UOB Kay Hian Private Limited
Wednesday, 23 April 2025
Nanofilm Technologies International: Challenges Persist Despite Revenue Recovery
Company Overview
Nanofilm Technologies International Pte Ltd specializes in manufacturing industrial machinery. Their expertise lies in batch and load-lock systems, along with materials possessing unique surface properties and nano-engineering capabilities. [[1]]
Stock Performance
- GICS Sector: Materials [[1]]
- Bloomberg Ticker: NANO SP [[1]]
- Shares Issued (m): 651.7 [[1]]
- Market Cap (S\$m): 351.9 [[1]]
- Market Cap (US\$m): 269.4 [[1]]
- 3-Mth Avg Daily Turnover (US\$m): 0.7 [[1]]
- 52-Week High/Low: S\$0.995/S\$0.445 [[1]]
Price Performance (%)
- 1 Month: (18.2) [[1]]
- 3 Month: (30.3) [[1]]
- 6 Month: (35.7) [[1]]
- 1 Year: (10.0) [[1]]
- Year-to-Date: (28.5) [[1]]
Major Shareholders (%)
- Dr. Shi Xu: 51.8 [[1]]
- Temasek Holdings: 7.3 [[1]]
- FY25 NAV/Share (S\$): 0.61 [[1]]
- FY25 Net Cash/Share (S\$): 0.09 [[1]]
1Q25 Results: Revenue in Line, Margin Disappoints
Nanofilm’s 1Q25 revenue reached S\$44 million, a 12% year-over-year increase, aligning with expectations and representing 19% of the full-year estimate. However, the gross margin experienced a 6 percentage point decline year-over-year, falling short of the anticipated flat performance. The revenue growth was primarily fueled by the AMBU and NFBU segments. Although Nanofilm’s direct exposure to US tariffs is limited, indirect impacts may be felt. While revenue recovery is underway, achieving substantial earnings may take time. The recommendation is to maintain a SELL rating with a reduced target price of S\$0.46. [[1], [2]]
Segment Performance
- AMBU: S\$39 million, +11% year-over-year [[1], [2]]
- NFBU: S\$3 million, +49% year-over-year [[1], [2]]
- IEBU: S\$2 million, (24%) year-over-year [[1], [2]]
- Gross Margin: 27% (6ppt decline) [[1], [2]]
Key Observations from 1Q25 Results
- Revenue met expectations, but gross margin fell short due to a weaker contribution from the higher-margin IEBU segment. [[2], [3]]
- AMBU accounted for 89% of revenue, with 3C growing 6% year-over-year, automotive growing 15% year-over-year, and other industrial segments (including EuropCoating Group) growing 34% year-over-year. [[3]]
- NFBU grew 49% year-over-year, while IEBU declined 24% year-over-year due to the timing of equipment deliveries. [[3]]
- Nanofilm is closely monitoring the potential impact of US tariffs, with diversified industry exposure and geographic presence expected to provide some resilience. Singapore-based operations may offer optionality for future exports. [[3], [4]]
Financial Highlights and Forecasts (S\$m)
| Year to 31 Dec (S\$m) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
177 |
204 |
232 |
262 |
296 |
| EBITDA |
37 |
50 |
47 |
53 |
58 |
| Operating Profit |
3 |
10 |
17 |
20 |
24 |
| Net Profit (rep./act.) |
3 |
8 |
13 |
16 |
18 |
| Net Profit (adj.) |
3 |
8 |
13 |
16 |
18 |
| EPS (S\$ cent) |
0.5 |
1.2 |
2.0 |
2.4 |
2.8 |
| PE (x) |
111.5 |
45.4 |
27.1 |
22.3 |
19.2 |
| P/B (x) |
0.9 |
0.9 |
0.9 |
0.9 |
0.8 |
| EV/EBITDA (x) |
9.0 |
6.7 |
7.1 |
6.4 |
5.8 |
| Dividend Yield (%) |
0.2 |
0.4 |
0.7 |
0.9 |
1.0 |
| Net Margin (%) |
1.8 |
3.8 |
5.6 |
6.0 |
6.2 |
| Net debt/(cash) to equity (%) |
(19.2) |
(6.5) |
(14.3) |
(11.1) |
(8.7) |
| Interest cover (x) |
n.a. |
116.6 |
77.4 |
86.6 |
94.7 |
| ROE (%) |
0.8 |
2.0 |
3.3 |
3.9 |
4.4 |
| Consensus Net Profit (S\$m) |
– |
– |
19 |
27 |
27 |
| UOBKH/Consensus (x) |
– |
– |
0.70 |
0.58 |
0.68 |
Strategic Priorities
Nanofilm is focusing on three core execution priorities: [[4]]
- Operationalizing its global footprint to enhance customer proximity, supply chain resilience, and commercial agility. [[4]]
- Strengthening technology differentiation through scalable, high-efficiency platforms. [[4]]
- Advancing sustainability-led innovation through new energy applications. [[4]]
Earnings Estimates
Earnings estimates are maintained. [[4]]
Valuation and Recommendation
Maintain a SELL recommendation with an 8% lower target price of S\$0.46 (previously S\$0.50). The valuation is based on 23x 2025 EPS (previously 25x), pegged to 0.5 standard deviations below its long-term forward mean. The reduction reflects the stock’s ongoing multiple derating process. Nanofilm is trading at 27x 2025F PE, higher than global peers (19x) and Singapore peers (15x). [[4]]
While revenue recovery is evident, substantial earnings recovery may take time due to elevated costs from new locations and higher staff count. Potential US tariff impacts also create uncertainties. [[4], [5]]
Potential Catalysts
- Better-than-expected ramp-up of the nanofabrication business. [[5]]
- New applications in the advanced material segment. [[5]]
Peer Comparison
| Company |
Ticker |
Price @ 22 Apr 25 (lcy) |
Market Cap (US\$m) |
2024 (x) |
2025 (x) |
2026 (x) |
3-yr EPS CAGR (%) |
P/B 2025 (x) |
Yield 2025 (%) |
ROE 2025 (%) |
Net Gearing (%) |
| Global Peers |
| 3M Co |
MMM US |
126.09 |
68,003 |
16.6 |
16.3 |
15.0 |
n.a. |
15.4 |
2.4 |
98.0 |
151.1 |
| PPG Industries |
PPG US |
99.4 |
22,561 |
20.8 |
12.7 |
11.7 |
16.5 |
3.1 |
2.8 |
25.6 |
72.3 |
| EMS-Chemie |
EMSN SW |
568 |
16,399 |
28.8 |
27.8 |
25.7 |
4.2 |
7.0 |
3.2 |
26.1 |
(27.4) |
| OC Oerlikon |
OERL SW |
3.242 |
1,360 |
16.2 |
10.7 |
7.8 |
61.1 |
1.0 |
6.4 |
8.3 |
97.4 |
| Rogers Corp |
ROG US |
54.05 |
1,001 |
38.6 |
23.6 |
15.0 |
5.8 |
n.a. |
n.a. |
n.a. |
(10.8) |
| Red Avenue |
603650 CH |
32.3 |
2,646 |
37.6 |
29.8 |
24.8 |
24.3 |
4.9 |
1.9 |
15.4 |
100.4 |
| Bodycote |
BOY LN |
477.8 |
1,149 |
44.2 |
10.1 |
9.0 |
5.7 |
1.3 |
4.9 |
12.4 |
19.7 |
| Average |
|
|
|
29.0 |
18.7 |
15.6 |
|
5.5 |
3.6 |
31.0 |
57.5 |
| Singapore Peers |
| Venture Corp |
VMS SP |
10.95 |
2,411 |
13.0 |
12.7 |
12.0 |
(0.6) |
1.1 |
6.8 |
8.6 |
(44.4) |
| AEM |
AEM SP |
1.15 |
276 |
31.3 |
15.6 |
14.3 |
n.a. |
0.7 |
1.6 |
4.6 |
10.3 |
| Frencken |
FRKN SP |
1.01 |
330 |
11.6 |
10.8 |
10.2 |
9.1 |
0.9 |
2.8 |
8.9 |
(5.9) |
| UMS |
UMSH SP |
1.04 |
566 |
18.1 |
15.1 |
13.3 |
(4.3) |
1.7 |
5.0 |
11.5 |
(15.6) |
| Aztech Global |
AZTECH SP |
0.55 |
325 |
6.0 |
21.2 |
19.2 |
(39.6) |
1.3 |
2.4 |
6.0 |
(81.1) |
| Average |
|
|
|
16.0 |
15.1 |
13.8 |
|
1.2 |
3.7 |
7.9 |
(27.3) |
| Nanofilm Tech |
NANO SP |
0.54 |
269 |
45.4 |
27.1 |
22.3 |
71.5 |
0.9 |
0.7 |
3.3 |
(1.1) |
Financial Statements
Profit & Loss
| Year to 31 Dec (S\$m) |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
204.3 |
232.2 |
262.2 |
296.4 |
| EBITDA |
50.1 |
47.3 |
52.9 |
57.8 |
| Deprec. & amort. |
39.7 |
30.5 |
32.4 |
34.2 |
| EBIT |
10.4 |
16.8 |
20.5 |
23.7 |
| Total other non-operating income |
(0.2) |
0.0 |
0.0 |
0.0 |
| Associate contributions |
(0.1) |
0.0 |
0.0 |
0.0 |
| Net interest income/(expense) |
(0.4) |
(0.6) |
(0.6) |
(0.6) |
| Pre-tax profit |
9.6 |
16.2 |
19.9 |
23.1 |
| Tax |
(2.1) |
(3.6) |
(4.4) |
(5.1) |
| Minorities |
0.2 |
0.3 |
0.3 |
0.3 |
| Net profit |
7.7 |
13.0 |
15.8 |
18.3 |
| Net profit (adj.) |
7.7 |
13.0 |
15.8 |
18.3 |
Balance Sheet
| Year to 31 Dec (S\$m) |
2024 |
2025F |
2026F |
2027F |
| Fixed assets |
304.5 |
324.1 |
341.7 |
357.5 |
| Other LT assets |
73.5 |
73.5 |
73.5 |
73.5 |
| Cash/ST investment |
110.2 |
142.0 |
130.6 |
121.9 |
| Other current assets |
146.9 |
132.9 |
147.7 |
164.6 |
| Total assets |
635.1 |
672.5 |
693.5 |
717.5 |
| ST debt |
8.2 |
8.2 |
8.2 |
8.2 |
| Other current liabilities |
48.2 |
75.5 |
84.2 |
93.8 |
| LT debt |
76.7 |
76.7 |
76.7 |
76.7 |
| Other LT liabilities |
72.0 |
72.0 |
72.0 |
72.0 |
| Shareholders’ equity |
387.9 |
398.2 |
410.9 |
425.5 |
| Minority interest |
42.1 |
41.8 |
41.5 |
41.2 |
| Total liabilities & equity |
635.1 |
672.5 |
693.5 |
717.5 |
Cash Flow
| Year to 31 Dec (S\$m) |
2024 |
2025F |
2026F |
2027F |
| Operating |
21.2 |
85.0 |
42.3 |
45.5 |
| Pre-tax profit |
9.6 |
16.2 |
19.9 |
23.1 |
| Tax |
(2.1) |
(3.6) |
(4.4) |
(5.1) |
| Deprec. & amort. |
39.7 |
30.5 |
32.4 |
34.2 |
| Associates |
(0.1) |
0.0 |
0.0 |
0.0 |
| Working capital changes |
(26.9) |
41.3 |
(6.2) |
(7.2) |
| Non-cash items |
0.0 |
0.0 |
0.0 |
0.0 |
| Other operating cashflows |
0.9 |
0.6 |
0.6 |
0.6 |
| Investing |
(59.1) |
(49.5) |
(49.5) |
(49.5) |
| Capex (growth) |
(34.9) |
(50.0) |
(50.0) |
(50.0) |
| Investment |
(9.2) |
0.0 |
0.0 |
0.0 |
| Proceeds from sale of assets |
0.2 |
0.0 |
0.0 |
0.0 |
| Others |
(15.2) |
0.5 |
0.5 |
0.5 |
| Financing |
(7.5) |
(6.4) |
(7.0) |
(7.5) |
| Dividend payments |
(4.3) |
(2.6) |
(3.2) |
(3.7) |
| Proceeds from borrowings |
9.4 |
0.0 |
0.0 |
0.0 |
| Loan repayment |
(12.6) |
0.0 |
0.0 |
0.0 |
| Others/interest paid |
0.0 |
(3.8) |
(3.8) |
(3.8) |
| Net cash inflow (outflow) |
(45.3) |
29.1 |
(14.1) |
(11.4) |
Key Metrics
| Year to 31 Dec (%) |
2024 |
2025F |
2026F |
2027F |
| Profitability |
| EBITDA margin |
24.5 |
20.4 |
20.2 |
19.5 |
| Pre-tax margin |
4.7 |
7.0 |
7.6 |
7.8 |
| Net margin |
3.8 |
5.6 |
6.0 |
6.2 |
| ROA |
1.2 |
2.0 |
2.3 |
2.6 |
| ROE |
2.0 |
3.3 |
3.9 |
4.4 |
| Growth |
| Turnover |
15.4 |
13.7 |
12.9 |
13.0 |
| EBITDA |
34.0 |
(5.7) |
11.8 |
9.4 |
| Pre-tax profit |
206.9 |
68.3 |
22.4 |
16.1 |
| Net profit |
147.0 |
67.4 |
21.8 |
15.8 |
| Net profit (adj.) |
147.0 |
67.4 |
21.8 |
15.8 |
| EPS |
145.3 |
67.4 |
21.8 |
15.8 |
| Leverage |
| Debt to total capital |
16.5 |
16.2 |
15.8 |
15.4 |
| Debt to equity |
21.9 |
21.3 |
20.7 |
20.0 |
| Net debt/(cash) to equity |
(6.5) |
(14.3) |
(11.1) |
(8.7) |
| Interest cover (x) |
116.6 |
77.4 |
86.6 |
94.7 |
