CEO's response. None was forthcoming. Again I should have followed it up but did not.
The damage to reputation is now evident and It appears that no one outside the company (except possibly the sellers who meantime maybe helped by leakage of information have driven the share price down) reliably yet knows what is going on. I could put it more bluntly but it is about time we did.
Thank you for sharing Poole! It sounds like they should have listened to your advice.
Let's hope the installation/ commissioning problems can be put behind them and that proprietory information of how to fix them remains secret!
Well it’s clear the customer base has every confidence in SCE and their ability to execute-excellent contract win