Company Overview
Nanofilm Technologies Int’l Ltd is a deep technology company specializing in advanced materials and filtered cathodic vacuum arc (FCVA) coating technologies. The company is recognized for its commitment to ESG and sustainable production methods.
Financial Performance
- 3Q24 Revenue: Increased by 10% year-on-year (yoy) to S$60 million, with a quarter-on-quarter growth of 38%.
- Advanced Materials Business Unit (AMBU): Contributed to revenue growth with an 11% yoy increase, driven mainly by a 27% yoy growth in the smartphones and tablets sub-segments.
- Nanofabrication Business Unit (NFBU): Revenue rose 8% yoy to S$8 million, benefiting from higher allocations for smart wearable products.
- Industrial Equipment Business Unit (IEBU): Experienced flat yoy revenue at S$3 million due to sluggish demand.
- Sydrogen Energy: Notably, revenue surged by 688% yoy (low base effect) in 3Q24 as coating production for hydrogen fuel cell bipolar plates used in automobiles increased.
Guidance and Outlook
- FY24 Guidance: Management expects FY24 revenue and net profit to exceed FY23 levels, barring unforeseen circumstances. The company anticipates lower capital expenditures (capex) in FY24.
- Production Expansion: The Vietnam Plant 2 has commenced small-scale production for customers, while the India plant is expected to start production for its key customer by the end of 4Q24 or 1Q25.
Analyst Recommendation
- Rating: The broker maintains a Reduce call for the stock, citing that the current share price has factored in the expected recovery in FY25-26 net profit.
- Target Price: The target price has been raised to S$0.69 from the previous S$0.59, based on an updated price-to-earnings (P/E) multiple.
Risk Factors
- Upside Risks: New order wins from customers, faster operational progress at joint ventures (JVs) like ApexTech and Sydrogen Energy could enhance net profit contributions. A strong demand upturn is also a positive factor.
- De-rating Catalysts: High customer concentration and rising operational costs as the company expands into new regions and sectors.
Market Data
- Current Price: S$0.825
- Market Cap: Approximately US$406.7 million
- Average Daily Turnover: US$1.87 million
Shareholder Information
- Major Shareholders:
- Pearl Yard Holdings: 38.6%
- Venezio Investments: 7.3%
Analyst Details
- Analyst: William TNG, CFA
Document Details
- Date: October 29, 2024
- Broker: CGS International Securities
