Alexium International Group Limited

AJX Details

Key Takeaways of Q4FY21 (June 2021 Quarter): Alexium International Group Limited (ASX: AJX) is involved in researching and developing technology, licensing its intellectual properties, and selling its specialised chemistry to customers.

• The Commercialisation of TMCS: AJX has commercialised the Alexicool® suite of products for the total mattress cooling system (TMCS) and achieved initial sales from its launch.
• Upward Sales Trend: The company reported US$2.2 million of sales in Q4FY21 due to increased adoption of its new and existing product lines. AJX expects the upward sales trend to continue in 1HFY22.
• USFDA Certified BioCool™ Product: AJX has expanded its Alexicool® product line in late 2020 and launched biobased phase change materials (PCMs). In Q4FY21, AJX obtained the BioCool™ trademark for its new biobased product line by the US Agricultural Department under the BioPreferred Program.
• Rebranded Phonon Technology: During Q4FY21, AJX rebranded the Phonon technology to Eclipsys™ and has developed new textile and foam-based thermal management consumer products. AJX expects the technology to drive growth in large adjacent markets outside of the US bedding market.
• Production Scale Run: AJX completed and successfully produced its FR NyCo technology through a rolled goods application in Q4FY21.

Revenue & Net Loss from FY16-FY20; (Analysis by Kalkine Group)

Key Risks:

• Maintaining Robust IP: AJX faces the risk of product innovation and new product development and needs to maintain a highly experienced, technical, and educated staff to meet the development needs of the products.
• Adequate Capital: AJX needs to manage resources to ensure adequate capital to generate profitability and remain well capitalised based on revenue estimates, business pipeline, corporate budget, and funding alternatives.

Outlook:

• AJX anticipates growth in the US bedding market and of Alexicool® product line to reach full production scale in 1HFY22.
• AJX has developed Eclipsys™ platform for the body armour market and is now scheduled for market adoption in 1HFY22.
• AJX will continue to work on the FR NyCo Technology in Q1FY22 for optimal wearability and design to provide production-scale goods to the military for testing and assessment.

Stock Recommendation: The stock of AJX gave a positive return of 64.58% in the past month and a positive return of 64.58% in the past three months. The stock is currently trading higher than the 52-weeks’ average price level band of $0.044 - $0.100. On a TTM basis, the stock of AJX is trading at a price to book value multiple of 9.9x, higher than the industry (Basic Materials) median of 2.8x, thus seems overvalued. Considering the current trading levels, significant stock returns, and valuation based on TTM basis, we suggest investors book profit and give a ‘Sell’ rating on the stock at the current market price of $0.079, as of 3 August 2021, 2.41 PM (GMT+10), Sydney, Eastern Australia.  

AJX Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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