Surface Transforms Share Discussion Threads

[supernumerary] 08/1/2024 18:34

pf - that doesn't make me wrong: at worst it would mean it's even harder to negotiate these contracts than I'd assumed. That doesn't make it impossible, nor does it obviate the need for the management to try and find ways to publicise what they've achieved.

Interesting about the contract terms - do you have a copy we could all read?

I was a fan of SCE, due at least in part to the GM, but the facts have changed, so I've changed my position - I remain a fan of the company, but no longer the management.

[pinkfoot2] 08/1/2024 18:09

I’m afraid you are wrong-the odd OEM will let you name but it’s highly unusual and incredibly difficult to negotiate.They operate very robotically.What I have learned from them is the statement’ don’t rely on our business to prop you up’ as they are paranoid about concentration risk

I am a fan of SCE because of the gross margin and I am happy to report there are no ‘cost downs’ in the contracts-suggest you go away and mug up on that term as it’s important in automotive as a supplier

[supernumerary] 08/1/2024 17:46

lol - cringe away :~)

[damayhill] 08/1/2024 17:27

OK buddy, you carry on. I'll just sit here and cringe on your behalf. Your latest assertion didn't compound your embarrassment at all. Not at all. Do you even understand the distinction between a supplier and an OEM?! I'll leave it there...

[supernumerary] 08/1/2024 17:14

Dh - don't be silly. I said what would happen and it did. What part of that do you not understand? I was able to do so because I've seen the pattern before - it's not new. Trying to say it didn't actually happen because it was caused by something else is the non sequitur, not my comment which was entirely apposite.

If it's the industry standard not to name suppliers, that's understandable because they're all big companies who don't need the day-to-day support, but tiddlers like sce do, and it's up to them to negotiate contracts that allow reasonable publicity. Why does everybody seem to accept that the status quo cannot be changed? If managers can't do that, then they're not doing their jobs.

[bagpuss67] 08/1/2024 17:10

Cavendish also estimate a c£2 value with a £150m foot print at 15PE ratio. Which coincides with my hoped for exit.

[pinkfoot2] 08/1/2024 17:10

Correct-the one thing all should know about OEM SOP is that the date rarely if ever moves.Automotive is incredibly regimented-and you disrupt production at your peril.Those who work in the sector are highly valued-they have time, cost and margin drilled into them.I have employed many of these guys simply because they get it.

I would be more worried if the OEMs were pulling up stumps-they clearly aren’t and I asked this question of the BOD at the last funding round.More reassurance came today.

Clearly credibility is weak on operational matters-I expect this to dissipate as we move into the new capacity and build up some inventory

[damayhill] 08/1/2024 16:59

Supernumerary, if you honestly believe your statement that I highlighted to be true then - as pinkfoot has suggested - you genuinely don't understand how the automotive industry works. The lack of positive market reaction to contract news in recent years has absolutely nothing, repeat nothing to do with them not naming the OEM or the fact that series SOP is typically 2-3 years away. To continue to insist that it does serves only to embarrass yourself. Trying to justify your point by saying that the last time there was such an RNS the share price didn't rise, is what's known as a non-sequitur. It's absolutely fine not to know these things, mutual education is part of what these boards are for - but don't just make stuff up and then react badly when somebody calls you out on it!

[supernumerary] 08/1/2024 16:47

Dh - the 'absolute tosh' is what actually happened when the last order RNS arrived. Were you not around then?

You seem to be forgetting that anybody can take an order they can't deliver - it's the latter part that's difficult.

pf - 'This company is so cheap it makes me weep!' Probably the only thing we agree on.

[bones698] 08/1/2024 16:38

Not from the prices I've seen go through today it's mainly been all sells but try to spin it how you like

[bdaonion] 08/1/2024 16:26

FWIW Advfn's numbers of 300k buys v 4.4m sells is way out. 2 large trades totaling around 1.8m marked as sells were clearly matched trades and many "sells" are buys based on the prices.

[pinkfoot2] 08/1/2024 16:15

My judgement isn’t clouded-I don’t do sentimentality with money and I have told the BOD that too.It seems you are emotionally attached to negativity mate-go and read a book on personal fulfilment

Your benchmarking 50pc drop related to unconnected, completely different companies-repeat after me, this company has a £400m order book and despite the woe is me, all customers are very supportive-fact!!

[bones698] 08/1/2024 16:00

Loads of cash ? 6m is not a load of cash given the burn rate . Yes that might improve but it's not loads of cash .

The 300k revenue miss whilst doesn't look massive could have been very detrimental to the share price ,I have seen similar figures result in. 50% drop in share price . It's not so much about the amount it's the failure to meet expectations . The only reason this hasn't dropped more today is the pending contract news that was thrown in to counter that imo . 300k buys v 4.4m sells approx

It may seem to cheap yourself with a higher average price but I don't see it as cheap until they can prove they can deliver .

As a holder your judgement is clouded m that's not a dig but I have seen similar comments many times from holders of shares only to see those shareprices collapse . So forgive me if I don't share your optimism quite yet .

A lot of shares sold today not bought shows weakness isn't over here either .

[pinkfoot2] 08/1/2024 15:53

Exactly-this company like many others suffered from growing pains, exacerbated by the hockey stick ramp up.

But guess what-they are still in possession of the superior IP, they have loads of cash and a £400m order book.They have to a certain extent got away with the production issues by virtue of being a plc and access to funding.A private company would have been sold by now.The flip side of being a plc is that you have to provide a running commentary on events-does anyone really think £300k of deferred sales is material as I certainly don’t.Look forward, not back-we are still piling on the order book

As for naming OEMs, some of you clearly have no experience of automotive-I have and it’s unusual for OEMs to allow customers referencing in a public way.

This company is so cheap it makes me weep!

[damayhill] 08/1/2024 14:53

albert einstein - yes you're right, they have done SO MUCH right. Superior product, amazing order book built in short time, good prospective thinking about capacity building. Unfortunately one key component to date has let them (and us) down: execution. At this stage of a small company's development, it's all about execution.

[damayhill] 08/1/2024 14:49

Supernumerary: 'I pointed out a long time ago that new orders will have no effect until more information is released about them. RNS's arrive with no customer name, and revenues that will only start to appear years later'.

I'm sorry, but this is absolute tosh. The market has no expectation whatsoever that OEMs are named - indeed it's an accepted convention that they are not named, as the customer themselves prefer some degree of anonymity due to commercial sensitivities. The fact that the Start of Production (SOP) is some years hence is also an absolute given. There is no alternative. The development work required to integrate numerous different suppliers necessitates this.

If SCE are able to demonstrate the ability to ramp up production in line with contractual commitments, without any detrimental impact on quality or gross margin, then future contract announcements will have a very material impact on share price.

The Tier 1 contract announcements beginning in July 2019 and building to an order book of almost £400m are an absolute game-changer for SCE. Its the fact that they haven't been able to ramp up production quickly enough or fund capital expansion without two major fundraises that held this back.

[supernumerary] 08/1/2024 14:47

Not remotely enough. This is what Hardman wrote in October 2022:

The large growth is now self-financing

SCE is raising equity: £16m through a successful placing at 40p and up to £3m via an Open Offer. This will fund the completion of Factory One and most of Factory Two, with positive operating cashflow then doing the rest. With capital now in place, internal cashflow would fully fund, year-in/year-out, 30%-plus annual growth. This is a very fast-growing market. An extra order is expected this year. With an order book twice the market capitalisation and a prospective further book twice that again, the fundraise is clearly designed to bring to fruition those pending orders, now that the OEMs are assured of significantly growing fulfilment capacity.

[bones698] 08/1/2024 14:45

Shareprice chart says different though . There have been many companies developed world leading tech and failed . Just because they are near doesn't mean success until they deliver on it .

[albert_einstein] 08/1/2024 14:37

All this negativity? They have developed a world class product in a traditionally conservative marketplace with significant barriers to entry. Not only that but they have secured huge deals with industry giants for a safety critical component. They must be doing something right!

[bones698] 08/1/2024 14:11

Feverteen agree with it has been a poor run but doesn't mean it's doomed just yet either. Raising cash is required for most companies to achieve their goals . The tuning and effect of that could have been better if management had delivered . That's another discussion though.

The question is at this moment in time is it a good bet or not . I think it's still pretty 50/50 on risk reward as there is food upside if things go well but the odds more in favour of them missing those targets so you pays your money and takes your choice here . For now I'll sort on the sidelines .

A lot of sells going through surprised it's not dropped a bit more today but small mercies for lthers . 10p I might buy a few

[fevertreeman] 08/1/2024 14:04

Also worth pointing out just how profligate Bundred & Johnson have been with the monies provided to them by s/holders! Three placings since 2021 have provided SCE with £49m of funding alone (excluding anything in way of capital grants etc).

£20m at 50p in Jan 21
£18m at 40p in Oct 22
£11m at 10p in Dec 23

Market cap today is c£40m, so grandstand value destruction! SO I too am concerned that Johnson comes back to us for more cash before 2024 is out, citing yet more excuses about problems in themselves not being insurmountable......

[fevertreeman] 08/1/2024 13:52

Supernumerary, absolutely correct about the analysts research, as they like the rest of us have been consistently let down by Johnson & Bundred. They're heavily reliant on what Johnson chooses to tell them about what is happening in the shining global tech hub that is Knowsley, and that appears to be the square root of SFA.

The 'hope' here is that the COO who's been in post just 3 months can get sort out the operations side of things, whilst the newly minted CFO does the same with the finances
And they need a proper TALENT strategy which will be critical to the future of the company. What is worrying is that the strategic and operational management skills needed have not kept pace with the business. Johnson and Bundred have been woeful at recognising their own shortcomings, and today's announcement does nothing to assuage mine or others who have been invested here for a while.

[bagpuss67] 08/1/2024 13:18

Cavendish note out. Retain 69p target.

[damayhill] 08/1/2024 13:09

Very fair NChanning. I think there's another scenario in which sales targets are achieved and new contracts announced are significant but with SOP from 2027 and beyond. In that scenario, I have this going to 26-28p this year, which would be +150% so absolutely makes sense in the context of your three scenarios. I can't see any reality in which forecasts are exceeded tbh.