Surface Transforms (LON: SCE) are the topic of conversation when Mike Foster, Analyst at Hardman & Co joins DirectorsTalk. Mike explains who this company is and why investors should take note, why there is a need for ceramic brake discs, the addressable market potential, its position in the market, risks involved and company financials.
Surface Transforms manufactures and sells carbon ceramic brake discs. The last three-month period of contract awards since the financial year-end has been transformational in the development of the company. It now has multi-year, multi-million, recurring income contracts from European-based global OEMs. These will support cash breakeven during 2020, moving to EBITDA-positive (post-tax credit) in fiscal 2021 and profitability in 2022. Long-term contracts collectively bring lifetime revenues of over £20m. The overwhelming significance is that this follows many years’ client-testing, and this product-endorsement opens the path to order-of-magnitude sales expansion.