Amaero [ASX: 3DA] Update September 2026
Defence Industrial
Commercial Momentum and Defence Validation Drive the Next Phase of Growth
We are revising our target price for Amaero Inc. (ASX: 3DA) upward to $0.97, implying a compelling 287% total upside from the current $0.25 share price and marking an uplift of 17% from our January 2025 Update report. Our investment case has advanced materially as Amaero transitions from capacity build-out and customer qualification towards commercial scale-up. FY2026 revenue increased 376% YoY to A$18.1m, and contracted backlog reached A$23.1m by July 2026, equivalent to ~1.3x FY2026 revenue. Commercial visibility has strengthened further through the A$7.8m minimum titanium powder commitment, with the customer expecting purchases to exceed the contracted minimum. Management is also targeting ~100% growth in titanium powder production in FY2027. Recent on-market buying also provides a positive alignment signal, with Pegasus Growth Capital investing ~A$2.8m and increasing the substantial-holder group's voting interest from 30.23% to 31.30%, alongside separate director purchases. The external backdrop remains supportive, with US policy increasingly focused on domestic defence manufacturing, critical-material security and resilient supply chains. We believe stronger contracted demand, an established manufacturing platform, an upcoming US listing, and improving strategic positioning provide greater support for our valuation than at initiation.
Defence Programs Advance Towards Production
Amaero has achieved important milestones across refractory powders and PM-HIP. The A$6.5m US Department of War refractory development programme provides near-term revenue while positioning Amaero within US efforts to develop lower-cost, domestically available high-temperature materials. Meanwhile, PM-HIP has progressed into low-rate initial production with BPMI for the US submarine industrial base following several years of development and qualification. Successful execution and follow-on production awards could establish additional recurring revenue streams beyond the existing contracted base.
Installed Capacity Provides Significant Operating Leverage
Amaero completed its initial A$72m capital investment program on schedule and on budget, with three EIGA Premium atomisers providing ~680tpa of powder capacity. A fourth atomiser scheduled for June 2027 is expected to increase capacity to ~920tpa, while planned argon recycling should improve production economics. With substantial capacity already installed, the investment case is shifting towards utilisation and earnings conversion. Higher throughput should improve fixed-cost absorption and support margin expansion, making capacity utilisation and gross-margin progression key indicators through FY2027.
Valuation range of A$0.78–1.16 per share
Using our DCF valuation methodology, we derive a valuation range of A$0.78–1.16 per share, with a midpoint target price of A$0.97/share. This reflects a P/NAV of 0.26x and a potential upside of 287%. Our higher valuation reflects stronger revenue and backlog, increased contracted titanium demand, installed manufacturing capacity and defence programs advancing towards production. Our valuation does not assume full value for a follow-on refractory program or a US listing. Following US domiciliation and confidential submission of a Form S-1, shareholders have approved the issuance of up to 5m common shares through an underwritten registered public offering, another enabling step toward potential US capital-market access. A successful listing could broaden institutional participation, improve liquidity and strengthen access to growth capital, although we assign no specific IPO premium given uncertainty around timing, pricing and potential dilution. FY27-30 represents an important earnings-conversion period, with further upside dependent on higher utilisation, improving operating margins, and converting development programs into recurring production. Key risks remain operational execution, slower order conversion and utilisation, continued cash consumption and potential dilution.