K-TIG signs welding licencing deal with Singapore industrials group

K-TIG ASX KTG Steel-Ti Precision Welding WaaS licence agreement Southeast Asia
K-TIG has signed an 8-year WaaS agreement with Steel-Ti Precision Welding.

Newly-listed Adelaide company K-TIG (ASX: KTG) has signed a licencing agreement with Steel-Ti Precision Welding Pte Ltd in Singapore for the supply of welding technology and support services to a purpose-built manufacturing facility due for start-up next year.

The eight-year agreement is the first of its kind to be signed with a south-east Asian customer for the use of K-TIG’s patented technology and includes long term licencing fees, fees calculated by usage and utilisation, minimum monthly charges and an advance payment.

Under the terms, K-TIG will also provide consultative services to Steel-Ti in relation to materials handling, cutting and automation equipment to facilitate quality and output standards from the new facility, due for completion in 2020.

The company will record and monitor Steel-Ti’s welding activities in order to provide a transparent reporting and billing system based on actual production and utilisation of its equipment.

Using its cloud-based system, K-TIG will also digitally store Steel-Ti’s welding data, providing updates to software and firmware in the background, and uploading new weld routines as required.

WaaS business model

Steel-Ti is part of a large industrials conglomerate owned by Singapore’s Teo family, who also operate shipping company Pacific International Lines and container manufacturer Singamas.

Steel-Ti produces high-value tanks and vessels for the oil and gas, aviation, and shipping industries, and piping for the liquified natural gas industry in the south-east Asian and Japanese markets.

It will be one of the first companies in the world to adopt K-TIG’s Welding-as-a-Service (WaaS) business model, whereby clients approach K-TIG on a job-by-job basis as opposed to being sold a piece of equipment for a one-off fee.

The model is aimed at promoting long-term recurring revenue and ongoing client relationships.

Transformative technology

K-TIG chief executive officer David Williams said the agreement would allow for the promotion of K-TIG technology in “one of the world’s highest-growth regions”.

“Signing an eight-year agreement demonstrates how transformative our technology is for the industry and the market’s willingness to adopt [it],” he said.

“[It] is illustrative of our strategic growth priority of a strong focus on long-term recurring revenue generation and growth.”

K-TIG’s welding technology provides a next-generation speed of output which removes welding as a bottleneck in the fabrication process.

“Our customers are in the enviable position of being able to re-think their production from end- to-end in order to leverage levels of automation, productivity gains and cost savings that our technology provides,” he said.

At mid-afternoon, shares in K-TIG were up 5.17% to $0.305.