A Chat With Alexium CEO Nick Clark
Posted by The Nude Investor On September 25, 2015 2 Comments
If you’re a follower of The Nude Investor, you’ll know that ASX listed Alexium International Limited (ticker AJX) has been my main “core” holding for a long time now. I was lucky enough to get on board AJX way back in November last year (2014) when it was trading around the $0.20 mark.
Since then the stock price has gone through the roof and recently traded as high as $1.17, meaning an almost 600% gain on my initial parcel (I’ve bough a lot, lot more since then).
AJX daily candlestick chart showing price action over the past 12 months.
Alexium provided me with my first real “multi-bagger” and for that, it will always hold a special place in my “investing heart”. Whilst I was initially attracted to Alexium because of the technical setup (it went through a textbook breakout pattern), the more I learned about the fundamentals of the company, the more I was sold on it’s long term potential.
Now, even after 1200%+ gains from it’s lows a little over a year ago, I still think AJX represents good value.
For those of you that don’t follow Alexium, their main claim to fame is the development of a new breed of fire retardant (FR) chemistry (a market worth an estimated US$10 – $18 billion by 2019, depending on who you talk to) that is both non-toxic and environmentally friendly.
This is significant as the current crop of bromine based FR solutions are both highly toxic and terribly bad for the environment. A quote from an article from the National Center for Biotechnology Information sums up this conundrum perfectly:
growing evidence shows that PBDE compounds are escaping from the products they protect and making their way into the products’ users. Moreover, the chemicals may disrupt human thyroid hormone functioning and cause other health effects, prompting many nations to ban or suspend their use in new consumer goods
So the very chemicals that are supposed to protect it’s users from harm, are actually causing serious and lasting health effects. In many countries, legislation limiting or straight out banning the use of such chemicals is either already in place or in the pipelines.
Cue Alexium.
Alexiums products represent the next generation in FR solutions and their reputation is growing, although they are still relatively unknown. Some (including myself) believe that is soon to change.
They have already announced numerous relationships with major players in the automotive, bedding, home furnishings, outdoor tenting and military industries, to name a few. They have a significant relationship with the U.S. military and are currently short listed as one of two companies vying for a substantial contract to develop the next generation FR military uniforms – something that would really put Alexium on the map. Alexium is widely considered to be the front runner for the contract.
A photo from a recent presentation showing how effective AJX’s FR chemistry is when applied to standard military uniforms. Watch the video here.
They have developed the worlds first ever FR treatment for nylon based materials – something competitors have spent decadestrying to develop. This is extremely important as nylon has significant cost and performance advantages over other cotton and polyester based materials.
Alexium also teamed up with high profile U.S. corporate advisers EAS (of Fortesque Metals (FMG) and Liquefied Natural Gas (LNG) fame) and is scheduled to list on the New York Stock Exchange as early as October this year – something that is bound to bring with it significant interest in the company. A chat with Alexium International CEO Nicholas Clark
I know many of my readers are either interested in or already have a holding in Alexium International, and as a shareholder with a significant holding in Alexium, I decided it was time to get in touch with CEO Nicholas Clark to ask a few questions.
I was delighted to hear he was more than willing to chat. I asked Nick some of the pressing questions I had regarding the companies progress. Read below to hear what he had to say: 1)2015 has been a breakthrough year for Alexium. Are you happy with how things have progressed and what can we expect through the rest of the year?
Very happy. It’s always been my strategy to ensure that 2015 was a year of creating a foundation that can be built on for 2016 onwards. It was always important to secure a strong pool of customers to ensure we had strength moving in 2016. We couldn’t be any happier with the growth in customers and the strength we have seen in the chemistry. 2)Alexium has an upcoming listing on the NYSE. I know many shareholders have found the whole process a little confusing. Things have also been very quiet on this front as far as news flow. Is everything still going to plan and when can we expect to hear further details about the listing?
Trust me, its very frustrating not to be able to shout out loud whats going on. Unfortunately, we are in a confidential filing (or blackout) period where we simply can’t say anything. The positive in that is, that because we are in that period, then naturally filing has commenced. That’s the best I can do for you right now. Be rest assured though, that as soon as we are given the green light, I’ll let the world know about it, don’t worry about that. 3)You’ve teamed up with the high profile U.S. advisers EAS. There are rumors that things haven’t played out as you would have liked with regards to a previous capital raising and the behavior of some of the institutions that partook. Have you been happy with how things have gone on that front and are EAS still playing a big advisory role with regards to growing the US business?
Not every thing in business goes to plan. EAS has done a fantastic job in getting me into doors, where I would not have otherwise got into in New York (even with a strong background of contacts myself). The last raise itself actually went okay and during the previous one, we had one particular insto that simply didn’t behave. If we had a crystal ball, then we would have known not to deal with them, but when your sitting in-front of someone and they look you in the eye and say “we are long term partners” you have to take a 50/50 punt. Once bitten twice shy, but in the end I was 85% happy when it came to the raising, and in fact EAS was able to repair some of the loss we experienced through their strong networks. 4) The military market has been a big focus for Alexium for a long time now and it’s obvious that you’re forging some strategic alliances in that space. How are things progressing on that front? When can we expect news flow regarding Natick and FRACAU fronts?
Very well – our relationships are steadfast and at this stage sometime in October we have been told. 5)I know a lot of investors became interested in Alexium based on your exposure to possible (very) large military contracts. I’ve heard before that you yourself actually see the commercial sector as more lucrative in the long run and any military contracts will simply be “icing on the cake”. Do you feel this way and what is the most exciting development you see at the moment in that space?
Yes, 100%. The commercial sector will always be the big prize. Military is good by way of reputation but right now, our mattress/home furnishing relationship and recent announcement of Murdock Webbing will be outstanding for the company. Of course not forgetting our continued development with iTextiles in Denim and Co-Branding (hang tags) just to name three out of our pool of what has turned in approx 16 clients now of various sizes. 6)On that note, there’s been a lot of speculation regarding Alexiums recently announced bedding customer. I assume the lack of naming and order details (figures) of the client is due to commercial sensitivities, however, is there any more light you can shed on this particular customer?
Yes – this is very, very exciting. We are only limited to not announcing the name because the client wants to be fully integrated on the shelves, before their competitors can see the pricing. It won’t be long now, and their orders simply continue to grow and grow. 7)Alexium has provided shareholders with constant news flow throughout the year, and appears to be kicking a lot of goals. However, there was distinct lack of cash flow showing up in the last financial report, which surprised some. Do you have any comment on this? When can investors expect to see revenue banked from the significant list of recently acquired clients?
I think the cover note on the 4C showed the reason behind that. Our Revenue was up significantly more, and the only reason why the cash position was low, was based on client payment terms where the money hadn’t hit the bank. 8)As a relatively young CEO and new to the American corporate space, whats the single biggest learning curve/thing you’ve learned about doing business in the USA?
That’s actually not that accurate. I’ve had a long history accumulating 10 years of U.S. Experience, with a break between 2007 and 2010. I have worked and undertaken very senior roles in banking, legal and financial markets having started in Wisconsin, Texas and then New York (and obviously now South Carolina and D.C) . I’m more at home and familiar in the US than I am in my home country. My contacts, associations and networks are also stronger than in Australia. I would actually be a foreigner more so there. I’ve listed a number of companies (directly and indirectly) on the NYSE, NASDAQ and OTC (QX and BB) than I have had dinners (figuratively). The one area that has been the most challenging that I had less exposure to was the politcical and defense side. But that challenge is long gone. I spend more days on the Hill and with the Department of Defense in-front of congressman and senators, generals and admirals etc than I do at home. 9)Finally, is there anything else you’d like to tell our readers?
We are rocking this bad boy like you wouldn’t believe. The last three month of the year and the first three month of next year are going to be so exciting its hard to contain it. We have a great team who love doing what they do at AJX every single day.
Thanks for getting in touch Sam, and for the kind words of praise and support. Its rare we (as in CEO’s) get that these days, but I’ve always believed, that if you do it right, don’t keep people in the dark and call it how you see it, you can’t go wrong. To Conclude
So there you have it, Alexium is kicking some serious goals. The growing relationships with high profile industry players and looming legislative changes that look set to limit or even ban competitors products suggest to me that big things are in store for 2016 and beyond.
To top things off, Nick Clark certainly wins the “friendliest CEO in the world” award (he responded to my request within half an hour at 9pm on a Friday night!). It’s always nice (and rare) to engage with a CEO that you can tell is both passionate about their company and has shareholders interests firmly at heart.
I’m expecting some very significant news flow over the next 6 months that should really propel the share price forward. If my (and many others) research is correct, the military contract alone (should Alexium win out) will eventually provide enough revenue to justify the current market capitalization on it’s own. If even half the developments in the pipeline come to fruition, I see a share price significantly higher than the current levels in the next 12 to 24 months.
2016 is going to be make or break for Alexium, and I for one am punting on the “make” side of things. AJX is one of the few stocks I plan to holding “long term”, even if we see further broader market volatility. I will continue to hold this view (and my AJX stock) unless I see signs of the companies fundamentals deteriorating.
If you’re interested in learning more about Alexium, you can visit their website here. Also, I’d love to hear what you think about Alexium. Do you agree with my bullish evaluation of the company or do you see things differently? Comment below and let me know your thoughts.
Happy investing. The Nude Investor
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There are 2 Comments.
Larry Olivier
2:17 am September 28, 2015
I wish you every success with AJX. My own assessment of the risk factors may be a tad higher than yours because defence contracts have many, many deciding factors. Often these have nothing to do with the fighting personnel best interests but more with the politicians bests interests. They always place their own survival on a much higher pedestal than the soldiers! And that is not even allowing for the corruption factor.
Competition, of course, is always a threat.
However, I do see a lot of upside here and have bought a few for the SMSF because, like you, I have a long term of this company.
And as you know a $5 share price on the big board in NY is easy to achieve unless you are a real dog. Reply
The Nude Investor
8:04 am September 28, 2015
I have to agree with you Larry – many think AJX is guaranteed success and a share price multiple that of current levels. I’m bullish, but I have my eyes on the risks.
I’m not overly worried if they aren’t awarded the military contract – I see the commercial space as being where the real value lies. But yes competition is something we will need to keep an eye on, especially in about 12 months time when the current crop of FR producers get a feel for AJX’s product. Reply
AJX Price at posting:
57.0¢ Sentiment: Buy Disclosure: Held
(20min delay)
