Surface Transforms PLC (LSE:SCE)

Surface Transforms PLC (LSE:SCE) is an FTSE AIM All share listed, United Kingdom-based manufacturer of carbon fiber reinforced ceramic disc brake materials.

Key Recommendation Rationale – Watch at GBX 1.24

FY24 Revenue Outlook (Released on 25 January 2024)

• Technical Update: SCEs stock price is in the downtrend forming lower lows and lower highs, which is depicted in the one sided downfall from GBX 76.00 levels to current GBX 1.24. The current fall could be poised for a small bounce back which could present an exit opportunity. The Relative Strength Index is currently pointing at 23.06, which is in the oversold region and could showsome strength crossing above 30.00mark. Further, the UK markets (FTSE 100) is currently witnessing a profit booking from the life time highs and could possible drift rift lower further on any delays in the cut in the interest rates in UK.
• FY24 Revenue Outlook: The company projected FY24 sales to grow by 111% to 165%, reaching GBP 17.5 mn to GBP 22 mn, up from GBP 8.3 mn in FY23. The growth is expected to be driven by efforts to reduce scrap, increase manufacturing capacity, and deliver a more favorable product mix to customers. Despite Q1 FY24 constraints due to scrap and limited capacity, significant progress has been made in these areas, which is expected to continue boosting sales throughout 2024.
• Increased Losses: During H1 FY23, the company reported a higher operating loss of GBP 4.63 mn in H1 FY22 from Operating losses of GBP 2.43 mn in pcp, whereas the loss for the period after tax increased to GBP 4.84 mn against the loss of GBP 2.43 mn in pcp.

Share Price Chart

Conclusion

Due to the current macroeconomic condition, higher interest rates, poor sentiments, and considering the financial losses and technical chart pattern, a "WATCH" recommendation on Surface Transforms PLC (LSE:SCE) has been given at the current market price of GBX 1.24 (as of 30 May 2024, 09:00 AM GMT+1).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 30 May 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.