KULR Technology Group (NYSE-Amer: KULR) scored another potentially massive deal. This time, it’s with a Top 5 American EV truck manufacturer, with the goal of KULR designing and delivering its next-gen battery safety solutions to that client’s growing fleet of EV trucks and SUV’s. Similar to deals from other Top-Tier clients, choosing KULR is no coincidence. Instead, it results from KULR ONE Design Solutions’ proven abilities as a best-in-class battery-safety option to protect brand products, image, and reliability.
While KULR didn’t name the manufacturer, they did highlight that the client company is forecasting a substantial ramp-up in production of its EV truck line in 2024. Good news for them is for KULR as well, noting the brand intends to use KULR’s superior battery-safety technology and performance in its vehicles, an integration that will do more than provide safety to its consumers; it adds another potentially significant revenue stream for KULR that on a multiples basis can justify higher share prices. Moreover, it demonstrates that KULR benefits from targeting the right opportunities at the right time.
Research and Markets report that the US electric truck market is expected to grow at a 54% CAGR and reach $15 billion by 2030. And they all need what KULR provides: innovative, IP-protected battery safety solutions that are so robust that they earned a place on the International Space Station and Mars Perseverance Rover. Of course, those inclusions send a clear message- KULR battery safety solutions are trusted to protect multi-billion dollar assets from one of the most significant threats to their existence: fire and explosion.
A Who’s Who Client List Of Industry Behemoths
Their confidence in KULR has led to significant other deals, including with the Department of Energy, NASA, the US Air Force, and the Department of Transportation. On the private sector side, the list is equally impressive, having scored contracts and working relationships with Boeing (NYSE: BA), Ball Aerospace (NYSE: BLL), Airbus (OTC: EADSY), Lockheed Martin (NYSE: LMT), Leidos (NYSE: LDOS) and Raytheon (NYSE: RTX). Even that list names just a few. Moreover, as news pointed out in October, it continues to grow. And not from small independent companies but from many of the largest and most influential companies worldwide.
Plenty supports their interest in KULR technologies. The most apparent reason is that when it comes to battery safety technology, KULR is leading the pack, a position earned by developing, manufacturing, and licensing next-generation carbon fiber thermal management technologies for batteries and electronic systems. Its breakthrough cooling solutions are more than powerful; from a battery-safety and investor’s perspective, they could earn KULR the lion’s share of battery-safety integration sales with leading aerospace, electronics, energy storage, 5G infrastructure, and electric vehicle manufacturers to make their products cooler, lighter, and safer for the consumer.
That intention was further advanced after KULR announced entering into a Memorandum of Understanding with privately-held precision nanocoating technology company Forge Nano. KULR expects the strategic partnership to generate initial revenues between $3.5 million and $5 million, resulting from KULR ONE Design Solutions offerings with Forge Nano’s proprietary Atomic Layer Deposition coating process. KULR believes the deal will create a breakthrough product to serve demand from OEM partners’ batteries by providing unmatched safety and efficiency. Noting how a large contract can get even bigger, KULR said the strategic partnership will assess Forge Nano’s premium battery cells for space and US Department of Defense applications. Specifically, they will utilize KULR’s automated cell screening to measure individual battery cells’ voltage, temperature, and impedance. Then, they will analyze the data to identify potential issues and optimize battery cell performance compliant with the strict NASA flight specification reference points.
Add-On Orders Fuel Consistent Quarterly Growth
As one would expect, the deals made contribute to a steepening revenue curve. For its Q2, ending on June 30, 2023, revenues increased to $2.7 million from $0.6 million reported in the same period last year, an approximately 360% increase. Contract Services revenue soared over 2300%, resulting from contract services revenue of roughly $0.7 million versus $0.03 million in the prior year. Product revenue was also impressive, posting approximately $2.0 million compared to $0.6 million in the same period last year. That increase is an over 250% spike.
There was more to like, especially the part supporting that revenues are starting to fall faster toward its bottom line. In that respect, gross margins increased to 37% compared to 28% in the same period last year. The better news is that KULR expects those margins to more than hold; they are guiding them to reach the low 40% range in coming reports. That allows them to maximize its revenue pipeline, including its $1.13 million contract award from the US Army to develop next-generation high-energy battery packs employing the KULR ONE Design Solutions. Other revenues from its partnership with a world-leading provider of drone-powered package delivery services will get the same benefit. For them, KULR is providing its K1-DS platform and proprietary technology to develop high-capacity lithium battery packs for last-mile delivery, recognized as the most expensive and time-consuming part of the shipping process. That’s not all.
KULR is accruing value from an additional development contract from a United States Armed Forces branch. In that deal, KULR is hired to develop high-energy battery packs for uninterruptible power supplies to mobile command centers. These contracts are excellent examples of how the KULR ONE Design Solutions platform provides KULR clients and partners with unique, comprehensive solutions that management believes result in the most comprehensively packaged battery safety solutions for high energy and demanding applications.
Analysts Model For A 1607% Share Price Increase
Of course, KULR benefits as well. And analysts are taking notice. In fact, three analysts covering KULR stock share a common bullish theme, each holding a BUY rating and price targets as high as $7.00, over 1694% higher than its current price. The lowest price target of $1.20 is still bullish, representing a potential upside of 207%. And using the midpoint of the three, $3.28, from analysts that typically know much more than retail investors, a 741% gain could be in play. In other words, despite KULR going to the capital markets at a challenging time, a consensus is that its shares will continue to move higher. Appreciably so. (*based on the share price on 10/16/23, $0.39, 11:27 AM EST, Yahoo! Finance)
Still, investors don’t need to rely solely on analysts’ words. KULR provides plenty to support the bullish thesis by publishing consistent news flow that shows KULR shifting its growth pace speed from hyper to warp. That results from KULR making deals with clients in multiple sectors. In addition to EV and aerospace clients, KULR announced developing safe battery testing solutions for a top 5 global electric vertical take-off and landing (“eVTOL”) product manufacturer. Results of these tests should be published soon, which could serve as the predicate to advance eVTOL battery safety further ahead of the federal regulator’s expectations to present certification rules for the emerging eVTOL air taxi market.
KULR is also expanding its SafeCASE™ product line for electric bikes and the consumer e-mobility market, bringing to the consumer level the same patented technology it provides NASA to protect astronauts on the International Space Station and crewed space missions. Keep in mind that there are over 300 million e-bikes in use worldwide, with that number compounding at estimated double-digit percentages. As consumers learned with hoverboards, the threat of battery-related fires is more than real; it can be fatal. Thus, KULR’s solutions are more than investment-grade value drivers; they can be life savers for consumers in multiple sectors.
Additional Big-Ticket Deals Support The Bullish Proposition
KULR breakthroughs in lithium-ion battery safety technology are leading to deals with prominent names, including Andretti Technologies, to provide thermal management and battery safety solutions to its electric SUV extreme racing team Andretti United Extreme E. That deal can also benefit from joint research to co-market proprietary battery products and solutions. The EV sector isn’t alone in supporting higher KULR valuations.
KULR is working with Leidos to provide battery safety technology and with Heritage Battery Recycling to offer the same and, at the same time, open doors of opportunity to work with transport and delivery companies like United Parcel Service (NYSE: UPS) and FedEx (NYSE: FDX) due to earned certifications. Currently, those allow for the shipment of batteries utilizing the KULR Safe Case products through UPS’ vast shipping network. It also allows its US DoT-compliant “Safe Case” to be used as a safe and reusable shipping container for Li-Ion battery transportation up to 2.1KWh. That allowance provides KULR’s major recycling partner with a safe shipping container that can handle batteries above 300Wh. And with billions of lithium-ion batteries needing proper disposal, it could significantly steepen KULR’s revenue curve.
Indeed, totaling just the deals highlighted exposes a valuation disconnect between assets, contracts, and share price that is more than wide; it’s unjustified. And that’s factoring just what’s in the queue. Knowing that KULR isn’t a company content with the status quo, a better appraisal would account for the current value drivers already contributing and award value from a forward-looking perspective that potentially puts many millions in additional revenues in play. Factoring in that totality is where a fair price would originate. At $0.38, the share price not only misses the mark; it presents a bargain-basement opportunity.
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