Surface Transforms Share Discussion Threads

[misterd1] 17/10/2023 09:41

One thing that dawned on me last night with the NPV point raised by one poster - is that the £100m figure is probably already discounted isn't it?

By that I mean that the contracts must surely allow for price/material inflation going forward and wouldn't be fixed now.

Would that be a fair comment - as I'm not used to contracting out so far into the future.

[fevertreeman] 17/10/2023 09:38

Financial Planning & Analysis...hmmm....clearly CFO is already making a difference. She's quickly recognised she is woefully under-resourced - am not surprised but this does strongly suggest that the business lacks the necessary finance function professionalism to support the growth. Why this hadn't happened before is an open question.

[albert_einstein] 17/10/2023 09:07

The trading in this is just downright weird.

How many AIM companies have signed £100m deals with industry giants.

Imagine how much due diligence would have been done before they agreed such a deal for a safety critical component.

[jerarnie1] 17/10/2023 08:59

Growing the Finance Team - new roles advertised for FP&A Analyst and Management Accountant

[amt] 17/10/2023 07:42

Yes Bones. Admin running at 5m and R&D at about 8m annualised currently. I think R&D should drop a lot by then so say 3m and Admin 7m annualised. Might be a bit tight but then GP could increase a touch and each 1% is another 1 million so 50m profit is realistic in 2027

[bones] 17/10/2023 07:33

I would be surprised if overheads at that stage would only be £10M as there would be a minimum of two factories on the go by the £150M capacity level with maybe half the staff non-direct costs and everything associated with maintenance and health and safety, a big depreciation cost on the expanded capital assets, etc.

In favour, the increased capacity, advances in R&D and efficiencies should reduce production costs per unit of which there will be multiples of today’s output. That should help maintain a high gross margin.

I agree the sentiment and ambition to achieve a billion pound valuation on that basis. Just a matter of execution now - no mean task ahead but do-able!

[amt] 17/10/2023 07:29

Yes and more orders to be announced but the size of yesterday's was a very positive surprise for me.

[jerarnie1] 17/10/2023 07:26

I've been buying more over the past couple of weeks, with a little bit of blind hope about on-going execution ability. To be awarded this latest contract after a complete 'look under the bonnet' by OEM 10 removes a large percentage of my anxieties. That this company still has a MC under 65m seems completely out of kilter. I will keep adding, and am confident of a re-rating, at some point, maybe by Christmas, this one or the the next one, or....

[amt] 17/10/2023 06:57

I also think that this new order also implies that production is going well and manufacturing issues must have been resolved otherwise they would not have been awarded the contract.
Also conforms capacity of 150m needed by 2027 so say turnover of at least 100m by then. At 60% margin equals 60m and costs of say 10m gives 50m profit.
Pe of 20 sees a one billion valuation.
So the one billion valuation is not a dream anymore but a real possibility.
Plus we shouldn't worry about a cash raise. They now have a business such that they could borrow money secured against against assets.

[geko5trade] 16/10/2023 22:10

Yes that's true they've made the UK market a lot less friendly to investors.

[fevertreeman] 16/10/2023 16:40

1.7 m shares traded on back of a £100m order and share price is nailed to the floor...UK market has become completely dysfunctional thanks as professional investors get hammered by MiFiD, stamp duty, tax on dividends, etc etc etc

[fevertreeman] 16/10/2023 16:38

Stiffing shareholders isnt the answer as there are potentially other options available.....borrowing against the order book; factoring; financial support from OEM customers in various forms

[regandharry5] 16/10/2023 16:09

All questions for the hew CFO.

[amt] 16/10/2023 16:05

I think they should get a loan of say 10m on the back of the order book and snub the AIM market. Without any fear of a cash raise the share price should then take off.

[geko5trade] 16/10/2023 13:38

Yep, agree.

[fillspectre] 16/10/2023 13:28

If you had told me a few years ago an ST £100m lifetime contract award announcement would barely move the share price I wouldn't have believed you. Different times, different sentiments. However maybe news on how current delivery is going would have greater effect. We must be due a Q3 update soon. Fils.

[geko5trade] 16/10/2023 13:26

Lol! I tend to agree about civility but I thought 'deluded' was slightly better than 'deranged'! I also refrained from 'head deep in sand'!
In seriousness there's no question the market has changed fast. Although there have been various reassurances about cash the current market can be pretty harsh if there's a whiff of vulnerability. I thought this weakness really started with the last placing. I know the argument that it will make no difference in the scheme of things and I also think that the reason for having a listing is to have access to capital. Nevertheless the price did smack of weakness and still think the spectre of a cash call may still be weighing on them. There's no 'but you don't understand these are the reasons and look at the prospects...' the market just does what it does and grinds small.
All this makes them more susceptible to TO. Because for someone who has the cash and where there is synergy then...

[longshanks] 16/10/2023 13:11

Happy to be corrected, although I prefer the term mis-informed to deluded (just to keep things civil)

[fevertreeman] 16/10/2023 11:58

1m shares traded and share price has barely budged off its 12 month lows

[amt] 16/10/2023 11:55

Yes don't forget that ultimately there is a huge market outside of luxury vehicles.
150m turnover is perhaps 30, 000 vehicles.
Global car sales is 80m so even 1% share of that market is 800,000.
In other words 150m turnover is just the start.

[bones] 16/10/2023 11:46

Always happy to see this phrase:

”……;The award covers vehicles where the product is standard fitment as well as vehicles where it is an option……”

Standard fitment of CC brakes will be a secular trend so expect more of it as the years progress and SCE’s technology improves to produce smaller discs at lesser cost as they’ve repeatedly said they are developing.

[geko5trade] 16/10/2023 11:09

To me this is (another) huge validation. Longshanks though I fear is deluded when he talks of 2% return in a bank account for cash. People are getting over 5% in rock solid bonds and much more depending on risk profile. So the return on cash and the cost of cash has turned on its head just in the last year and this fundamentally changes the markets ‘risk’ premium of growth companies.
Announcement today is very good news and the market will change again as the tide does but right now many are swimming against it.

[fevertreeman] 16/10/2023 11:02

Totally agree... notwithstanding the management missteps and operational issues of last 24 months, if the current disinterest in ST which is one half of a global tech duopoly....I feel the options become quite stark:

1, This gets snapped up for a pittance by a determined PE or OEM related purchaser, and current shareholders get totally stuffed OR

2. The Board runs out of patience with London Stock Exchange listing, delists, and relists on NASDAQ where at least management and the technology will be welcomed with open arms, they will be given an appropriate tech rating at multiples above where we currently languish, & be supported by numerous tech investors.

[amt] 16/10/2023 10:44

100m order is worth 60m GP. Let's be prudent and say 55m after further costs.