US based research firm, Arrowhead is initiating its coverage on BluGlass Limited (BluGlass or BLG) with a fair value bracket of AUD 0.09 to AUD 0.18 per share (share price on November 20, 2023: AUD 0.059) based on the Blended Valuation (Discounted Cash Flow and Relative Valuation) method.

  • BluGlass is a laser diode manufacturer based in Australia and the US. The company stands out as a comprehensive GaN laser manufacturer, offering a diverse laser diode product suite, from small-batch custom lasers to high-volume off-the-shelf products, with wavelengths spanning 395-525 nm and flexible form factors.
  • The GaN laser diode market is expected to reach USD 3.9 bn by FY 2032. The complexity of laser diode manufacturing, limited number of suppliers and lack of innovation in new product development and laser diode has resulted in a significant unmet demand for a dedicated GaN laser diode supplier.
  • BLG is one of the few GaN laser suppliers worldwide with state-of-the-art facilities and a vertically integrated supply chain in Australia and the US, placing the company in an advantageous position to meet the unmet customer needs. BLG provides flexibility, customization, and manufacturing agility, which are crucial in the GaN laser market.
  • BLG’s remote plasma chemical vapor deposition (RPCVD) technology, featuring low-temperature, low-hydrogen processes, advances cleaner, more efficient photonics. This technology is central to BLG’s unique business model, and is safeguarded by 53 patents, 15 Patent Cooperation Treaty applications, 8 patent families and 17 trademarks.
  • The company is poised to venture into advanced capabilities such as Distributed Feedback (DFB) technologies, and Photonic Integrated Circuits (PICs), to cater the evolving quantum computing and quantum sensing markets, in order to attract higher average selling prices. BLG has made substantial progress in its development of visible GaN DFB lasers using its proprietary RPCVD technology, demonstrating substantial performance improvements.
  • BLG is actively investing in expanding its product range within the 405-450 nm spectrum, encompassing both single- and multi-mode formats. The company’s strategic goal involves broadening its wavelength scope, extending from blue (450 nm) to green (500-525 nm) and further to ultraviolet (UV) (395 nm).
  • The company operates cutting-edge facilities in Sydney (laser design and wafer growth), Fremont, California (downstream manufacturing for turning wafers into laser chips or bars) and Nashua, New Hampshire (packaging and reliability testing), which are dedicated to advancing and commercializing its RPCVD technology.
  • The acquisition of a Silicon Valley laser diode production facility in FY 2022 for USD 2.5 million (mn) has been synergistically beneficial for BLG. Anticipating enhanced capacity and increase in gross margins from 15% to 45%, BLG envisions its fully operational fabrication facility contributing to a top line of approximately USD 170 mn. BLG has already acquired multiple orders with several industry-leading customers who are qualifying BLG-manufactured lasers in real-world applications, underscoring its prominence.
  • BLG is engaged with several highly respected partners like Ganvix, which will augment its earnings growth and enhance its technological know-how. The company’s inclusion as a member in the Commercial Leap Ahead for Wide Bandgap Semiconductors (CLAWS) Hub by the US Department of Defense in October 2023 will enable it to develop its technical know-how and secure its financial position, paving the way for significant growth opportunities.
  • The company has highly experienced professionals, such as Mr. Jim Haden (CEO) and Mr. Ian Mann (COO & CTO), who are responsible for overseeing the business, determining the direction and operations of R&D, and transitioning BLG from its R&D origins to a technology development and product manufacturing company. Further, BLG’s board comprises Mr. James Walker (Non-Executive Chair), Jean Michel Pelaprat (Non-Executive Director), Mr. Stephe Wilks (Non-Executive Director) and Mr. Vivek Rao (Non-Executive Director), who contribute to the company’s success by bringing their vast and global experience to the table.
  • The company is listed on the Australian Securities Exchange (ASX) under the ticker BLG.

The full report is available to download here: BluGlass Limited – Arrowhead Initiation Report – 20 Nov 2023