Edison Research: Nano Dimension – Disruptive Printed Circuit Board Prototyping

Nano Dimension (TASE:NNDM,NASDAQ:NNDM) has combined techniques from 3D printing and nanotechnology inks to develop an innovative system that revolutionises PCB prototyping, enabling designers to bring the process in-house. This reduces time to market and ensures that IP security is not compromised. The company also has earlier stage developments for structural electronics, batch manufacture of PCBs and printing human tissue.

Nano Dimension has invented an innovative 3D printer (DragonFly) and associated nanoparticle conductive and dielectric inks. It is now commercialising the system to enable electronic designers to rapidly manufacture prototype multi-layer printed circuit boards (PCBs) without using multiple processing steps. This potentially speeds up the design process by eliminating the need to outsource prototype production to a specialist PCB manufacturer, typically based in the Far East, and ensures IP is kept secure. Target markets include companies designing electronic goods, defence companies, PCB service providers and academic departments.

The next 12 months mark a crucial phase of execution for Nano Dimension as it moves from development to commercialisation. Delivery to key milestones (set out in Exhibit 5) and to our financial estimates should substantially validate the company’s technology, commercial proposition and financial model. The company has already received over 2,500 enquiries for the DragonFly. The first DragonFly was recently delivered to a leading Israeli defence company for evaluation, so we model sales of three units to beta-site customers towards the end of FY16. Assuming that beta-testing is successful, we estimate sales of 39 printers in FY17 with a full ramp-up to 200 units and profitability in FY18. We estimate that there is sufficient cash to last until the first sales are made (end FY16e) but more (we estimate US$11m) will be required to support volume ramp-up.

Delivery to our estimates and key milestones over the next year would justify significant share price appreciation, with our base case valuation returning a fair value of NIS9.93/ordinary share (US$12.86/ADS), excluding any additional potential contribution from third-party ink sales or early stage development programmes. The current share price factors in the prospect of dilution and risks of setbacks to the commercialisation plan, which is common in pre-revenue technology companies.

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