This under the radar ASX defence company could more than double in value, a broker says

Defence stocks are in focus at the moment for a number of reasons.

There’s the obvious with the US and Israel launching strikes on Iran over the weekend, but there’s also a longer-term trend for countries around the world to increase the share of spending they are attributing to defence, all of which bodes well for Australian defence stocks.

One company which arguably stands to benefit is AML3D Ltd (ASX: AL3), which is focused on the manufacture and sale or lease of its Arcemy 3D printing modules.

The company recently released its first half results, with revenue slipping 30% to $3.3 million, and the net loss increasing 65% to $4.9 million.

Order book looking strong

This might not sound amazing on the face of it, but the company also said it had an order book of $16.5 million, with $3.25 million of that recognised as revenue in the first half, with delays around raw materials and the extension of timelines pushing revenues into the second half of the year.

The company said in its first half report it was making good inroads in the defence sector.

AML3D is continuing to diversify its customer base to include core U.S. Defence contracts and expanding into new industrial manufacturing markets. The 1H26 ARCEMY contract with FasTech, a supplier to the Defense and civil industry, is a good example of leveraging AML3D’s success supporting the U.S. Navy Maritime Industrial Base (MIB) to broaden into additional markets. This contract builds on the delivery of a custom ARCEMY X system to the Tennessee Valley Authority, the largest federally owned Utility in the US, during 1H26.

AML3D said it also had ambitions to grow in Europe, “to build on the momentum generated by an initial order for materials testing from BAE Systems in the UK”.

The company added:

The expansion into additional Defence and industrial manufacturing markets in the U.S. and entry into Europe represent the next phase of AML3D’s growth strategy. They will be underpinned by AML3D’s plans to invest in a more than doubling of the capacity in our U.S. operations and the establishment of a European Technology Centre.

AML3D shares looking cheap

The team at Shaw and Partners had a look at the first half result and they like what they see.

They have a price target of 40 cents per share on AML3D shares and say near term earnings are not that important, as their valuation, “is driven by long-term sales exceeding A$100 million”.

AML3D shares are currently changing hands for just 17.7 cents.

The company was valued at $82.9 million at the close of trade on Friday.

The post This under the radar ASX defence company could more than double in value, a broker says appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.