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AJX - ALEXIUM INTERNATIONAL GROUP LIMITED


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Hi Crooky, the Weekly chart also looked OK for a change, although on smaller volume. Daily RSI back above 50 also. I will most likely wait and see if there is any small pullback to 50-51 area for an entry, with a stop below 44c and a TP in low 70s.

 

Weekly Chart.

 

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  • 1 month later...
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Alexium International (AJX) 54c

 

Along with Quickstep, Xtek (XTE) cites ship builder Austal (ASB), marine propulsion outfit Veem (VEE), weaponry and aerospace play Electro Optic Systems (EOS) and drone surveillance outfit D13 (D13) as listed homeland security peers.

 

We'll also throw in the Perth-based innovator in flame-retardant materials, which is targeting the US military complex in relation to uniforms treated with its non-toxic brew that changes the surface properties of materials.

 

But Alexium's recent revenue traction stems from its involvement in a "softer" market: comfy mattresses and pillows.

 

As with so many tech juniors, Alexium's progress has been a slow burn (pardon the pun) since the stock backdoor-listed in 2010 at 20c apiece. Originally, investor excitement centred on Alexium's ambition to supply the US military with uniform retardant.

 

"Progress is always slow to break into the defence sector unless there is an immediate unmet need," says Alexium chairman Gavin Rezos. "The reason is the size and value of the orders and the supply chain changes warrant extensive testing to ensure best product, cost effectiveness and robust supply chain."

 

In the meantime, Alexium has targeted a number of industrial markets, including a deal with an unnamed large mattress maker. There's nothing new about FR treatments. The trouble is, most of them are based on highly toxic bromides, blamed for thyroid cancer and memory loss. They've been banned (or are the process of being outlawed) in most western countries.

 

Alexium recently reported record shipments of Alexicool in the month of June: 90,000 pounds (40,000kg), more than five times the run rate in January. Alexium cites the FR market as a $US7 billion ($8.8bn) global opportunity. Other applications include transportation (such as aircraft seats), decorative fabrics and outdoor fabrics. Another is fireproofing electric components, such as circuit boards.

 

Another use is coating technology for building materials, including cladding. If anyone doubts the potential there, look no further than London's cladding-related Grenfell Tower fire that killed at least 79 people.

 

In the meantime, Alexium maintains the US military market is a "strong focus", especially given President Trump's intent to boost the number of battle-ready troops. Rezos says the US Department of Defence is after a more cost-effective and non-toxic retardant on nylon-cotton uniforms to replace the existing cotton-rayon garb, for use by all staff rather than just combat troops. Alexium has been working with the Natick US army research centre and US Marines, along with a prime contractor that currently supplies the uniforms.

 

Testing to date shows Alexium's FR meets their standards and is cost-effective. Rezos says: "Once we sell to the US Army and US Marines, the other US armed forces and 22 other militaries (such as NATO) will be able to buy without the need for the same level of testing."

 

In the March quarter, Alexium reported revenue of $6.47m, cash outgoings of $5.36m and a cash balance of $6.4m. The June quarter report, due out next week, should show the company in a cash flow-neutral position (on a run-rate basis).

 

While Alexium shares have rebounded from their May low of 47c after the June update, investors in the main have been snoozing. But if the company gets its intended Nasdaq listing away, a wider audience might take a different view.

Tim Boreham edits The New Criterion. tim.boreham@independentresearch.com.au

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Interesting look at contrasting management strategies with this one.

 

4C release this afternoon showed first ever quarter of positive cashflow, flagged cutting of unprofitable revenue streams (and associated bespoke services), and conservatively re-positioned with a solid (albeit not market-darling worthy) growth profile and lean capital structure. This transition has coincided with the changing of the guard from Nick Clark to Dirk Van Hyning, with two very contrasting styles.

 

Might be worth reading Lusch and Vargo's widely cited Service Dominant Logic for an insight into the previous strategy under Clark. 5 years ahead of the regulatory curve, and winning market share through bespoke, high switching cost solutions could have made this company an important strategic asset for one of the industry's larger players (even if only to quash the threat to market share). Clark has a nice grasp of game theory it would seem. A look at Amazon, or XRO more locally, on a broader basis shows that profitability is not the be-all and end-all if market penetration can undermine the industry incumbents - value via acquisition or market dominance at a later stage can still be created. Whether AJX had an adequate capital base to carry out a strategy like this is another question.

 

Interested now to see growth milestones hit, and whether the more time-honoured conservative approach of organic growth, particularly with a "shift away from lower margin bespoke solutions for individual customers towards platform solutions that address significant market gaps".

 

It may be that the recent regulatory change in the US at the federal level can achieve similar results for Alexium as the market gravitates to them, and we are seeing two roundabout ways of delivering shareholder value. It's a wait and see from me.

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  • 3 years later...

another one that lurks and then spurts. Market Cap still under $50M

 

AJX up 35% ... did a Sales update, and now in a Trading Halt

Alexium BioCoolâ„¢ Products: Sales Update

 

Highlights:

... Sales of BioCoolâ„¢ products have increased significantly over the last 3 months; led by our core customers transitioning from Alexicool® (our standard PCM) to BioCoolâ„¢ products

... Alexium’s BioCool™ products are registered with the USDA BioPreferred program and have a bio content of 94% , the highest bio content of any microencapsulated PCM listed

... Attractive proposition for our customers seeking a cost-effective means to improve their environmental credentials without sacrificing performance

... BioCoolâ„¢ product sales now account for 48% of total product sales for mattresses

 

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