Hardman & Co Video | Surface Transforms (SCE) Open Offer and Q&A
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Hardman & Co Research
Hardman Talks Video | Surface Transforms Surface Transforms Open Offer and Q&A Following the recent announcement of a placing and public offer by Surface Transforms, the management team of David Bundred, chairman, Kevin Johnson, CEO, and Isabelle Maddock, CFO, appeared on Hardman Talks to explain the need for further funding. This will support the expansion in manufacturing capacity, itself driven by strong customer demand. Watch it here: https://youtu.be/FWWNhGPfrds In this update to investors SCE provides detail on the roll-out of its recent production starts on five models and the steps taken on increasing output. SCE currently has financial resources – a debt line is in the last stages of approval – to fund expansion to £150m annual sales capacity by 2027 with the benefit of modelled cash generation to 2027, and then beyond. The most pressing issue for investors is the delay in achieving the fourfold production rise for which the production line has been expanded. Output in October ran at £1m, which is a rise of two-and-a-half times compared with the average rate last year. De-bottlenecking is the key, as there are seven 'single points of failure ' in the ca. 30-step production process. SCE has already paid for and is installing production equipment to raise capacity further, to £50m p.a. sales. The de-bottlenecking of processes on the existing enlarged line has driven turnover expectations and estimates for 2024E and the progressive roll-out of the £50m capacity impacts in stages through the year, leaving SCE with scope for elimination of the bottlenecks in this next year. With only one competitor in a large and rapidly growing auto component market with at least three major environmental advantages – weight, particulates and end-of-life – the delivery on the £390m order book is the constraint to sales. Demand most certainly is not. The order book is to 12 models, stretching ca. seven years, with five currently live. SCE updated on its strong relationship with its customers, which remains cooperative and good. The next update is anticipated in January 2024. Watch the recording: https://youtu.be/FWWNhGPfrds Read more about the event here: https://hardmanandco.com/hardman-talks-surface-transforms-open-offer-qa/ To be first in the know about Hardman & Co’s latest digital events, subscribe to the mailing list here. The Hardman Talks series is designed to share the latest sector insights and company investment cases from our corporate clients and our expert team of analysts. Click here to subscribe to the Hardman Talks channel on YouTube. Hardman & Co | 9 Bonhill Street | London | EC2A 4DJ | www.hardmanandco.com
Hardman & Co Research can still be accessed for free after MiFID II. About Hardman & Co: For the past 25 years Hardman has been producing specialist research designed to improve investors’ understanding of companies, sectors, industries and investment securities. Our analysts are highly experienced in their sectors, and have often been highly rated by professional investors for their knowledge. Our focus is to raise companies’ profiles across the UK and abroad with outstanding research, investor engagement programmes and advisory services. Some of our notes have been commissioned by the company which is the subject of the note; this is clearly stated in the disclaimer where this is the case. Hardman Research Ltd, trading as Hardman & Co, is an appointed representative of Capital Markets Strategy Ltd and is authorised and regulated by the Financial Conduct Authority; our FCA registration number is 600843. Hardman Research Ltd is registered at Companies House with number 8256259. Our research is provided for the use of the professional investment community, market counterparties and sophisticated and high net worth investors as defined in the rules of the regulatory bodies. It is not intended to be made available to unsophisticated retail investors. Anyone who is unsure of their categorisation should consult their professional advisors. This research is neither an offer, nor a solicitation, to buy or sell any security. Please read the note for the full disclaimer.
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1784621 29-Nov-2023
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