CGS International
April 23, 2025
Nanofilm Technologies Int’l Ltd: 1Q25 Revenue Increase and Strategic Tariff Navigation
Nanofilm Technologies Int’l Ltd (NANO SP) reported a 12% year-over-year (yoy) revenue increase in 1Q25, reaching S\$44 million. This performance aligns with both CGS International’s and Bloomberg consensus full-year forecasts. The company is proactively monitoring the trade tariff situation, with potential impacts being primarily indirect due to limited direct exports to the US. However, a notable challenge in 1Q25 was a weaker gross margin, which fell to over 27% compared to 33% in 1Q24. Despite these factors, a 90-day tariff pause could stimulate demand pull-in from 3Q25F into 2Q25F. The overall net profit outlook remains contingent on tariff developments, leading to a reiterated Reduce rating with a lowered target price (TP) of S\$0.49. [[1]]
AMBU as the Primary Revenue Driver
The 12% yoy revenue increase to S\$44 million in 1Q25 represents 19% of the full-year forecasts. This is consistent with historical trends where 1Q typically contributes 14-19% of the annual revenue. The Advanced Materials Business Unit (AMBU) was the main contributor, with an 11% yoy increase, accounting for 89% of the 1Q25 revenue. The Nanofabrication Business Unit (NFBU) followed with a 49% yoy increase, though it only represents 6% of the revenue. Within AMBU, the 3C sector (Computer, Communications, and Consumer Electronics) grew by 6% yoy, Automotive by 15% yoy, and other industrial segments by 34% yoy. Sydrogen experienced a surge of 158% yoy but constitutes just 1% of the total revenue. The Industrial Equipment Business Unit (IEBU) saw a 24% yoy decrease due to timing issues with equipment deliveries. The group’s gross margin was over 27% in 1Q25, down from 33% in 1Q24, influenced by a weaker contribution from IEBU. [[1]]-[[2]]
Tariff Situation Monitoring
Management has indicated that the group has limited direct exposure to the US concerning the recently announced tariffs. However, the company anticipates broader indirect impacts. Given the early stages of the US tariffs, Nanofilm is closely monitoring potential effects and will leverage its operational presence in Singapore, China, Vietnam, and Europe to support customers in navigating these challenges. [[2]]
Revised Earnings and Valuation
FY25-27F EPS forecasts have been reduced by 37.9-41.0%, reflecting lowered gross margin assumptions by 4-5 percentage points. The Reduce call is maintained due to downside risks to earnings stemming from trade tariffs. Given the uncertainty in earnings, a shift to P/BV valuation has been implemented, using BVPS to determine the TP, which is reduced to S\$0.49 based on FY25F P/BV of 0.80x. This valuation is -1 standard deviation below Nanofilm’s 5-year average (FY21-25F) P/BV. The previous TP of S\$0.63 was based on 14.8x FY26 P/E (-1 standard deviation P/E multiple over 2021-25F). [[3]]
Potential Upsides
- New order wins from customers.
- Faster operational progress at JVs ApexTech and Sydrogen Energy in FY25-26F.
- Strong demand upturn.
De-rating Catalysts
- High customer concentration.
- Higher operating costs from expansion.
Key Financial Metrics
Current price: S\$0.54
Target price: S\$0.49
Previous target: S\$0.63
Up/downside: -9.3%
CGSI / Consensus: -19.6%
Market cap: US\$268.9m, S\$351.9m
Average daily turnover: US\$0.62m, S\$0.83m
Current shares o/s: 657.4m
Free float: 45.4%
Key Changes in Estimates
- FY25F EPS reduced by 38.6%.
- FY26F EPS reduced by 41.0%.
- FY27F EPS reduced by 37.9%.
Major Shareholders
- Pearl Yard Holdings: 38.6%
- Venezio Investments: 7.3%
Financial Summary
| (S\$m) |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Revenue |
177.0 |
204.3 |
230.3 |
249.2 |
267.2 |
| Net Profit |
3.13 |
7.74 |
12.84 |
16.45 |
19.15 |
| Core EPS (S\$) |
0.005 |
0.012 |
0.020 |
0.025 |
0.029 |
| Core EPS Growth |
(93%) |
145% |
66% |
28% |
16% |
| FD Core P/E (x) |
112.3 |
45.3 |
27.4 |
21.4 |
18.4 |
| Price To Sales (x) |
1.97 |
1.72 |
1.53 |
1.41 |
1.32 |
| DPS (S\$) |
0.007 |
0.007 |
0.005 |
0.006 |
0.007 |
[[4]]
| (S\$m) |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| DPS (S\$) |
0.007 |
0.007 |
0.005 |
0.006 |
0.007 |
| Dividend Yield |
1.22% |
1.22% |
0.91% |
1.17% |
1.36% |
| EV/EBITDA (x) |
8.44 |
7.31 |
5.88 |
4.99 |
4.27 |
| P/FCFE (x) |
8.88 |
NA |
9.15 |
17.46 |
13.84 |
| Net Gearing |
(17.2%) |
(5.9%) |
(13.8%) |
(17.0%) |
(20.9%) |
| P/BV (x) |
0.92 |
0.91 |
0.89 |
0.86 |
0.83 |
| ROE |
0.79% |
2.02% |
3.27% |
4.08% |
4.59% |
| % Change In Core EPS Estimates |
|
|
(38.6%) |
(41.0%) |
(37.9%) |
| EPS/Consensus EPS (x) |
0.68 |
0.62 |
0.72 |
|
|
[[5]]
Upside Risks and De-rating Catalysts
Upside Risks:
- New order wins, improving utilization rates. [[2]]
- Faster progress at JVs ApexTech and Sydrogen Energy, boosting net profit. [[3]]
- Strong demand upturn from key customers, increasing revenue and earnings. [[3]]
De-rating Catalysts:
- High customer concentration, posing risks if major customer orders decline. [[3]]
- Higher operating costs from international expansion, hurting earnings. [[3]]
Results Summary
| (S\$ m) |
1Q25 |
1Q24 |
yoy chg |
4Q24 |
qoq chg |
| AMBU |
39 |
35 |
11% |
52 |
-25% |
| IEBU |
2 |
2 |
-24% |
4 |
-50% |
| NFBU |
3 |
2 |
49% |
4 |
-25% |
| Sydrogen |
0 |
0 |
158% |
1 |
-100% |
| Revenue |
44 |
39 |
12% |
61 |
-28% |
[[2]]
Abbreviations Used
- Nanofilm: Nanofilm Technologies International Ltd
- AMBU: Advanced Materials Business Unit
- NFBU: Nanofabrication Business Unit
- IEBU: Industrial Equipment Business Unit
- Sydrogen: Sydrogen Energy Pte Ltd
[[2]]
Earnings Revisions
| (S\$m) |
FY25F |
FY26F |
FY27F |
|
Old |
New |
Chg |
Old |
New |
Chg |
Old |
New |
Chg |
| Revenue |
230.3 |
230.3 |
0.0% |
249.2 |
249.2 |
0.0% |
267.2 |
267.2 |
0.0% |
| Operating expenses |
(62.2) |
(62.2) |
0.0% |
(64.7) |
(64.7) |
0.0% |
(68.1) |
(68.1) |
0.0% |
| Net profit |
20.9 |
12.8 |
-38.6% |
27.9 |
16.5 |
-41.0% |
30.8 |
19.2 |
-37.9% |
| EPS (S\$) |
0.0321 |
0.0197 |
-38.6% |
0.0428 |
0.0253 |
-41.0% |
0.0473 |
0.0294 |
-37.9% |
| Number of shares (m) |
651.65 |
651.65 |
0.0% |
651.65 |
651.65 |
0.0% |
651.65 |
651.65 |
0.0% |
| Gross profit margin (%) |
37.00% |
33.00% |
-4.00 |
38.50% |
33.25% |
-5.25 |
38.50% |
33.50% |
-5.00 |
[[2]]
Asian Peer Comparison
Data as at April 22, 2025
| Company |
Ticker |
Recom. |
Price (lcl curr) |
Target Price (lcl curr) |
Market Cap (US\$ m) |
P/E (x) CY24F |
P/E (x) CY25F |
3-year EPS CAGR (%) |
P/BV (x) CY24F |
Recurring ROE (%) CY24F |
Dividend Yield (%) CY24F |
| Nanofilm Technologies Int’l Ltd |
NANO SP |
REDUCE |
0.54 |
0.49 |
270 |
45.4 |
27.4 |
75.6% |
0.91 |
2.1% |
1.2% |
| AAC Technologies |
2018 HK |
Add |
34.20 |
63.00 |
5,186 |
21.0 |
17.1 |
60.0% |
1.69 |
8.2% |
0.7% |
| BOE Technology Group-A |
000725 CH |
Hold |
3.84 |
4.50 |
19,704 |
24.1 |
13.8 |
63.9% |
1.07 |
4.6% |
1.9% |
| Cowell e Holdings Inc |
1415 HK |
Add |
20.75 |
48.00 |
2,306 |
14.2 |
10.6 |
76.8% |
4.46 |
34.9% |
0.0% |
| Lens Technology Co Ltd-A |
300433 CH |
Add |
19.57 |
26.40 |
13,377 |
24.2 |
17.7 |
28.2% |
2.04 |
8.7% |
2.0% |
| LG Innotek |
011070 KS |
Add |
138,700 |
320,000 |
2,316 |
4.6 |
4.5 |
11.1% |
0.61 |
14.3% |
2.2% |
| Q Technology |
1478 HK |
Add |
6.22 |
8.70 |
953 |
16.4 |
13.8 |
92.4% |
1.36 |
8.6% |
1.6% |
| Samsung Electro-Mechanics |
009150 KS |
Add |
119,400 |
210,000 |
6,291 |
12.5 |
10.5 |
26.5% |
1.09 |
9.0% |
1.3% |
| Samsung Electronics |
005930 KS |
Add |
55,000 |
74,000 |
229,663 |
11.1 |
11.0 |
42.5% |
0.95 |
9.0% |
2.3% |
| Sunny Optical Technology |
2382 HK |
Add |
62.90 |
108.8 |
8,873 |
23.8 |
16.5 |
61.8% |
2.50 |
11.6% |
0.8% |
| Universal Scientific Industrial |
601231 CH |
Add |
13.22 |
20.00 |
3,983 |
13.2 |
10.8 |
16.3% |
1.56 |
12.5% |
2.3% |
[[3]]
| Company |
Ticker |
Recom. |
Price (lcl curr) |
Target Price (lcl curr) |
Market Cap (US\$ m) |
P/E (x) CY24F |
P/E (x) CY25F |
3-year EPS CAGR (%) |
P/BV (x) CY24F |
Recurring ROE (%) CY24F |
Dividend Yield (%) CY24F |
| Will Semiconductor Ltd-A |
603501 CH |
Add |
122.8 |
146.0 |
20,492 |
42.4 |
34.3 |
98.8% |
6.05 |
15.5% |
0.3% |
[[3]]
Simple average excluding Nanofilm: P/E 18.9, P/E 14.6, CAGR 52.6%, P/BV 2.13, ROE 12.4%, Yield 1.4%
ESG Analysis
Nanofilm Technologies Int’l Ltd demonstrates a strong commitment to ESG and sustainable production methods. The company was awarded Frost & Sullivan’s 2021 Asia Pacific Technology Innovation Leadership Award and recognized as one of Singapore’s Best Managed Companies in 2024 by Deloitte, maintaining this status for four consecutive years and achieving Gold Standard Winner status in 2024. [[4]]
Sydrogen Energy JV
Nanofilm’s joint venture with Temasek, Sydrogen Energy, focuses on applying advanced materials surface solutions to fuel cell and electrolyser systems within the hydrogen energy economy. Hydrogen fuel cells are environmentally friendly, generating electricity without emitting carbon dioxide or harmful pollutants. Successful market adoption and commercial scaling of this JV could create a new revenue stream for Nanofilm. [[4]]
ESG Highlights
Nanofilm’s FCVA and FCVA hybrid coating technologies offer an environmentally friendly alternative to conventional coating technologies, performing vacuum coating deposition at room temperature without high heat. This differentiation is increasingly attractive to customers focused on environmental considerations, potentially driving higher demand for Nanofilm’s coating services. [[4]]-[[5]]
Environmental Trends
Nanofilm’s factories comply with environmental laws and regulations in their operating countries. The company is committed to environmental protection, reducing carbon emissions, preventing pollution, and minimizing waste. Regular ESG audits by global customers further ensure compliance. In FY24, GHG emission intensity was reported at 5.78 tCO2e per thousand machine production hours, a reduction from 6.38 tCO2e in FY23, achieved through increased use of renewable energy, strict machinery usage policies, and energy-efficient machines. Nanofilm aims for a 40% reduction in GHG emissions intensity by 2030F, using 2022 as the baseline. [[5]]
Financials
| (S\$m) |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Total Net Revenues |
177.0 |
204.3 |
230.3 |
249.2 |
267.2 |
| Gross Profit |
100.0 |
115.6 |
118.2 |
127.4 |
136.4 |
| Operating EBITDA |
37.5 |
49.9 |
56.0 |
62.7 |
68.3 |
| Depreciation And Amortisation |
(34.5) |
(39.7) |
(42.2) |
(44.6) |
(46.9) |
| Operating EBIT |
3.0 |
10.2 |
13.8 |
18.1 |
21.4 |
| Financial Income/(Expense) |
0.2 |
(0.4) |
0.4 |
0.2 |
0.0 |
| Pretax Income/(Loss) from Assoc. |
(0.1) |
(0.1) |
0.0 |
0.0 |
0.0 |
| Non-Operating Income/(Expense) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Profit Before Tax (pre-EI) |
3.1 |
9.6 |
14.2 |
18.3 |
21.4 |
| Pre-tax Profit |
3.1 |
9.6 |
14.2 |
18.3 |
21.4 |
| Taxation |
(0.4) |
(2.1) |
(1.8) |
(2.3) |
(2.7) |
| Profit After Tax |
2.7 |
7.5 |
12.4 |
16.0 |
18.7 |
| Minority Interests |
0.4 |
0.2 |
0.4 |
0.4 |
0.4 |
| Net Profit |
3.1 |
7.7 |
12.8 |
16.5 |
19.2 |
| Recurring Net Profit |
3.1 |
7.7 |
12.8 |
16.5 |
19.2 |
[[5]]
| (S\$m) |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| EBITDA |
37.51 |
49.91 |
56.00 |
62.70 |
68.28 |
| Cash Flow from Invt. & Assoc. |
0.14 |
0.10 |
0.00 |
0.00 |
0.00 |
| Change In Working Capital |
0.96 |
(26.89) |
18.83 |
(5.42) |
(5.18) |
| Net Interest (Paid)/Received |
0.95 |
0.30 |
0.40 |
0.16 |
0.00 |
| Tax Paid |
(1.96) |
(2.33) |
(1.77) |
(2.29) |
(2.67) |
| Cashflow From Operations |
37.59 |
21.10 |
73.46 |
55.15 |
60.43 |
| Capex |
(49.07) |
(34.88) |
(35.00) |
(35.00) |
(35.00) |
| Cash Flow From Investing |
(49.07) |
(34.88) |
(35.00) |
(35.00) |
(35.00) |
| Debt Raised/(repaid) |
51.14 |
(3.16) |
0.00 |
0.00 |
0.00 |
| Dividends Paid |
(9.27) |
(4.30) |
(3.21) |
(4.11) |
(4.79) |
| Cash Flow From Financing |
25.49 |
(7.46) |
(3.21) |
(4.11) |
(4.79) |
| Total Cash Generated |
14.01 |
(21.24) |
35.25 |
16.04 |
20.64 |
| Free Cashflow To Equity |
39.66 |
(16.94) |
38.46 |
20.15 |
25.43 |
| Free Cashflow To Firm |
(10.29) |
(10.89) |
41.46 |
23.00 |
28.43 |
[[5]]
| (S\$m) |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Total Cash And Equivalents |
155.2 |
110.2 |
145.5 |
161.5 |
182.1 |
| Total Debtors |
81.3 |
111.8 |
101.0 |
109.2 |
117.1 |
| Inventories |
19.5 |
17.1 |
23.3 |
25.1 |
26.8 |
| Total Other Current Assets |
12.8 |
18.0 |
18.0 |
18.0 |
18.0 |
| Total Current Assets |
268.8 |
257.1 |
287.7 |
313.8 |
344.0 |
| Fixed Assets |
299.6 |
304.5 |
307.2 |
307.5 |
305.5 |
| Total Investments |
3.9 |
3.8 |
3.8 |
3.8 |
3.8 |
| Intangible Assets |
32.8 |
53.0 |
43.6 |
34.1 |
24.6 |
| Total Other Non-Current Assets |
16.4 |
16.7 |
16.3 |
15.9 |
15.4 |
| Total Non-current Assets |
352.7 |
378.0 |
370.8 |
361.2 |
349.3 |
| Short-term Debt |
4.7 |
8.2 |
8.2 |
8.2 |
8.2 |
| Total Creditors |
35.0 |
42.6 |
56.8 |
61.4 |
65.9 |
| Other Current Liabilities |
6.1 |
5.6 |
5.6 |
5.6 |
5.6 |
| Total Current Liabilities |
45.8 |
56.4 |
70.6 |
75.2 |
79.7 |
| Total Long-term Debt |
77.5 |
76.7 |
76.7 |
76.7 |
76.7 |
| Total Other Non-Current Liabilities |
74.1 |
72.0 |
72.0 |
72.0 |
72.0 |
| Total Non-current Liabilities |
151.7 |
148.7 |
148.7 |
148.7 |
148.7 |
| Total Provisions |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Total Liabilities |
197.5 |
205.1 |
219.3 |
224.0 |
228.4 |
| Shareholders’ Equity |
379.9 |
387.9 |
397.5 |
409.8 |
424.2 |
| Minority Interests |
44.1 |
42.1 |
41.6 |
41.2 |
40.8 |
| Total Equity |
424.0 |
430.0 |
439.1 |
451.0 |
465.0 |
[[6]]
| Key Ratios |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Revenue Growth |
(25.4%) |
15.4% |
12.8% |
8.2% |
7.2% |
| Operating EBITDA Growth |
(51.1%) |
33.1% |
12.2% |
12.0% |
8.9% |
| Operating EBITDA Margin |
21.2% |
24.4% |
24.3% |
25.2% |
25.6% |
| Net Cash Per Share (S\$) |
0.11 |
0.04 |
0.09 |
0.12 |
0.15 |
| BVPS (S\$) |
0.59 |
0.60 |
0.61 |
0.63 |
0.65 |
| Gross Interest Cover |
1.60 |
2.81 |
4.59 |
6.39 |
7.13 |
| Effective Tax Rate |
14.3% |
21.9% |
12.5% |
12.5% |
12.5% |
| Net Dividend Payout Ratio |
134% |
56% |
25% |
25% |
25% |
| Accounts Receivables Days |
187.5 |
172.9 |
168.6 |
154.0 |
154.6 |
| Inventory Days |
89.90 |
75.54 |
65.71 |
72.42 |
72.33 |
| Accounts Payables Days |
196.3 |
160.2 |
161.8 |
177.2 |
177.7 |
| ROIC (%) |
0.74% |
2.42% |
2.91% |
4.06% |
4.83% |
| ROCE (%) |
1.04% |
2.62% |
3.30% |
3.99% |
4.49% |
| Return On Average Assets |
0.40% |
1.27% |
1.86% |
2.38% |
2.73% |
[[6]]
| Key Drivers |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Advanced Materials (% yoy) |
22.7% |
17.5% |
9.2% |
0.0% |
0.0% |
| Industrial Equipment (% yoy) |
4.0% |
3.0% |
2.0% |
0.0% |
0.0% |
| Nanofabrication (% yoy) |
12.0% |
12.0% |
12.0% |
0.0% |
0.0% |
[[6]]
