Can 3D printing take the plunge? Segment information with Altor Capital
3D printing is probably a familiar buzzword for ASX investors, as a number of publicly traded players have attempted to establish market leadership in recent years.
Most of these companies deploy the technology in the industrial and manufacturing space.
And while its use case remains widespread as the potential and addressable markets are great, investors have entrusted 3D printing companies with the responsibility of setting the course for their next phase of growth.
In this context, Storer got an update on the industry this week with David McNamee – a portfolio manager at investment and advisory group Altor Capital.
With positions in a few publicly traded 3D printing companies, Altor is well positioned to discuss the outlook for the sector as the industry matures.
“We’ve been studying the industry for a number of years and the technology has received quite a bit of money for almost a decade,” he said.
“But it’s probably only reached a point in the last 12-24 months (where) it makes sense from a unit economics standpoint, but also from a technological standpoint.”
During the same period, the pandemic struck, causing severe disruption in global manufacturing supply chains.
And that has left the industry in a kind of middle ground, especially because it’s mainly applied to industries where operational changes require large-scale capital management decisions.
“If you think about it from a big business perspective, they have to make some pretty big structural decisions about their own supply chains when it comes to 3D printing,” says McNamee.
“And these are decisions that are hard to reverse because you are fundamentally changing the way you build and receive products. “
“So it takes time, and we are currently sitting at this point in the cycle in my opinion.”
Given this, the addressable market is “obviously huge,” McNamee said.
Globally, he cited the demand for the US Based 3D Printing ETF (PRNT) managed by ARK Invest, which tracked around $ 20 for three years before climbing to US $ 40 in the last 12 months.
And nationally, Altor’s largest position in the space is in 3D Metal Forge (ASX: 3MF), which was listed in March raising $ 10 million from investors at 20c per share.
After a strong start, 3MF shares have returned to the pack, but McNamee enjoys the flexibility of its business model as part of the multi-year integration process required for 3D printing solutions in global supply chains.
“They haven’t heard from much lately, but we think their fundamentals are strong and the management team is very strong,” he said.
“(CEO) Matthew Waterhouse has a lot of experience and they have good traction with some top clients like (American multinational machinery company) Flowserve and Conoco Phillips, the oil and gas major,” he said. declared.
McNamee described 3MF’s added value as being more of an “agnostic” solution, deploying its intellectual property in 3D printing to mold specific products to meet customer needs and working together on deployment with their end customer.
“They fit into this process and generate income through consulting fees. But with the potential to then become the primary supplier for delivering 3D printing supply chains with these companies, ”he explained.
Another position in Altor’s portfolio is Amaero International (ASX: 3DA), which recently consolidated above 60c per share after climbing post-pandemic lows near 10c.
“It’s great technology that came out of Monash University, and there are some great people involved in the business,” he said.
And like other companies in space, “I think they could see a real increase in their share price if some of these big contracts that they’ve been working on for a while turned into long-term deals.”
While Amaero serves more customers in the defense and aerospace sectors, 3DF is focusing more on the industrial and energy sectors.
“Obviously, oil and gas have been hit during the pandemic, but I think this is an area where there are significant market opportunities for technology to improve manufacturing processes,” said McNamee.
He added that 3MF’s headquarters in Singapore gives it some differentiation in space, giving it better access to a global customer base.
“As part of their business model, they’ve built relationships with the Singapore government and the Port of Singapore,” McNamee said.
“And these are critical to determining exactly certain use cases for 3D printing technology and then expanding them to a commercial level.”
“So I think it gives them a good platform to grow the business from a global perspective and establish this unique operating model in terms of consulting revenue generation, and then ultimately becoming the primary supplier for provide specific 3D printing solutions, ”he said.