Overview of Nanofilm Technologies International Ltd
Nanofilm Technologies International Ltd, a leading deep technology company specializing in advanced materials and filtered cathodic vacuum arc (FCVA) coating technologies, faces significant challenges in FY24. The report predicts the company will likely miss Bloomberg consensus forecasts for FY24 net profits, primarily due to start-up losses from its new production sites in India and Vietnam, alongside continued losses from subsidiary Axyntec Dünnschichttechnik GmbH and JV Sydrogen Energy. The company’s net profit forecast for FY24 has been revised downward to S\$5.7 million, representing a significant drop from the earlier S\$9.2 million estimate.
Financial Forecasts and Key Metrics
Revenue is expected to grow modestly from S\$192.7 million in FY24 to S\$230.3 million in FY25 and S\$249.2 million in FY26. However, gross profit margins are forecasted to decline, with FY25 and FY26 margins reduced by 3.5% and 2.2% percentage points, respectively. The company’s EPS for FY24-26 is now projected at S\$0.009, S\$0.032, and S\$0.043, reflecting significant downward revisions of 38.2%, 30.8%, and 20.7% over previous estimates.
Management Reshuffle
Following the resignation of its Chief Technology Officer in March 2024 and its Chief Executive Officer in December 2024, Nanofilm’s founder, Dr. Shi, has resumed the role of Group Chief Executive Officer as of January 1, 2025. This move is anticipated to potentially accelerate the company’s recovery trajectory.
Recommendation
The report maintains a “Reduce” recommendation for Nanofilm with a lower target price of S\$0.63, representing an 18.2% downside from the current price of S\$0.77. Key risks include high customer concentration and escalating operating costs. Upside catalysts could stem from new customer orders or accelerated operational progress in its joint ventures.
Asian Peer Comparison: Insights and Recommendations
The report provides a detailed comparison of Nanofilm Technologies with several prominent Asian peers. Below is an in-depth analysis of each company covered:
AAC Technologies (Ticker: 2018 HK)
Based in Hong Kong, AAC Technologies is recommended as “Add” with a target price of HK\$46.68. The company has a market capitalization of US\$6,030 million and trades at a forward P/E of 20.9x for FY25 and 17.4x for FY26. The recurring ROE stands at 8.5%, supported by a dividend yield of 0.7%. The company shows promising growth prospects in the coming years.
BOE Technology Group-A (Ticker: 000725 CH)
BOE Technology, a Chinese technology giant, is rated as “Hold” with a target price of RMB 4.50. The company has a massive market cap of US\$23,082 million and forward P/E ratios of 16.2x for FY25 and 14.9x for FY26. Offering a 2.8% dividend yield, it demonstrates moderate growth potential with a recurring ROE of 7.5%.
Cowell e Holdings Inc (Ticker: 1415 HK)
Recommended as “Add,” Cowell e Holdings boasts a target price of HK\$37.80 and a market capitalization of US\$3,084 million. It trades at forward P/E ratios of 17.2x for FY25 and 14.2x for FY26. With a striking recurring ROE of 30.5%, the company emerges as a high-growth player in the technology sector.
Lens Technology Co Ltd-A (Ticker: 300433 CH)
Lens Technology, another Chinese powerhouse, is rated as “Add” with a target price of RMB 26.40. Its market cap stands at US\$17,409 million, while forward P/E ratios are forecasted at 23.0x for FY25 and 19.3x for FY26. The company offers a 2.1% dividend yield and a recurring ROE of 11.3%, showcasing steady growth potential.
LG Display (Ticker: 034220 KS)
LG Display, a South Korean display panel manufacturer, is rated as “Hold” with a target price of KRW 11,000. The company has a market capitalization of US\$3,104 million. It does not currently have a forward P/E estimate, reflecting challenges in profitability. However, it offers a recurring ROE of -1.4%, indicating potential hurdles ahead.
LG Innotek (Ticker: 011070 KS)
LG Innotek is recommended as “Add” with an impressive target price of KRW 320,000. The company, with a market cap of US\$2,646 million, trades at forward P/E ratios of 5.2x for FY25 and 4.8x for FY26. Its recurring ROE is 12.9%, supported by a dividend yield of 1.9%, suggesting significant growth opportunities.
Q Technology (Ticker: 1478 HK)
Q Technology, based in Hong Kong, is rated as “Add” with a target price of HK\$7.70. The company has a market capitalization of US\$1,036 million and forward P/E ratios of 16.1x for FY25 and 13.8x for FY26. A recurring ROE of 8.7% and dividend yield of 0.6% reflect its stable growth trajectory.
Samsung Electro-Mechanics (Ticker: 009150 KS)
Samsung Electro-Mechanics is recommended as “Add,” trading at a target price of KRW 210,000. With a market cap of US\$6,553 million, the company boasts forward P/E ratios of 11.1x for FY25 and 10.9x for FY26. Its recurring ROE of 9.9% and dividend yield of 1.2% indicate steady returns for investors.
Samsung Electronics (Ticker: 005930 KS)
The South Korean tech giant Samsung Electronics is also rated as “Add,” with a target price of KRW 125,000. The company, with a staggering market cap of US\$221,503 million, trades at forward P/E ratios of 7.4x for FY25 and 7.5x for FY26. With a recurring ROE of 12.0% and dividend yield of 2.7%, it remains a blue-chip investment option.
Sunny Optical Technology (Ticker: 2382 HK)
Sunny Optical, a Hong Kong-based optical solutions provider, is rated as “Add” with a target price of HK\$91.80. The company has a market cap of US\$9,871 million and trades at forward P/E ratios of 19.8x for FY25 and 15.9x for FY26. Its recurring ROE of 15.0% and dividend yield of 1.0% make it an attractive investment option.
Universal Scientific Industrial (Ticker: 601231 CH)
This Chinese electronics manufacturing company is rated as “Add” with a target price of RMB 20.00. It has a market capitalization of US\$4,800 million and forward P/E ratios of 13.0x for FY25 and 11.2x for FY26. Offering a recurring ROE of 13.9% and a dividend yield of 2.4%, it demonstrates consistent growth potential.
Will Semiconductor Ltd-A (Ticker: 603501 CH)
Will Semiconductor, another Chinese tech player, is rated as “Add” with a target price of RMB 146.00. It boasts a market cap of US\$17,805 million and trades at forward P/E ratios of 29.8x for FY25 and 25.5x for FY26. With a recurring ROE of 16.5%, the company showcases robust growth prospects.
