What once took weeks to produce with pinpoint accuracy now boils down to hours under a printing platform. This new style of what has become known as additive manufacturing is creating entirely new ways of generating nearly anything. This has impacted a multitude of industries as well as industrialized countries to break into new manufacturing methods in the 21st century.
Take, for instance, Heritage Printing Technology (HAGE, Financial). Just last week, the company announced a major China-based distributor, Synergy Tech Co., will enhance the company’s exposure in one of the more prominent arenas for 3-D printing. Being that Synergy is based in China, it has a strong grasp over government controls and has been in the arena for a while, according to the release.
Since this past Tuesday’s open at 19 cents, Heritage has managed to see highs of 30 cents; roughly 54% during that period. In October, Heritage saw highs of 38 cents. During the summer, it saw almost 70 cents.
The play for market share in China has become increasingly important based on the push from government level agencies to back spending in the industry. In fact, China is expected to pass the U.S. in terms of total spending put forth toward 3-D printers in 2016. Analysts project this should continue well into the next two to three years.
Government investments are aiding this process. Kangshuo Group is eligible for $15 million and research and development spending by Chinese companies has risen from 5.8% in 2015 to 6.9% this year, according to reports from China Daily. In addition, roughly 130 Chinese companies spent nearly $50 billion combined on R&D over the year to June 2016. That is up almost 20% since the same time last year. One of the largest companies in this pool is Chinese e-commerce juggernaut Alibaba Group (BABA, Financial).
Outside of this new opportunity in China, there have also been options for breakthroughs in health care. Biotech 3-D printing company Organovo Holdings (ONVO, Financial) has seen a very positive impact from what has been coined the “Trump Biotech Bounce.” But unlike other companies in this space, Organovo has not targeted the next fast track therapy or attempted a successful phase trial. It is more focused on creating actual human tissue, seemingly out of thin air.
How could this even be possible? 3-D printing has allowed companies, specifically Organovo, to adapt the technology and enable printers to use different mediums of “ink” to print with.
In the case of Organovo, they just released quarterly results that showed the company’s continued progress through its novel processes. For the period ending Sept. 30, 2016, unaudited financials show the company recorded $1.4 million in revenue and increased this figure by nearly $200,000 compared to the previous period. Organovo has been able to decrease its net loss with a major impact coming from a drop in corporate expenses.
The previous sell-off in October seems to have remedied itself. Late last month, the company saw a massive decline in the stock price after announcing it would be initiating a public offering of common stock at a price of $2.75 per share. Prices plunged to $2.48, but Organova has enjoyed a healthy rebound to trading levels above $3 in recent weeks.
Thanks to investments from large conglomerates, the 3-D printing industry has been noticing a much more significant boost in recent months. With the exception of stocks like Stratasys (SSYS) falling on disappointing earnings, the industry as a whole has seen a jump. In fact, just take a look at 3-D Printing ETF (PRNT, Financial) and you will quickly notice stocks have realized an abrupt rebound after hitting lows of $20.01 in early November. In recent trading sessions, the ETF, which tracks the markets for 41 different holdings, has jumped to highs of $21.99 within the last week.
Certainly interest has increased from major acquisitions being made by companies like General Electric (GE, Financial). The company, in an effort to increase its exposure in the 3-D printing industry, has made several plays to acquire companies in the space. The company is working to become what it is called “a digital industrial company.”
In fact, since 2010, the company has invested well over $1 billion into expanding its manufacturing and additive technology offering. Late last month, the company closed a deal for $599 million to acquire 75% of Concept Laser GmbH. There is also an option to take full ownership over the course of several years. This could easily be considered an industry catalyst that will help lift the overall market.
General Electric also agreed to purchase a controlling interest in Swedish company Arcam AB (OSTO:ARCM, Financial). Arcam invented electron beam melting machines that are used for metal-based additive manufacturing to create complex metal powders.
The climate for additive manufacturing is heating up right now and more industries are taking advantage of the unique opportunity that has been presented. From metal and aerospace to biotech and health care, 3-D printing is having a noticeable effect on some of the largest industries in the market. This trend is projected to continue well into the next decade and could continue to pose a unique scenario for those looking for exposure to what was once a fringe industry.
Disclosure: The author owns 55,750 shares of Heritage Printing Corp. and ZERO shares in any other companies mentioned.
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