Member Info for Al180

Hi Truro Trader, I have been invested for a similar length of time myself so totally understand where you are coming from. What strikes me as different this time is firstly aerospace, 2022 saw £200k (4% of turnover), 2023 £385K (7% of turnover) and in H1 2024 £500K (24% of the first six months revenue).

Adoption has been slow in this sector but aerospace revenue has suddenly become significant and growing quickly

We also seem to now have a more dynamic management financially and operationally with a break even figure just over £5M and new sources of revenue starting to make a difference

From comments in the trading update and figures in the interims it looks likeit was a bad year for energy, a good one for aerospace and a recovering industrial sector after a slightly below par H1. The energy sector is expected to see a strong recovery in FY25 but if it continues to under perform aerospace has a pipeline of sales scheduled well into 2025 and visibility of new work, the Industrial sector is expected to benefit from growing revenues in the ready coated product range. Hardide feels like a different company now to the one that was reliant on a few major oil and gas companies for revenue.

Expansion would have to be planned well in advance but I believe we are only at about 60% of capacity utilisation at present so plenty of room for manoeuvre.

I believe Hardide can remain cash flow positive and advance from this point making the current valuation very attractive.

Dibs61 Indeed the low MC is the reason I have increased my holding during the past six months,. the value of breaking into a safety critical aerospace market after 13 years of trials alone should be worth more than our current valuation.

I'm personally confident Hardide can remain cash flow positive and not come back to the market for more funds outside of financing a major expansion in capacity , I suppose the market must need more convincing of that than I do.

Looks OK to me with no drain on cash in H2, trading at net cash positive level at the end of period despite some delays in new business work now expected in the first half of the new financial year, BE reduced to just over £5m PA turnover.

There is also further evidence that Aerospace and Industrial are catching up and maybe overtaking oil and gas turnover.

I was half expecting an update today as it was on the 18th last year. It looks like Hardide are also exploring other applications for the ready coated range in the industrial spares sector, from the interim update.............

"There were no sales to the power generation sector either in the period under review or the prior period, whilst the initial set of turbine blades sold in 2022 are field tested. The customer has indicated that we should expect follow on sales towards the end of the current calendar year. We are also exploring opportunities for sales of spares to support the maintenance aftermarket in this sector."

In 2023 revenue was derived from energy 63%, industrial 30%, aerospace 7%.

The H1 2024 revenue was energy £0.8m, Industrial £0.8m, aerospace £0.5m. Energy was the big miss down from £1.9m in H1 2023, industrial was slightly down from £0.9m in H1 2023 with aerospace up 400% from £0.1m H1 2023.

The interim results say that demand from the energy sector has shown some recovery after customer destocking but they also talk about new applications to revive the sector. US oil production is at all time highs but they are achieving this with fewer rigs. The latest rig count on Oct 4th was 585 compared to numbers in the 750 region in the H1 2023 period. I’m expecting improvements in the energy sector revenue but I think the main drivers will be Industrial and aerospace.

The launch of the ready coated range and shipping of first orders was announced on March 26th, comments from the launch RNS and in the interim update where it is mentioned many times as a current and future source of revenue make me think this will give a significant boost to industrial turnover.

The aerospace revenue was 5X that of H1 2023 with visibility of orders well into 2025, this part of the business seems to be growing rapidly with new applications being tested all the time.

The revenue seems to have gone from being dominated by energy which has always been erratic from one period to the next to a more equal mixture of the three sectors.

I’m expecting this months update to show Hardide becoming cash flow positive at the end of H2.

I remember Richard Hullihen in a presentation before FDA approval saying that he expected the adoption of this to follow a similar path to MRI which he played a major part in. MRI was slow at first gaining momentum as more machines were put into facilities, he described it as exponential growth. Polareans expectations indicate running out of money around 18 months before cash generation so we can currently anticipate another fundraising. I'm back in this share as I think the SP will be much higher when funding is required or they won't need one, I also want some of my losses back which I hope isn't clouding my attitude.

GG123 what figure are you using for the 1p fundraising?

The placing and subscription raised £6.3M, the open offer £3M giving gross proceeds of £9.5M which I would assume to be about £8m after fees.

ST peaked at a £144M market cap (79p) on Feb 4th 2021 about 11p equivalent today, the order book has grown since then but it was before anyone had heard of scrap discs or single points of failure.

404X agreed, I initially confused your link with the brake upgrade kits that were being sold with calipers to change from Iron to ceramic where ST provided discs to the likes of Alcon and Movit.

My focus was on the price charged to the OEMs for multi year contracts and I didn't read the thread properly after a few beers last night.

Looking at your link 404X it is just replacement discs although they call it a kit, maybe producing small run rates of a certain design is more expensive I'm pretty sure my estimate is reasonably close as there have been other clues over the years that iv'e picked up on .

The price I was talking about relates to OEM contracts which is only the disc, the upgrade kits have always been expensive.

When ST first started providing small amounts of discs to the market you could work out that they were costing about £1000 each from the run rates of the vehicles. They were looking to half this cost on scale up so taking inflation into account I would estimate around £700 to £800.

Sorry meant to say Q2 not Q4.

I've had the same thoughts Damay, we were initially promised a TU with the YE results when they were expected to be released in May , they could of got bad news out of the way when eventually released at the end of June.

There was the comment in the results regarding supply chain issues due to cash shortages in April and May before receiving the open offer funds so there is also the possibility that Q4 was disappointing and they wanted the longest period after this to release a TU so they could show how things have improved since they have had the OO funds.

There has been a TU RNS on the morning of the AGM for the past two years, my thoughts are they may do the same this year and if they do it should be reasonably positive for the reasons mentioned out but you never know with SCE.

This was in the the April 9th RNS.............

"The issue with the last furnace relates to our site expansion rather than the machine itself. The protracted negotiations regarding the site expansion have now been concluded enabling the last furnace to progress"

I’m hopeful regarding the market for Hardides pre coated range.

After many years of waiting for orders following long periods of testing it’s good to see them taking an aggressive route to market. A quick search for “Hardide pre coated range” shows a lot of coverage from trade magazines.

They were producing small quantities of discs for many years without issues, in scaling up they used larger more energy efficient furnaces, a problem was found with the linings of a furnace as far back as 2022 which was later reported as resolved but there are three different types of furnace for different processes so this could be a new problem. ST say it is a case of perfecting manufacturing with new equipment which they state they are getting on top of with production in March double that of Jan and Feb but they don't claim to of resolved the issues as yet.

Poole, the furnaces as far as I know have performed well since Q2 2023. The issue started in late 2022, these were new larger energy efficient furnaces, the linings failed within weeks when they should last at least 6 months. New linings were developed and fitted this took about 4 months to achieve with a slow ramp up over the next 2 months . The last news we had is the new linings were exceeding expectations.

There is also the prospective pipeline of £300m, this refers to future planned models that both the OEM and ST have done engineering work on. So far the prospective pipeline has ended up as part of the order book and the only reasons it wouldn't is if the model was cancelled or the OEM decides to change supplier.

Due to a disastrous 2023, a recent share placing and a very negative AIM market we are where we are. I can see a massive potential future valuation for this company but there are risks. The April update needs to show progress with production, lessons should of been learned from previous breakdowns that stopped production but until the £50m capacity expansion is completed there will be parts of the production line that still only have one machine in place. The possible single points of failure will reduce as capacity is installed but not sure how much will be operational in Q1. I feel reasonably confident but Q1 performance will be mostly about what the engineers have learned.

I wasn't expecting a fundraising, the 50k and 100k sells recently were a clue I suppose although I stupidly ignored them and bought a few this week .