KULR Technology Group’s (NYSE-Amer: KULR) deal-making momentum continues to strengthen into the end of 2023. And that helps expose a valuation disconnect between share price, assets, and revenues worth seizing. While that proposition was in play prior, KULR’s recently announced add-on contract with the US Army strengthens that sentiment, particularly inherent to its expected revenue contributions through 2024. But revenue contributions are just one factor to consider.
Another and more important fact to consider, especially for investors, is that the extended agreement adds to the growing list of validations supporting the premise that KULR battery-safety technology, including its KULR ONE lithium-ion battery cell storage solutions, is more than good; they are likely best-in-class. KULR CEO Michael Mo thinks so. He noted, “This extension serves as a testament to the transformative potential of our technology and the trust the US Army has put in us to partner with them to achieve their goal of developing state-of-the-art energy storage solutions.” He added,“To be trusted by the US Army to provide cutting-edge effectiveness and safety in energy solutions to our soldiers is an honor. We look forward to completing our extensive K1-DS design and testing process so the Army can move into production as soon as possible of these next-generation energy storage solutions that meet the Army’s high technical and safety standards.”
And that’s just one project earning high-value, high-standards attention. In addition to the US Army project, KULR recently announced becoming the sole provider of an automated cell screening effort for NASA and scoring a deal with a “Top 5” American EV truck manufacturer to provide its next-gen battery safety solutions to that client’s growing fleet of EV trucks and SUV’s. All these deals share a common theme: KULR’s track record of battery-safety solutions excellence is attracting considerable multi-sector interest.
Choosing KULR To Protect Consumers And Assets
More importantly, it’s leading to deals made. While KULR didn’t name the EV truck manufacturer, they did highlight that the client company is forecasting a substantial ramp-up in its EV truck line production in 2024. That’s likely to be excellent news for KULR, especially with the company saying the brand intends to use KULR’s superior battery-safety technology and performance in its vehicles. That integration will do more than provide safety to its consumers; it adds to an increasing number of revenue streams for KULR that, on a multiples basis, can justify higher share prices. Moreover, inking its deal with a “Top 5” EV manufacturer could lead to additional big-ticket contracts from a sector needing precisely the battery-safety solutions it sells. There’s no argument against KULR’s solutions offering the right things 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. Those inclusions help send a clear message- KULR battery safety solutions are so potent and trusted they are chosen to protect multi-billion dollar assets from one of the most significant threats to their existence: fire and explosion.
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, KULR’s client list continues to grow, not from small independent companies but from some of the largest and most influential companies and agencies worldwide.
KULR Is Earning Its Client Interest
That interest, and the value received from it, is earned from KULR designing critical elements of lithium-ion battery safety and storage solutions and then developing, manufacturing, and licensing its next-gen carbon fiber thermal management technologies for use in client-specific batteries and electronic systems. That includes its breakthrough cooling solutions that are more than powerful; they could lead to KULR earning 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.
Seizing that potential is a mission in progress, evidenced by KULR announcing it entered 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 coupled with Forge Nano’s proprietary Atomic Layer Deposition coating process. Like its others, this collaborative effort could lead to more significant opportunities, resulting from what KULR believes will be breakthrough product technology to serve demand from OEM partners’ batteries by providing unrivaled safety and efficiency. In other words, this relationship can contribute to already excellent deals getting even better. And, once again, KULR can target revenue-generating business from departments and agencies with billions to spend. That’s already happening.
KULR noted in its announcement that the strategic partnership will assess Forge Nano’s premium battery cells for space and US Department of Defense applications, which will utilize KULR’s automated cell screening to measure individual battery cells’ voltage, temperature, and impedance. From that point, data can be further analyzed to identify potential issues and optimize battery cell performance compliant with the strict NASA flight specification reference points.
KULR By The Numbers
While KULR is advancing multiple programs, they are able to maximize value in an accretive fashion. That’s evidenced by a steepening revenue curve. For its Q2, ending on June 30, 2023, revenues increased roughly 360% to $2.7 million from $0.6 million reported in the same period last year. Contract Services revenue soared over 2300%, from approximately $0.7 million versus $0.03 million in the prior year. Product revenue growth didn’t disappoint, either. It spiked by over 250%, posting roughly $2.0 million compared to $0.6 million in the same period last year. The better news is that those dollars are falling faster toward its bottom line.
In that measure, gross margins increased to 37% compared to 28% in the same period last year. The better news for those appraising KULR is that the company expects margins to strengthen, guiding them to reach the low 40% range in coming reports. That should allow KULR 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 are generated from its partnership with a world-leading provider of drone-powered package delivery services, which should also contribute to a strengthening bottom line. For the latter, 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. Other value drivers are active.
KULR is in another development contract with 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 diverse services and platform contracts do more than generate revenues; they are excellent examples of how the KULR ONE Design Solutions platform provides 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 Are Bullish On KULR’s Near And Long-Term Potential
Incidentally, these value-creating deals are not flying entirely under the radar. Three analysts covering KULR stock share a common and bullish theme, each holding a BUY rating and price targets as high as $7.00, over 1958% higher than its current $0.34 price. The lowest price target of $1.20 is still bullish, representing a potential upside of 252%. And using the midpoint of the three, $3.28, from analysts that typically know much more than retail investors, a 864% gain could be in play. In other words, despite choppy markets, each model has the path of least resistance for KULR shares to be paved higher. Thus, a bullish break from the price consolidation over the past month could provide the energy needed to score those gains. (*based on the share price on 11/15/23, $0.34, 1:51 PM EST, Yahoo! Finance)
Still, investors don’t need to rely solely on analysts’ words. KULR provides plenty for those doing their own due diligence. In addition to the mentioned EV and aerospace clients and contracts, 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 timely predicate to advance eVTOL battery safety solutions ahead of expected federal 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 beyond just being real; it can be fatal. Thus, KULR’s solutions are more than investment-grade value drivers; they can be life savers and brand protectors in multiple sectors. Some of the biggest and most storied brands recognize that value.
KULR Is Working With Sector Royalty
KULR breakthroughs in lithium-ion battery safety technology have led to deals with racing sector royalty, working with Andretti Technologies to provide thermal management and battery safety solutions to its electric SUV extreme racing team Andretti United Extreme E. That deal includes leveraging joint research to potentially co-market proprietary battery products and solutions. The EV sector isn’t alone in helping accelerate KULR’s growth.
KULR is working with Leidos to provide battery safety technology and with Heritage Battery Recycling, which could 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, monetizing that allowance to its fullest potential could exponentially impact revenue growth.
Therefore, to properly appraise KULR, investors need to factor intrinsic and inherent value from a myriad of things, including on the intrinsic side, a massive IP portfolio, revenue growth, a Who’s Who client list, and the fact that when it comes to battery-safety technology, KULR is more than leading the charge; they are competitively unrivaled in making consumer and industrial products safer. Combining all that with the inherent potentials from the contracts in play and others expected, it’s difficult to disagree with the analyst models- that being, KULR is indeed worthy of a much higher valuation.
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