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Hardide – positive North America oil & gas and aerospace update… but what about financials & valuation?

By Steve Moore | Monday 9 July 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Having previously questioned on surface coating technology company Hardide (HDD) emphasises “positive” & “confident”, but when’s the jam to be delivered?, I today note the company “pleased to announce” the appointment of a Business Development Engineer based in Houston, Texas - emphasising “a strong rise in demand from oil and gas customers in North America”. More promising?

Mark Hanania is noted to have 20 years of engineering and business development experience and joins from 3M Canada, where he was responsible for driving innovation into the Alberta/British Columbia oil and gas markets. The appointment will also see existing North America VP Business Development, Dan Wilson, able to concentrate on other high-tech markets including aerospace, “where we believe there are significant opportunities throughout the region”.

The company notes those factors are “underpinning significant investment in coating technology and quality accreditation at the company's US coating facility in Martinsville, Virginia… The Martinsville facility is on-track to receive accreditation to aerospace quality management standard AS9100 during summer 2018”, adding “we are expanding our capacity in the USA with investment in people, equipment and technology supported by the highest, aerospace quality standards”.

At its 31st March half-year stage, the company had cash of £3.2 million – but that only after a net £2.5 million of new equity; there a loss of £0.3 million, although reduced from a corresponding prior year period £0.7 million on revenue up from £1.5 million to £2.2 million. It emphasised it “is confident of the outlook for the second half and expects the trading performance for the full financial year to be in line with market expectations”.

Those expectations though mean a loss of circa £0.7 million for the full-year and a loss still next year, before moving into small profit on revenue a bit shy of £6 million the following year. With the market cap - at a current 1.875p share price - comfortably above £30 million, I’d certainly be waiting for more financial delivery before reconsidering from avoid.

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