Long Legged Doji - AL3 - Still forming a bull flag?
Technical:
Short term: Bearish/Bullish
Markets generally saw the today’s update as no surprise. However, it finished with the long legged doji candlestick during market sell off today. Not bad.
Current Support Level $0.35 – Strong support level so far.
Next Support Level $0.3 – option exercise price.
I still think it is forming a bull flag pattern (Long term).
Fundamental:
Medium to long term: Bullish
Today’s focuses are the profitability and quality of AML3D (AL3) products and the possibility of successful commercialisation. Please refer to my previous post that explained the reason to value AL3 as a hybrid of manufacturing and software business.
AL3 has illustrated in its presentations that the company can deliver cheaper, faster, and stronger products than typical subtractive and powder additive 3D technology companies. This led me to investigate into the technology and investment opportunity closely last year. Great technology does not guarantee the juicy return on capital. This is one of my insights about AL3’s profitability and the quality of products back then.
RAM3D is one of the largest 3D metal printing service providers in Australasia. The NZ company commercialises Selective Laser Melting (SLM) product using the Reinshaw AM250 SLM Machine. SLM technology uses metallic powders with laser beam produces relatively small to medium sized components. The CEO mentioned about its profitability at the 4th International Forum on Additive Manufacturing on 9 Sep 2020. His concern was RAM3D’s margin had been getting tight over years. Obviously, metal powders are not that cheap. He also told that the consumption of the inert gas (Argon) had been much higher than the system specification. I decided that it was not worth investing in company who use supplied machineries in 3D printing sector. The bar of entry seems incredibly low, hence, the higher competition with lower margin. Apart from the consultancy role, it does not seem to have any value-added service/product.
Meanwhile, AL3 developed its own machinery. It uses affordable metal wires instead of expensive metal powders (same alloy type). I have not done much research on these areas. I feel metal powder requires higher level of processing, so must be limited supplier (Mainly overseas?) and less availability of different materials. After the COVID, many manufactures are looking to improve their supply chain issue. Manufactures prefer easily sourced materials, then, wires seem promising. I guess that AL3 can keep much higher profit margin than RAM3D because AL3 can add value to its own innovative technology and machinery - WAM (DED system, originated from Wire Arc Additive Manufacturing - WAAM, my understanding is identical) and uses cheaper materials but same grade alloy.
AL3 focuses medium to large sized parts rather than smaller/medium parts with use of the SLM machinery.
• Renishaw AM250: Build volume 250 x 250 x 365 mm
• WAM technology: Unlimited build volume but not suited for small size parts.
Safety concerns powder Additive Manufacturing (AM) vs wire AM
• Difficulty in handling – Metal powder can be harmful to human (required breathing apparatuses and ventilation). Metal wires are easier to handle.
• Storage issue: Metal powder can be flammable (Aluminium and Titanium). I assume that wires are easier to store.
According to the Cranfield University site (waammat.com), WAAM performs better in cost savings, material utilisation, mechanical properties, part size and platform flexibility. On the other hand, powder bed technology (I think same as SLM, also known as Direct Metal Laser Melting – DMLM, or Laser Powder Bed Fusion – LPBF) comes with higher level of complexity and accuracy. Therefore, potential application for each technology is different. After all, I am a believer that every technology has its own use case.
By the way, Dr Paul Colegrove (Key AL3 Personnel), who is the engineering technology manager at AL3. He used to be the senior lecture at the Cranfield University. The University started up (Spin-out) the WAAM3D. You can find interesting details, key search words “WAAM, Dr Filomeno Martina, Cranfield University”.
Lastly, can AL3 succeed in commercialisation of the metal 3D printer? It is highly likely that AL3 technology will. WAAM technologies are founded based on extensive academic research (e.g., Cranfield’s University), therefore, clearly different from technology (Company) in research and development stage. WAAM technologies have been commercialised by Norsk Titanium, RAMLAB and WAAM3D. Most importantly, AL3’s management and boards are focused and experienced. AL3’s WAM has been certified by Lloyd’s Register (Great for marine industry) and well funded. I feel confident that they will engage customers and gain the commercial contracts.
AL3 targets various sectors such as marine, mining, energy, and defence. It is important to understand that it takes time to reach commercial contracts and executes through confidentiality agreement. I always recall “The stock market is a device for transferring money from the impatient to the patient – Wattern Buffett”. If I have opportunities and time, I will share some of my insights in the quality aspects of WAM such as porosity, thermal overheating, and certification etc.
Short term: Bearish/Bullish
Markets generally saw the today’s update as no surprise. However, it finished with the long legged doji candlestick during market sell off today. Not bad.
Current Support Level $0.35 – Strong support level so far.
Next Support Level $0.3 – option exercise price.
I still think it is forming a bull flag pattern (Long term).
Fundamental:
Medium to long term: Bullish
Today’s focuses are the profitability and quality of AML3D (AL3) products and the possibility of successful commercialisation. Please refer to my previous post that explained the reason to value AL3 as a hybrid of manufacturing and software business.
AL3 has illustrated in its presentations that the company can deliver cheaper, faster, and stronger products than typical subtractive and powder additive 3D technology companies. This led me to investigate into the technology and investment opportunity closely last year. Great technology does not guarantee the juicy return on capital. This is one of my insights about AL3’s profitability and the quality of products back then.
RAM3D is one of the largest 3D metal printing service providers in Australasia. The NZ company commercialises Selective Laser Melting (SLM) product using the Reinshaw AM250 SLM Machine. SLM technology uses metallic powders with laser beam produces relatively small to medium sized components. The CEO mentioned about its profitability at the 4th International Forum on Additive Manufacturing on 9 Sep 2020. His concern was RAM3D’s margin had been getting tight over years. Obviously, metal powders are not that cheap. He also told that the consumption of the inert gas (Argon) had been much higher than the system specification. I decided that it was not worth investing in company who use supplied machineries in 3D printing sector. The bar of entry seems incredibly low, hence, the higher competition with lower margin. Apart from the consultancy role, it does not seem to have any value-added service/product.
Meanwhile, AL3 developed its own machinery. It uses affordable metal wires instead of expensive metal powders (same alloy type). I have not done much research on these areas. I feel metal powder requires higher level of processing, so must be limited supplier (Mainly overseas?) and less availability of different materials. After the COVID, many manufactures are looking to improve their supply chain issue. Manufactures prefer easily sourced materials, then, wires seem promising. I guess that AL3 can keep much higher profit margin than RAM3D because AL3 can add value to its own innovative technology and machinery - WAM (DED system, originated from Wire Arc Additive Manufacturing - WAAM, my understanding is identical) and uses cheaper materials but same grade alloy.
AL3 focuses medium to large sized parts rather than smaller/medium parts with use of the SLM machinery.
• Renishaw AM250: Build volume 250 x 250 x 365 mm
• WAM technology: Unlimited build volume but not suited for small size parts.
Safety concerns powder Additive Manufacturing (AM) vs wire AM
• Difficulty in handling – Metal powder can be harmful to human (required breathing apparatuses and ventilation). Metal wires are easier to handle.
• Storage issue: Metal powder can be flammable (Aluminium and Titanium). I assume that wires are easier to store.
According to the Cranfield University site (waammat.com), WAAM performs better in cost savings, material utilisation, mechanical properties, part size and platform flexibility. On the other hand, powder bed technology (I think same as SLM, also known as Direct Metal Laser Melting – DMLM, or Laser Powder Bed Fusion – LPBF) comes with higher level of complexity and accuracy. Therefore, potential application for each technology is different. After all, I am a believer that every technology has its own use case.
By the way, Dr Paul Colegrove (Key AL3 Personnel), who is the engineering technology manager at AL3. He used to be the senior lecture at the Cranfield University. The University started up (Spin-out) the WAAM3D. You can find interesting details, key search words “WAAM, Dr Filomeno Martina, Cranfield University”.
Lastly, can AL3 succeed in commercialisation of the metal 3D printer? It is highly likely that AL3 technology will. WAAM technologies are founded based on extensive academic research (e.g., Cranfield’s University), therefore, clearly different from technology (Company) in research and development stage. WAAM technologies have been commercialised by Norsk Titanium, RAMLAB and WAAM3D. Most importantly, AL3’s management and boards are focused and experienced. AL3’s WAM has been certified by Lloyd’s Register (Great for marine industry) and well funded. I feel confident that they will engage customers and gain the commercial contracts.
AL3 targets various sectors such as marine, mining, energy, and defence. It is important to understand that it takes time to reach commercial contracts and executes through confidentiality agreement. I always recall “The stock market is a device for transferring money from the impatient to the patient – Wattern Buffett”. If I have opportunities and time, I will share some of my insights in the quality aspects of WAM such as porosity, thermal overheating, and certification etc.
Penafian
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