Just out new Moelis report
Event
Alexium has announced that iTextiles has sourced new business
developments and international sales contracts for its Alexicool
technology. New customers referred by iTextiles totals annual
revenue of more than US$1.7m in CY16.
In addition to the US$1.7m in revenue, AJX has received orders for
multiple containers of chemistry from 2 well-established companies
that manufacture adhesives and coatings. It is estimated that the total
annual market for adhesives and sealants is estimated at US$42.5bn
globally, with an annual growth rate of 3.2%.
Impact
AJX has commented that it is on track for expected ramp-up of
revenues in 2H CY16 (i.e. July – December 2016). We understand that
AJX has added significantly to its inventories in 1H CY16 (i.e. January
– June 2016) to accommodate this and potentially other contracts.
It is our understanding that the US$1.7m in revenue from new
contracts is already included in AJX’s revenue guidance of US$18.5m
for CY16, therefore, there is no change to our estimates. Our view is
that the next catalyst for this stock will be the FY16 earnings report
where the market will look to see if AJX has reached 20-25% of
US$18.5m for revenue in 2H16.
Investment View
We reiterate our BUY rating and 12 month target price of $1.20. We
view AJX as a strategic investment leveraging increased scrutiny on
stringent fire safety regulations and banning of toxic and harmful
chemicals in traditional brominated and halogenated flame retardant
products
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