Velocity Comp Share Chat (VEL)

Have a look at Senior's trading update- production issues at Boeing and Airbus are having a knock on effect across the industry.

''Consequently, there appears to be an imbalance of supply into different parts of the aircraft, and we have recently been informed by one of our customers, an Airbus Tier 1 supplier, that they intend to significantly reduce scheduled deliveries from Senior in Q4 of this year before returning to normal during Q2 next year.''

Nice to see 1 director purchasing a few shares.

Airtech Advanced Materials is a major competitor and at the same time the supplier of the release films , bagging films to Velocity. It's net profit just from the UK operations has gone up by 10% from 3m to 3.3m 2022 Vs 2023 and they are expanding constantly. Now what excuses the management of Velocity will give us now for the Sp being so low when the entire industry is doing well? I would like to clearly know how there are planning to add value for the investors.

Yes, I did put that, it surely would be pleasant to see a takeover RNS of 100p a share one morning.

Or they get taken over

Can you tell us what is the similarity you see with Surface Transforms?

I can guess the basics being Jam tomorrow then share issues and options made on the promise of that jam, then the slow or non-delivery means an SP drifting downwards. But that's the story of countless small cappers.

A concern I have is that in the USA big companies tend to rule their respective industries, so a small specialist like VEL trying to get ahead with regulatory compliance could mysteriously find themselves constantly at the back of the queue, or on the "to do later" pile, whilst the larger companies eventually catch up, compete or takeover if there is profit to be had.

Also thanks for sharing your letter and response 👍

Interesting response... not really sure what to make of it and don't want to read too much into it.

I set a telegram group up for Velocity back in December (completely forgot about this). If anyone on here fancies joining then search for velocity composites on telegram and join. It might be easier to discuss the share in greater detail on there 👍

The reply

Thank you for your email. Your comments have been passed to the Board of Velocity. As you might expect, the Company cannot add anything further to its public statement in the HY results announcement, that Velocity has a large, qualified pipeline of potential contracts in the US and Europe of £200m. Due to the complex nature of aerospace manufacturing, these opportunities can take a long time to convert, but both the Board and its advisers agreed this statement was accurate based on the information available.

The recent RNS news was very unexpected having been told only in July the forecasted revenue for the year was £27m+ in line with prior announcments, now only 2 months on its £22.8m circ. Although you have given reasons for the shortfall I still see this as poor internal planning and hope you have learnt from it. Having good contingency planning and evaluate risks in your commercials properly.

The other issue which is building up is the compete lack of any new business from May 23 (18 months ago ) and subsequent presentations you have refered to your pipeline which has broadly stayed the same. May23 $250m+ June23 $295m+ Oct23 £295m+ Jan24 $245m+ July24 $245m+ The later 2 having taken off the additional growth.

Are these real live proposals/prospects which are taking an inordinate time to close, or are they just speculative proposals which have little hope of converting?

Surface Transforms!!

Hi All. Well said Jim.

Delays delays and jam tomorrow. Although I'm steadily invested here it does sound like the same old small cap story.

I guess it's good for the SP currently that there are so few investors and so little news you can could trade positions at the pace of a shrubbery growing. But that's also frustrating when good news arrives. I sold a large chunk weeks ago at 45p and my limit reinvesting buy at 40p kicked in this morning whilst having breakfast, so got to be happy with a lower average for the next long wait, however news flow is so slow I fear a drift lower. Emailing them about this could help. The US regulation system I fear is choked by 'Influence'. "This unexpected delay is due to temporary resource constraints between both the customer and the OEM relating to the review and sign off of the approval documentation". We just have to wait, but I'm sure persistance from Velocity and the buyers will win through. They are jumping through the hoops, though just not as fast as we hope.

https://www.velocity-composites.com/company-news/velocity-composites-achieves-global-industry-certification-in-the-us/

I thought we had got through the tight cash flow stage but look like there is little room for error again. They managed to navigated it in H1 so hopefully they can do the same now, pushing back on some of the onboarding of raw material supplies and using their invoice discounting facility if needed. Can the staged covid loan payments be slowed?

They just need to be in a position to show they are a 'going concern' when the accounts need signing off at year end which they should be able to still (otherwise we get a fund raise which they seem as keen to avoid as we are!) .

Whilst not ideal, it is at least not the fault of the company themselves, which makes it less of a concern than if that were the case.

Has anyone seen what they say in the Canaccord research note?

Jim89 agree with your post

However the BOD have been stouting about their £250m+ of pipeline proposals for over a year and nothing has come in.

They need to de-risk only having a few large clients as we can see if one or more reduces they work flow has a massive effect on the business

Hi Gillingham,

I tend to agree with your sentiment here. I must admit I read the RNS this morning over a coffee and facepalmed. My first thought was 'over promising and under delivering' I.e. empty promisses from the leadership team specifically Andy Beadon.

However, let's look at the positives, this is a long term hold, we all know that. The company is recovering from Covid and is still forecasting a c.40% increase in revenue from 2023. The drop this morning is certainly an opportunity in my eyes but frustrating when I'm in very deep here.

On the flip side, keeping shareholders informed needs to be improved by the company or people will become frustrated over time. More regular updates are required to under pin any share price rises. We need to be knowing about contract extensions, accreditations, new business when they happen, not all popped into a single RNS mixed with less positive news once a quarter. I feel this does need to be brought up with the leadership team by us shareholders at the next presentation/event.

July £27m Sept now £22.8m... Not good Please dont mess up next year make sure it happens.

Also not good is the complete lack of any news business. Lots of noise about £200M-£250M+ of strong proposals out in the market with a handful of manufactors but no conversion whats is happening?

Some nice little buys going through today with a bit more volume. Hopefully this is the start of the push upwards

Small topup of 12k shares

. The Board have set a five-year target of achieving a contracted revenue of £100m and 10% EBITDA margin.

So in five years if the PE was 12 (my guess) that would give a market cap of £120m which is 5.3 times todays market cap so the sp would be approx £2.30

Once Velocity is profitable and hopefully with additional contracts what PE will it attract?

Unusual late trade yesterday

Jim89 Great find and good read. Yes it sound like everything is on course for a great year Profits in H2

I do agree an update would be nice, however, I am quite comfortable here as things seem to be nice and steady, a firm base being established at this level. I do feel that a major update on new contracts or contract extensions will take us above the c.65p we saw in January 2023 and then results in January 2025 showing a profitable company will take us above £1 next year.

There is obviously a lot of work going on in the background, I've just found this article posted a day ago:

https://www.compositesworld.com/news/velocity-composites-receives-nadcap-accreditation-for-us-facility

Be nice to have a little update soon on current client and prospects

Jim Great post

I agree "I do feel that we are on the cusp of something here"

Like you I have increased my holding over the last year and now VEL is my single largest holding