1st Dec 2022. 8.58am

Regency View:


Regency View:


Surface Transforms wins contract worth £100m

Surface Transforms (SCE) announced last week that it had been awarded a contract with a lifetime value in excess of £100m as a tier one supplier of a carbon ceramic brake disc to a US automotive company.

The contract which SCE has named “OEM 10” is its single largest contract awarded to date and crucially sees SCE discs replacing those historically provided by its main competitor.

The lifetime revenue on this contract is estimated to be in excess of £100m over 6 years with the customer currently estimating a start of production date in 2024.

To temper the impressive contract news, SCE released a sobering trading statement in which it said sales for FY 22 will be lower than previously forecast at approximately £6.5m.

The lowered forecast was caused by technical issues at its OEM 8 contract. The issues were unrelated to SCE’s discs.

“This is clearly disappointing, but it should be noted that the total OEM 8 contract value remains unchanged at £100 million, and the impact is that the timing of the lifetime programme has started a few months later than originally planned and, unless caught up in the meantime, will eventually finish, a few months later than originally planned” read SCE’s statement.

SCE Daily Candle Chart

SCE Daily Candle Chart

CentralNic confirms ‘transformational’ 88% increase in revenue

CentralNic (CNIC) released an impressive set of financial results for the three months to end September.

As previously guided in October, revenue increased by 88% to $526.7m with organic revenue growth of 66%.

Gross profit increased by 53% to $128.3m and adjusted earnings (EBITDA) doubled to $62m. And CentralNic kept full year outlook in-line with recently upgraded expectations.

Ben Crawford, CEO of CentralNic, commented:

“CentralNic continued to build momentum in the third quarter, despite slower growth in the wider economy, with year-on-year organic revenue growth now reaching a record 66%, EBITDA more than doubling, and operating profit on a completely new level due to CentralNic’s operating leverage”.

“This continued strong and consistent financial performance has allowed us to refinance at a notably improved interest rate, with a syndicate of quality banks which have the means to provide ongoing support for CentralNic’s growth strategy. With the sustainability of our growth proven in a recessionary environment, and endorsed by leading financial institutions, we look forward to the future with even greater confidence.”

CNIC Daily Candle Chart

CNIC Daily Candle Chart

Alliance Pharma punished for missing market expectations

Alliance Pharma’s (APH) share price has been heavily punished for missing market expectations.

Demand in the business-to-business consumer healthcare market has recovered more slowly than Alliance had anticipated, especially in China.

Alliance now anticipates that revenues for the year ending 31 December 2022 will be at least £170m, with underlying profit before tax of at least £30m and free cash flow of at least £15m.

However, Alliance said it is “confident that the B2B market for Kelo-cote will recover to pre-pandemic levels during 2023, which, combined with continued strong growth in B2C sales, leaves FY2023 Kelo-cote expectations unchanged”.

The shares are trading back at a key area of support and the stock is now trading on a very low forward valuation (forward PE 5.6).

We believe Alliance Pharma is well positioned for long-term growth and believe the stock is likely to bounce back as covid disruption in China eventually eases.

APH Daily Candle Chart

APH Daily Candle Chart

Keyword Studios expects FY earnings to surpass analyst forecast

Keywords Studios (KWS) released a strong trading update last week which prompted the stock to hit its highest level since 5th of January.

The technical services provider for video games said it expects FY22 revenue to be at least 675m euros – above analyst estimates and adjusted Profit Before Tax to be in excess of 110m euros.

On its outlook for 2023, Keywords said:

“We expect the positive trading momentum to continue into 2023. Organic growth is expected to moderate but remain above the medium-term guidance of 10%+, with adjusted profit before tax margins expected to move to historical levels of c.15% as previously guided and as we invest into the business to support our growth ambitions”…

“As a result, we are confident in achieving a performance at the upper end of the current analysts’ forecast range for 2023.”

The bullish update caused the shares to break through resistance and this sets the stock up for a retest of last year’s highs.

KWS Daily Candle Chart

KWS Daily Candle Chart

TPX keeps guidance unchanged after September profit warning

TPX Impact (TPX) released interim results this week which were in line with the profit warning made on 30 September 2022.

The digital transformation group kept full-year guidance unchanged as half year revenue dropped 6.5% to £40.4m on a like for like basis.

TPX reported a half year operating loss of -£3.9m versus a profit of £1.3m in H1 2021. And half year adjusted earnings (EBITDA) dropped from £5.3m to £1.2m.

Full year outlook remains at the previously lowered levels of c.£90m revenue and £7.0-7.5m Adjusted EBITDA.

CEO Bjorn Conway commented:

“The market opportunity available to TPX remains significant with organisations across public and commercial sectors needing to adapt to the evolving market challenges and invest in digital transformation, as supported by our very healthy sales pipeline”.

TPX Daily Candle Chart

TPX Daily Candle Chart

Mulberry swing to loss as economic slowdown hits luxury spend

Mulberry (MUL) posted a half year loss this week as the UK economic slowdown and Covid-19 restrictions in China hit sales.

The luxury handbag manufacturer saw group saw revenue drop 1% to £64.9m posted a £4m loss for the six months ending 1st October, compared to a £7.3million profit in the equivalent period last year when it benefited from the disposal of a store lease in Paris.

Earnings were further impacted by higher investment in technology and marketing, the absence of business rates relief, and the acquisition of its former franchises in Sweden and Australia.

Mulberry CEO, Thierry Andretta commented:

“Looking ahead, we are confident in our ability to execute our strategy and to continue to invest across the Group for our future growth, in spite of the challenging economic and geopolitical backdrop. We are well placed for the festive trading period and will continue to drive the business forward to the benefit of all stakeholders.”

The shares reacted negatively to the numbers but remain above their November lows due to a strong rally in the stock earlier this month.  

MUL Daily Candle Chart

MUL Daily Candle Chart


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