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Hi ripley, there has been an updated research note since the link you posted after the additional US order. FY 2026 forecast now at £9m but year end cash the same as before due to additional capex spending on upgrading its Martinsville plant.

hTtps://www.hardide.com/wp-content/uploads/2026/02/HDD_030226.pdf

Agree Richie, aerospace revenue is the stable recurring income Hardide was crying out for, the nature of safety critical supply chains makes this a glacial process though. The exciting thing about the directional drilling market is the distances the drill is now getting to, 3 mile plus wells have gone from being very unusual to 20% of new shale drilling in a short space of time. Hardide seems to be the only coating that can cope with this 500 hour process. The nitriding and boronizing coatings only last between 100-300 hours depending on the environment, this could be particularly relevant in the Middle East with the high level of quartz sand and sour gas.

In a further conversation with AI it said………. major energy companies were demanding that their service providers use Hardide. I asked it to provide a source and this was the reply…..

"While you won't find a public document from ExxonMobil explicitly titled "The Hardide Mandate" (as these are highly confidential procurement specs), the phrase describes a very real shift in the market. Here is the foundation for that statement:

1. The "85% One-Run" Goal

Major operators (Exxon, Chevron, Oxy) have publicly stated in technical conferences (like SPE/JPT) that their priority is "drilling efficiency over speed." * In 2026, the industry benchmark for success is the "One-Run Well."

The 85% figure is the target "reliability threshold" operators are demanding from their service companies (Halliburton/SLB) for 3-mile laterals.

Because standard nitriding has a 100% failure rate (it literally cannot survive) over the 500+ hours required for a 3-mile run, service companies have been "forced" to upgrade their coating specs to remain competitive."

I've been looking at who the potential candidates are for the US and Middle East directional drilling sleeves sales, in the US we have four possible customers...

Halliburton- Has approximately 120 rigs that are used for direction drilling.

SLB- 110

Baker Hughes- 70

Weatherford- 40

In the Middle East I can only see it relating to Saudi Aramco and the Jafurah Shale Gas asset. This accounts for about 50 directional rigs.

How accurate AI is i'm not sure but it estimates the cost of a Hardide coated sleeve to be between £2000- £5500, this seems to be about 3X the cost of existing treatments. This is a drop in the ocean when the rig can complete a well without withdrawing the drill to change the sleeve.

A rig is also said to drill between 20-50 shale wells per year where the sleeve would be changed. If the above figures are anywhere near correct supply chain integration with any of the OEMs would create huge demand.

Hardide stated in the YE results…..

“There is significant customer interest in the potential for Hardide coatings to replace boronising and nitriding as a surface treatment solution to increase the longevity of sleeves used in directional drilling operations.”

An AI search indicates the market for these specific treatments on directional drilling sleeves is currently estimated to be a USD 450M – USD 650M global opportunity, growing at approximately 6–8% annually.

I can see an offer coming for Hardide if the industry wants to use their coating for even a small percentage of this market.

The typical adoption lifecycle for new shale drilling applications according to AI is…

Trials (12-18 months): Middle East customers are currently in the "sweet spot" of this phase.

Initial Production (approx 12 months): The US customer is here now.

Supply Chain Integration: This is where the revenue becomes recurring MRO (Maintenance, Repair, and Operations) income.

Although trials are the main hurdle to cross the initial production phase is also an assessment, the ability of Hardide to supply the product in volume, on time and spec has to be evaluated before they become part of the supply chain.

The second order from the US customer implies this is heading for supply chain integration and improves the chance of the middle east customer going in the same direction.

The middle east is a very new market for shale drilling but it’s being quickly adopted with the percentage of rigs in the area going from virtually zero in 2020 to nearly 20% of land rigs now involved in unconventional operations. I’m optimistic that initial production orders will also come from this area in FY2026

The comments over the past 12 months regarding the energy sector has led me to do some in-depth research regarding the new major US and Middle East customers. I believe developments here could be transformational for Hardide in the short term.

Both customers are looking to replace Boronising and Nitriding in directional drilling sleeves used in shale wells. This is the result of advancements in the past few years that have increased the distance of directional drilling leading to increased wear, drilling sleeves now last between 100 and 300 hours. This is not enough time to drill most wells leading to maintenance downtime and loss of at least £100k per day in costs and lost revenue

Hardide coatings are shown to last 3-5 times as long as Boronised or Nitrided sleeves. Although Hardide is more expensive there is an instant ROI due to reduced downtime

As of the most recent Baker Hughes report on January 30, 2026, there are 244 active drilling rigs in the Permian Basin.

Unlike much of Hardie's historical energy revenues these two customers will provide recurring revenue, most of the shale wells output will be in the first year or two so drilling is a continuous ongoing process.

Link to Cavendish research note now on Hardide website

hTtps://www.hardide.com/wp-content/uploads/2026/01/Cavendish-Research-Note.pdf

I think the share price not advancing noticeably after a good set of results may be due to the delayed start of production for the Airbus cargo plane. It was originally said to be worth at least £500k in FY2025, this is made up of initial tooling and development work in H1 which would move to initial production revenue during H2. We now know production is due to start at some point this year and FY2025 only benefited from development work; the breakdown of aerospace revenue for 2025 showed £1m for H1 and £0.8m for H2. It was never specified how much of the £500k was development or production revenue but I suspect around £200k in H2 was lost as a result of it not going into production.

After some digging into the subject I’m almost certain this refers to the new low emission A350F cargo plane.

The A350F had its EIS (Entry into Service) date recently pushed back one year to the second half of 2027, this is due to supply chain issues relating to the fuselage. The original plan was to have a gradual production ramp up to 12 planes per month by 2028, this ties in with new regulations for cargo aircraft emissions that says any cargo plane produced after 1st Jan 2028 can’t fly if it doesn’t conform with new emission regulations. There are already firm orders for this model from various airlines. Production orders for components would normally be supplied around one year before EIS date.

So how much could this affect aerospace revenue in FY2026?

I would assume the first year level of production would be about £180k per quarter so if production doesn't start until Q4 we are looking at about £540k in delayed income from this model. The contract was said to be worth approximately £8m over a ten year period so I would expect the first year to be less than the £200k per quarter average before they ramp up to full production in 2028.

Hardide followed comments about the cargo plane with this statement ……..

“The work won in 2023 with the same customer to coat parts used in commercial passenger aircraft has continued to progress well and should also enable a stable base load of volume work to continue for a number of years.”

I think the reason they mentioned this is while researching current and future production figures the A320 models which the 2023 contract refers to saw 607 produced in 2025 with 700 planned for 2026 and 900 for 2027. As Hardide will be supplying parts for planes that will be finished in 2027 this could potentially cover delayed A350F revenue this year should it not go into production until Q4 .

Thanks Rivaldo, this note will eventually be available on the Hardide website, I will keep an eye out for it and post a link when it does.

Extrapolating the forecast 2026 profit from 1.5p EPS I get….

78m shares in issue multiplied by 1.5p = £1.17m profit forecast for 2026

This also works out for the Cavendish PE of 11.4 (11.4x 1.17 = 13.3) current market cap of £13.4m.

Another order the size of that announced for the US energy company (£1.75m) would nearly double YE profit and halve the forecast PE

£1.75m x 57% GM = £0.997m this would result in £2.17m YE profit and a PE of 6.1

This looks quite possible with the Middle East customer currently in development phase and the US customer recently going from development into production orders, this along with the positive language in the results regarding potential additional orders from the US OEM and initial production orders from the Middle East customer this financial year.

Surprised at the subdued SP reaction. The valuation doesn't seem to reflect the level of financial stability Hardide has reached along with the likelihood of additional income in FY 26 from our new US and middle east energy customers.

Really happy with the update after a quick read, plenty of things to talk about after more detailed analysis initial thoughts …….

Q1 revenue £1.8m 40% increase on Q1 2025

Cash at 31st December £1.2m after £400k cash generation in first three month

Potential for the US and Middle East energy customers to add materially to sales in 2026 and beyond.

First orders for turbine blades since 2022

Second Airbus agreement not yet in production but expected to start this year.

Talking about increasing capacity with the reactors in place and also the cost of new reactors at £1.0-1.5m each

Yes certainly a bit of negativity in the markets generally today. At least Hardide should be relatively immune to US tariffs with production the facility in Virginia

Typical that I had my final top up before Thursday's results yesterday at 17.29p and the offer drops to 17p today.

I think the results have a far greater chance of having a positive effect than a negative one. Firstly we will get Q1 turnover which I expect to at least benefit from development and production revenue in the energy sector along with the second Airbus agreement now in production. There will also be a cash at 31st December figure which should catch up from the H2 figure which was negatively affected by working capital movement at the financial year end.

With Hardide now in a profitable trading position, any new work in 2026 will have a dramatic effect on the YE profit and PE ratio. This could come from so many different directions that I’m expecting some comments that will indicate the likelihood of this happening. The new team only seems to release an RNS when they have to and don’t do the proactive investor type interviews that previous management did so I'm expecting some positive information on Thursday.

Sorry Javanerd reading your post again it only talks of control not cost, although maybe these two things go hand in hand?

I would certainly think their costs are significant especially with the UK having the most expensive industrial energy in the world. There are also three different furnace processes in the production line some of which are very long. Starting with carbonisation then Chemical vapour infiltration (CVI) and finishing off with melt infiltration.

As long as the new CVI furnace becomes fully operational this year ST will be generating decent amounts of cash in 2026. H2 2025 all going well will have been EBITDA neutral with £1m of cash at 2025 YE. This looks like the point where money could have got tight and the OEMs may have possibly made up a small shortfall but going forward capacity will double with the second CVI furnace. Demand is not an issue; the OEMs have wanted more discs than ST have been able to produce for a long time and more of the £390m contracted pipeline kicks in this year.

Unless yield or cash is well off the mark in the update progress with the new furnace is the most crucial thing, apart from doubling capacity the second unit removes the last potential single point of failure in the production line

I posted this on another forum regarding the size of parts Hardide can coat and thought it might be of interest here.

The large reactor’s role will hopefully be to coat turbine blades for the power generation industry in 2026.

This “Proactive Investor” interview with previous management six years ago explains why they were thinking of this as a game changing opportunity, turbine coating is discussed at 7m 40 seconds in

hTtps://www.youtube.com/watch?v=JqFT_UcAQSM&t=16s

Orders were eventually supplied for coated blades in 2022, revenue from this resulted in a decent spike in energy sector revenue at the time. There is also a recent patent specifically relating to turbine blade coating. After a three year period of nothing much happening the new management in last year's results said they would not spend their time pursuing this opportunity.

The interim report showed a change in direction again with this comment……….

“Continuing to work with a key customer in the power generation industry to further improve the performance of Hardide coatings when used to mitigate the effects of water droplet erosion on turbine blades. This follows the outcome of field trials of the components initially supplied in 2022 which, if successful, could lead to further sales in 2026.”

As previous management explained in the video there are hundreds of blades per turbine and these are large items so adoption of this as an industry solution would be very significant.

Good to hear you're in profit FF It's been a long journey for me too.

If an offer was made for Hardide the value of having a unique superior product in the supply chain of Airbus would have to be assessed. A lot of money and 15 years of hard work got this coating into the production line for an A320, Comparative testing shows it outperforms the competition and is a direct replacement for Hard Chrome in thickness of coating which is being phased out.

Aerospace revenue has roughly doubled every year for the past 4 years and should be at least £2m this year when they show the revenue breakdown in Jan results. Any buyer besides getting a direct route to market would also receive recurring revenue for the foreseeable future from agreements already in place with Airbus and BAE systems.

Very positive language from Turner Pope, hopefully this link works.

hTtps://mcusercontent.com/d9ebd7c1aa0f3dbc5fab42eca/files/d415ece7-bfe3-cdba-ad02-cb2f839f69f9/Aptamer_Group_plc_16_12_2025_FINAL_BG.pdf