Nanofilm Technologies Reports Robust 3Q2024 Performance, Announces Strategic Global Expansions

Nanofilm Technologies International Limited, a leading provider of nanotechnology solutions, has reported strong financial results for the third quarter of FY2024. The company showcased significant revenue growth, strategic global expansions, and promising new customer acquisitions that are expected to drive future performance.

Key Financial Highlights

• The Group reported revenue of S\$60 million for 3Q2024, reflecting a 10% year-on-year increase and a 38% growth from the previous quarter.
• Gross profit margin was above 40%, up from 33% in the first half of 2024, with comparable gross profit growing by 66% quarter-on-quarter and 4% year-on-year.
• EBITDA increased by 34% quarter-on-quarter and 17% year-on-year, with the EBITDA margin rising above 28%, up from 19% in the first half of 2024.
• The Group reversed the losses from the first half of 2024, achieving profitability for 3Q2024 and the nine months ended 30 September 2024.

Business Segment Performance

Within the Advanced Materials Business Unit (AMBU), the 3C segment (Computer, Communications, and Consumer Electronics) grew 11% year-on-year and 71% quarter-on-quarter, reaching S\$37 million, driven primarily by the Communication and Computer subsegments.

However, the Wearables and Accessories subsegment faced a 20% year-on-year decline due to supply chain challenges, which resumed production in mid-September.

The Nanofabrication Business Unit (NFBU) reported 8% year-on-year growth and a 50% quarter-on-quarter increase, reaching S\$8 million, driven by higher allocation for the Micro Lens Array (MLA) project used in smart wearables.

The Industrial Equipment Business Unit (IEBU) remained flat year-on-year, contributing S\$3 million, primarily from equipment delivery and after-sales services.

Sydrogen, the hydrogen fuel cell technology division, reported a staggering 688% year-on-year growth from a modest base, driven by increased production of coatings for hydrogen fuel cell bipolar plates.

Strategic Global Expansions

Nanofilm Technologies is aligning closely with the China Plus One strategy, positioning itself for growth in China and globally. In Vietnam, Plant 2 has begun small-scale production of coating services for 3C customers, with ongoing development projects for both 3C and NFBU initiatives.

In India, the company is in the qualification phase and expects to start small batch production for a key customer by the end of 4Q2024 or 1Q2025.

Additionally, Nanofilm is expanding its reach in the European market through AxynTeC, leveraging integrated product offerings to establish a robust platform in Europe.

Outlook and Market Trends

The global Consumer Electronics market is seeing promising year-on-year improvement, driven by premiumisation trends and the increasing adoption of generative AI. Despite soft industrial output in Asia and Europe, indications of gradual recovery could help mitigate challenges faced by the Industrial Equipment business.

Advancements in the New Energy sector, particularly Sydrogen’s innovations in hydrogen fuel cell technology, offer significant opportunities as global green clean energy infrastructure evolves.

Nanofilm remains focused on optimising its cost structure through operational excellence to enhance productivity. Although lower full-year capital expenditure in infrastructure investments is anticipated, the company is committed to expanding its coating equipment capabilities to facilitate growth in Southern China, Europe, and the Corporate Lab.

Q&A Highlights

During the Q&A session, management addressed several key questions:

• The NFBU’s higher allocation for MLA is expected to be a permanent increase, with the segment continuing to grow steadily.
• The 3C business’s Communication and Computer subsegments account for approximately 80% of total 3C revenue.
• Nanofilm’s new customers in the smartphone industry are expected to contribute 5% to 10% of total revenue in 2024, with potential for growth in other consumer electronics devices.
• The company’s strategic expansions in Vietnam and India are initially focused on key customers but also open to other potential clients.

Overall, Nanofilm Technologies is well-positioned to achieve higher revenue and profits in FY2024 compared to the previous year, leveraging market trends and strategic global positioning.

Disclaimer

The information provided in this article is based on the latest business update from Nanofilm Technologies International Limited. It is intended for informational purposes only and should not be construed as financial advice. Investors are encouraged to conduct their own research and consult with a financial advisor before making any investment decisions.

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