Amaero [ASX: 3DA]
Metals & Mining
One of the ASX’s best small-cap ideas to play the strong and growing US defence market
We revise our coverage on Amaero (ASX: 3DA) with a Target Share Price of $0.827, offering a substantial 162% upside from the current price of $0.315. Amaero is uniquely positioned as a domestic strategic material supplier to the additive manufacturing sector and as a manufacturer with proprietary know-how in PM-HIP manufacturing, capitalising on surging U.S. defence and aerospace spending and the drive for industrial onshoring in the U.S. Amaero’s best-in-class refractory powders and advanced manufacturing techniques deliver unmatched strength and complexity for mission-critical components that the US is focused on. With significant U.S.- based facilities and robust government support, Amaero enables a reliable, qualification-proven domestic supply chain of key defence industrial inputs in ways that no other US based competitor currently can. Deep industry partnerships and experienced leadership add to Amaero’s technological edge, providing a clear trajectory for accelerated growth and substantial shareholder returns. Add to this the prospect of a near term US exchange listing, leads us to making a high conviction but patient bullish investment thesis for Amaero.
Large and Growing Addressable Markets
Amaero’s prospects are tied to the renewed U.S. defence and onshoring-growth momentum.U.S. AM spherical powder SAM is projected to grow faster than the global AM spherical powder SAM, which in turn is projected to grow faster than the global general metals powder TAM. Not only is Amaero positioned in the fastest growing end market, but it also possesses the best technology (EIGA premium systems) to enable it to better address the non-substitutable mission-critical needs of the higher-end segment of this end market (refractory and titanium alloys) in ways that no other USbased competitor can. The Company’s PM-HIP manufacturing offering is also aimed at addressing a key US supply chain bottleneck.
Exclusive supply wins and on the path to revenue expansion
Amaero is offering the U.S. market the largest capacity and lowest cost domestic production of refractory and titanium alloy spherical powders and has a first mover advantage with its PM-HIP manufacturing solution. Amaero has already won several long-term exclusive supply deals with leading defence OEMs and strategic additive manufacturers, enabling it to grow as these OEMs and manufacturers grow, paving the way for a notable revenue ramp for the Company over the next few years. Amaero has outspent its competitors on growth capex to achieve this, and the market is mispricing the unique and strong, durable technology-based competitive advantage that Amaero consequently possesses.
Conservative valuation approach confirms bullish thesis
Our bullish valuation thesis for Amaero needs it to only achieve modest market share despite its superior competitive positioning; additionally, our valuation ignores / partly considers other valuation levers like a notable and likely rerate from the realistic near-term goal of the Company’s stock listing on a US exchange. This is a high conviction, unique thematic pick that correctly looks beyond the recent expected revenue guidance change stemming from the 2025 US government shutdown. Our final intrinsic valuation for Amaero leads to a stock valuation of $0.723 in the Base Case and $0.930 in the Upside, leading to a midpoint valuation of $0.827, which represents a 162% upside return from the current stock price of $0.315.