Aeroedge
Aeroedge updates and some extract from the danger zone post end of December
Published on December 28th 2025 as part of the Danger zone post which is now in archive. I Decided to extract the part related to Aeroedge since I have not seen much analysis covering this small cap stock. I am providing a quick update first:
The process of making Titanium Blades is requires 5 complex steps, which starts with using waterjet, high precision machining and grinding as shown here.
Legal Disclaimer: All content published on Wintergems is intended for informational and entertainment purposes only. It is not intended to serve as a recommendation to buy or sell any security. The views expressed are my own and are subject to change without notice. The information provided here is proprietary. I make no representations or warranties as to the accuracy or completeness of the information provided and will not be liable for any losses, injuries, or damages from the display or use of this information. Readers are solely responsible for their own investment decisions.
Since the December post, the stock has more than doubled. Goldman Sachs has recommended this stock in January and Aero Edge published fantastic results on February 13th - more on this later. The stock is now trading at roughly 50x earnings now. Still might be good to track this stock as this stock is very volatile and readers might have a chance to catch this one. This is currently my largest Japanese position helped by the sharp increase.
This year will be a transformative for Aeroedge.
It should become the second source of manufacturing titanium blades for another commercial engine OEM. Although not disclosed, we believe this is Pratt & Whitney and likely to become the second source for the PW1100G used in the Airbus 320neo. As discussed below, P&W is having issue of reliability on their titanium blades.
Aeroedge should start making components for the next generation fighter jet engine developed jointly for Japan, Italy and UK - Rolls Royce is involved.
AeroEdge will start processing internally the raw titanium received from generic suppliers instead of relying on processed titanium block received from Safran. Allowing Aero Edge to increase its share of the blade business. Aero Edge is currently constrained to 40% due to intrants limitation from Safran.
AeroEdge published impressive results on February 13th 2026 as some of the program mentioned previously has started to ramp-up. We are still in early stage of those. Revenue increase 46% and and profits roughly 2.5x. Assuming similar results in the second half, the company could earn 90yen EPS. So close to 50x earnings. We are in exponential growth territory here, so very difficult to project earnings in 3 years from now.
Related to item 3, This is what the company had to say:
While demand for titanium-aluminum blades has expanded in this way, the supply of materials for titanium-aluminum blades has been dependent on only one European company, and this dependence has become a business risk. As a countermeasure to this risk, our company has been working for several years to develop new materials with the aim of building a vertically integrated system that handles everything from material supply to processing and to expand profits. As a result, we have made progress toward mass production of the new material and have concluded an agreement with SAFRAN of France regarding the supply of the new material and the expansion of market share. Mass production and supply of the new material will begin in stages from the next fiscal year, and from 2028, our market share is expected to expand from the current 40% to the high 40s. To address these issues, we are proceeding with preparations for mass production, including the construction of a laboratory building for new materials on newly acquired land. In conjunction with this, we are also working on the progress of mass production development
So expect in 2027 and 2028 to increase its shares of the LPT blades from 40% to high 40% and a higher share of the value (operating income margin).
Regarding item 1 and 2:
Regarding our efforts toward new mass production projects, we are simultaneously working on the mass production launch of two aircraft engine components, distinct from the LEAP engine, at our new factory, which was completed in 2024, and are proceeding with preparations for the start of mass production from the second half of this fiscal year.
So expect more revenue growth in second half once the mass production starts. They already got some revenue in this quarter making some samples for certification and testing I suspect.
Original Post published in December 29th as part of the Danger Zone post
AeroEdge
Aeroedge makes titanium aluminide blades for the LEAP aircraft engine, the Low Pressure blades at the rear of the engine as shown below. The exhaust gas, after passing through the high-pressure turbine, still has significant energy. The LPT blades spin as this gas flows over them, converting that thermal energy into mechanical energy. These blades made of titanium aluminide are very complex to manufacture, but are 50% lighter than traditional blades used (made of Nickel).
Correction from original post: The LPT blades are under the responsibility of Safran in the CFM partnership of the LEAP engine. GE makes the high pressure part. So AeroEdge is the secondary source for supplying LPT blades for Safran. My understanding is that Safran is manufacturing around 60% portion of the LPT blades inhouse. In my original piece, I mentioned that a GE subsidiary Avio Aero was also making LPT blades. This is correct but for another GE engine, not the LEAP. GE makes the HPT blades using a 3d printing techniques with titanium powder inhouse. This process using 3d printing for Titanium can be very tricky. P&W is having issuee with its own manufacturing of titanium blades with 3d printing. P&W numerous recalls on the PW1100G used in the Airbus 320 NEO - and the main headache of Airbus production ramp-up is due to contamination of the titanium powder used in titanium blades. Something related to the oxyde level.
In a away, AeroEdge could become Airbus most important supplier indirectly. Solving the P&W issue and helping Safran in ramping up the LEAP.
The LEAP engine populates 60% of the Airbus 320Neo and 100% of the Boeing 737Max. These 2 planes represent the vast majority (80% in the case of Airbus) of the total commercial airplane deliveries of Airbus and Boeing. The LEAP engine are manufactured by a joint venture of Safran and GE called CFM International (50% split).
Both the Airbus 320Neo and Boeing 737Max is extremely popular with backlog of more than 12 years ahead. However, both Airbus and Boeing are struggling to increase delivery rates. Boeing is also facing some serious reliability issues so FAA is limiting the number of delivery per month. The increase in rate for Airbus has been slow but more progressive. It should get to 75 monthly planes in 2027. Boeing should reach 430 planes in 2025 (36 planes per month) and 50 planes in 2026. The impact of Boeing production ramp-up is more significative for the LEAP engine since 100% of the aircraft use the LEAP engine.
The company is forecasting a sharp increase of the blades to be delivered in 2026 (+27%) and 2027 (+45 to +55%). This is explained not only by the increase number of aircraft deliveries towards 2027, but also by a new agreement with Safran to increase its share of the LP blade market from 40% to high 40%.
Furthermore, the company has signed a contract with a major engine maker to supply a key component. It could by Pratt and Whitney which also uses titanium aluminide blades for its PW1100g engine used in the Airbus 320Neo. Just speculating. The production of this new contract will start in 2026.
Finally, AeroEdge has internalize the production of the Titanium Aluminide raw material and will start using this raw material instead of relying on Safran.
So we have strong visibility for future profitable growth and as such the current EV/EBIT of 31 is justified and with a PEG of less than 1, we will slowly increasing on weakness. Adding
End of Original Post published in December 29th as part of the Danger Zone post
Feel free to post any questions or comments
Legal Disclaimer: All content published on Wintergems is intended for informational and entertainment purposes only. It is not intended to serve as a recommendation to buy or sell any security. The views expressed are my own and are subject to change without notice. The information provided here is proprietary. I make no representations or warranties as to the accuracy or completeness of the information provided and will not be liable for any losses, injuries, or damages from the display or use of this information. Readers are solely responsible for their own investment decisions.