AL3 accelerates entry into the EU and UK markets
Our 2024 Tech Pick of the Year Investment AML3D (ASX: AL3) just signed a distribution agreement to fast track its push into the EU/UK markets.
AL3 is currently in the middle of a big push into the US.
AL3 is already selling systems and parts to those other industries, like Boeing, Austal and oil & gas giants Chevron and Exxon.
AL3 raised ~$30m late last year - most of the cash was set aside to expand US facilities and position the company to make the most of a push to reindustrialise in the US.
So far so good - got a letter of interest from US navy a few weeks ago - which we covered here: US Navy Letter of Intent: AL3 “pivotal” to US Navy’s forecast demand of 100 x 3D printing systems.
When that cap raise was done AL3 also said it would set aside $5M to expand into the EU/UK markets.
We especially liked what AL3’s CEO Sean Ebert had to say in today’s announcement - “We are seeing the same demand signals in Europe that are driving our phenomenal growth in the US across Defence but also Utilities and Energy”.
And how the $5M investment AL3 has planned would be to establish “a Technology centre in Europe like we did at Stow Ohio”.
In our last AL3 note we wrote about which markets we think AL3 could grow into, one of those being the UK/EU:
In our last note we wrote about “Where else could even more AL3 contracts come from?”
Across the US military-industrial complex, AL3 could start selling into the US Army and Airforce:
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Outside of the US at the 2025 NATO summit, allies agreed to increase defence related spending between now and 2035.
The target set was to increase spending to 5% of Gross Domestic Product (GDP) annually...
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A specific commitment was to “innovate, and strengthen the defence industrial base” - which is exactly where we think AL3’s tech sits.
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We think that a wave of ramped-up defence spending across Europe, the UK and the Middle East could eventually flow in AL3’s direction too.
Back in April, AL3 signed an alloy testing contract with $118BN BAE Systems “in support of a material feasibility study” for expansion into the UK defence market:
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To get a view of the upside case, take a look at what happened with another ASX-listed company leveraged to the defence thematic recently - Droneshield.
A month or so ago, Droneshield signed a $61.6M european military contract and hit a NEW all time high market cap.
The past performance is not and should not be taken as an indication of future performance for this or any stock. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.
We think a few big orders in a row have the potential to trigger a similar re-rate in AL3’s market cap (but note, that Droneshield’s past performance is not an indicator of AL3’s future performance).
Many factors may determine the success of AL3 in its ability to secure major contracts and eventual re-rate in its share price.
Our AL3 ‘Big Bet’:
“AL3 re-rates to a $500M market cap on achieving significant sales growth across an expanding range of industries and jurisdictions”
NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is no guarantee that our Big Bet will ever come true. There is a lot of work to be done, many risks involved, including development risk, country risk and regulatory risk - just some of which we list in our AL3 Investment Memo.
Success will require a significant amount of luck. Past performance is not an indicator of future performance.
