Surface Transforms Share Discussion Threads

[bdaonion] 22/8/2021 16:24

Being pedantic, and a shareholder since 2004, the last fundraising made specific reference to contracts with OEM 8 and 9 requiring the need for the fund raising. There was no specific reference to OEMs 10, 11 or 12. There was also reference in the placing documents to OEMs 1-7 "and three new potential OEM customers". OEM 10 is clearly one of them, but at the time they were only potential. Zeus has confirmed SOP for OEM 8 in the 4th Qtr of 2021 so that contract has remained on time. As to Brembo, I could be tempted if they made an offer of £3 a share.

[jerarnie1] 22/8/2021 14:37

This article in MasterInvestor may have triggered the larger number of buys on Friday -

The manufacturers of carbon reinforced ceramic brake discs announced a contract award on Wednesday, which boss Kevin Johnson states is a very significant win for the company.
The customer is a major mainstream US automotive company, one of the most respected names in the industry. The contract, which could be worth £20m, is likely to start in 2024.
Analysts Raymond Greaves and Michael Clifton at finnCap currently have a 69p price objective for the group’s shares.Over at Zeus Capital, which is NOMAD and broker to the company, analyst Robin Byde is valuing the shares at 80p.
The interims to end June will be declared on 13 September.
The shares at 63p remain speculative until it really starts to get into production and pumps in the profits to back up the valuations.
(Profile 19.09.19 @ 17p set a Target Price of 30p*)
(Profile 08.01.21 @ 50p set a Target Price of 65p*)

[longshanks] 22/8/2021 12:44

Good to see you are still with us SCE Investor.I don't agree that OEM10 was already priced in; these contracts are not guaranteed and there were plenty of caveats at the time of the fund raising.Your point on Brembo is well made. They may well be running a slide rule over ST as an acquisition given the company is starting to impact their monopoly significantly.It would be a mistake though: they stand to benefit more from having a strong and successful competitor in a much larger market than by maintaining a niche fiefdom.

[sce investor] 22/8/2021 12:19

It appers we have another seller currently...I noted winterfloods moved onto the offer with 50,000 then increased it to 100,000 late friday afternoon.
With regards to price movement the OEM news was pretty much factored in as this was part of the reason for the last fundraising.
Market wants to see new orders to push the shareprice on from here.
Im pretty sure we will rerate during the course of Q4 which starts very soon.
We also have the half year results to look forward to on 13th September 2021 im hoping that will be the catalyst for the start of the rerate.
I noted mention of me in some of the previous posts im not here for a quick trade as i dont class this stock in that bracket.
I would expect the shareprice to at least double from here over the next year and for me a solid well managed business with limited volatility which is well placed to benefit from further cutomers/contract wins as they look to increase their market share.(Im pretty confident we are well beyong OEM 10 currently..)
My only concern is they would be a sitting duck for Brembo who have been on the aquisition trail and are starting to throw off some serious cash.
I also think that they see a suoperior product and will not like losing market share so would be a perfect fit into their future expansion plans.

[fillspectre] 20/8/2021 19:02

Maybe just a couple more weeks drifting before we get into the steady conditions of the trade winds where we might be able to maintain a steady course. Each successive contract award announcement tantamount to us requiring another reef in our main sail. See how she sets! Fils.

[jones1961] 20/8/2021 16:16

The seller is obviously still there as under normal mkt conditions the price would certainly be higher given the volume of buys. But as I said, am pretty sure the seller must nearly be done, and then hopefully there will be a nice little run up

[brucie5] 20/8/2021 15:28

Returned to join you here after an interval away from SCE. Chart suggestive to me of another attempt at 80p, but with recent news added on since March, when it made the last try. Depending on how you view it, it was at least a double top, not quite making it to 80p, so I would imagine that a further attempt will be made sooner rather than later, and bit of oomph could take it towards the next obvious target of £1, in line with Finncap note.
All the news so far, has been good.
AIMHO, NAI.

[longshanks] 20/8/2021 15:09

Welcome Jones1961 and Joe Say to the BB.@Joe Say, not a daft question but I think the company is well set up now for the forthcoming growth and going by the note from Zeus there are no further delays anticipated

[cheese666] 20/8/2021 14:07

knownowt - nice attribution of 'the Doldrums'. Only on this board would this be correctly cited (I'm not taking the mick by the way).

[jones1961] 20/8/2021 13:41

In my opinion, there has been a large seller for sometime now, and he took the opportunity to sell more after the recent news. I don´t have access to be able to go back a couple of months to see how much has been sold, but I imagine it is one of 2 possible shareholders, both of under 5%, who would not have to declare when they sell. Personally I think that if they have not finished, they must nearly have.
Judging by the number of trades so far today, I think it likely that the company has been tipped somewhere.

[knownowt] 20/8/2021 12:31

August is, to use a nautical term, 'The Doldrums'; a period of low activity and relatively few company announcements when 'MMs' try to keep their books balanced. Many investors are away from the office on holiday. The interim's release in mid-September seems like near-oerfect timing to me.

JS: The company has long planned for the expansion in business and has 'geared up' accordingly.

[joe say] 20/8/2021 10:12

Daft question of the day - but wouldn't the current chip shortage play to our advantage - as production is shifted back allowing SCE ample time to gear up for that deferred (increased) demand?

[cheese666] 20/8/2021 09:49

There was so much good stuff in the broker note and the RNS itself that it doesn't follow logic to see such a muted response. The share price responded more positively to the update at the start of August than the new contract announcement, update on the significant progress made at Knowsley and the clear indication of more contracts hoped for in the coming months.

There must be something weighing on the share price which we aren't aware of. What this is I don't know. Could there be some lingering disappointment from contracts not won, orders smaller than hoped for? The large American electric car manufacturer did cancel the high end model of it's new fastest car, it's big off road vehicle and it's coupe have both been delayed, which could affect what SCE had expected to get.

Looking at ourselves for answers, I do think there is some room for improvement in how announcements are made and leveraged for more impact. I fully understand the sensitivities of contract announcements (we have this in my own business) but, there is room for some appropriate fanfair and positive public reflection on a job well done. They could have an agreement that once, say, 6 months have passed, the OEM is made public (yes, this would have to be managed with OEM's you are continuing to work with but, it's ultimately in everyone's interest to have it known that you have the best brake disc in the world on your vehicle).

My hope is that there's some effort going into the 13th of September and that we might see some consolidated news 'marketed' to the wider finance community and the general share buying public.

[bones] 20/8/2021 07:54

In small caps right now across the board, the mentality seems to have switched to “sell the rallies” rather than “buy the dips”. Late 2020/early 2021 saw a tsunami of speculative money rush into small caps and I think a lot of those guys are cashing in their losses now they are back at work after a really flat last six months in the small cap space. The pattern looks similar over many of my holdings. It’s anecdotal but that’s what I see. There is nervousness about in general, IMO.

[fillspectre] 20/8/2021 07:23

You are not the only one surprised by share price reaction to recent news. I think probably all LTH are. Fils

[bdaonion] 20/8/2021 00:15

Surprised by the share price reaction today. The snippet of Zeus's report posted by rivaldo must have been overlooked by many. The SOP of OEM 8 in Q4 is very significant.

[longshanks] 18/8/2021 09:46

Great to see that they have started supply for the ValkyrieAlso worth noting that AM have just announced a new limited edition variant starting production next year: Https://www.goodwood.com/grr/road/news/2021/8/valkyrie-spider-is-peak-aston-martin-v12/

[albert_einstein] 18/8/2021 09:19

Quite a muted response to a very strategically important contract win.

[rivaldo] 18/8/2021 07:29

There's some useful additional snippets of info in Zeus Capital's note from yesterday which peeps may not be aware of - it seems all is going well at the Knowsley facility:

"Recent site visit and trading issues in H2 – Surface’s factory is based in Knowsley in the Liverpool City Region. The plant is significantly more developed than two years ago with preparations well underway to install OEM Production Cell 2 and fulfil new customer orders. The workforce will grow by a further 20% by year-end to meet expanding demand. On H2 trading (as previously discussed by the Group) Aston Martin and OEM 8 have now started to produce the vehicles that Surface is contracted to supply discs for. Deliveries for the Aston Martin Valkyrie are being made. OEM 8 deliveries are scheduled to start in Q4; design & development payments have already been received."

[toffeeman] 17/8/2021 18:24

1. If each contract they win has average annual revenue of £5m and the GP is 50%

2. They have 10 contracted customers each year (they lose some and gain some)

3. That makes gross profit of £25m per year.

4. say ebit is £10m

5. Current market cap is £130m p/e = 13

6. Price is low, given prospects.

[graham1ty] 17/8/2021 15:02

From the FinnCap note today: “ As the commercial case continues to prove itself, the order book builds and the production ramp-up proves successful we envisage the discount rate in our model declining, resulting in significant further upside to our valuation. For instance, a discount rate of 7% gives a price target of 100p/share. “

Every step that derisks SCE, and every contract that is won, the discount rate should fall for the DCF

100p would be a nice new target

[cheese666] 17/8/2021 13:23

Interesting to see that one of the house brokers, Zeus Capital, have set a target price of 80p and talk about 'contracts' being announced in the coming months.

I have felt for some time that branded brake callipers would be a smart move for SCE (I'm not sure it matters if they are inhouse or sourced from a good quality supplier).
CC brakes are often a prestige, aspirational purchase and Brembo are unquestionably ahead in this area for now.

The growing prestige of SCE becoming the smart default choice for track day enthusiasts and race teams will slowly filter through to retail buyers but, this again, could be bolstered by having STCC or CCST on the calliper.

[longshanks] 17/8/2021 10:19

As mentioned in the RNS, OEM 10 was already factored into planning by the company.

In previous presentations I believe they were referred to as OEM11. I have updated the header to reflect the change.

SOP for OEM5 is due on their 2021/2 model. If one assumes that the process to date has been satisfactory, we could well hear of an award for their 2024 model soon. Add in the other OEMs with 2024 models being evaluated not to mention OEM3 with its sister companies, OEM9 and carry-over models for OEM8 and one can start to see that the prediction of production reaching 165,000 disks p.a. by 2025 is not too ambitious.

I wouldn't worry about any temporary price weakness, the long term trend for me is rather clear. There will be some sellers on this news (SCE Investor?), but the smart money will be in for the returns that are just over the hill now.

[condom2] 17/8/2021 10:09

Emerald Zebra buy low sell high

[abergele] 17/8/2021 09:47

Emeraldzebra,
my buy earlier showed up as a sell ,as probably did a load of others as well..
may have been a ploy to make a visual that all were selling out,as perhaps an order to fill?..

edit,
on (ii),,,spread is 65/66p
put a buy in and they say 65p for them to buy?..dyor