Nanofilm Technologies - ApexTech JV Could Create A New Revenue Stream
- NanoFilm Technologies (SGX:MZH) has announced its joint venture (JV) with Shenzhen Everwin Precision Technology co Ltd (Everwin, 300115 CH) and Shanghai Hongshi Enterprise Management Partnership (Unlisted). The JV to be located at Zigong, Sichuan, China, will be named Sichuan Apex Technologies Co Ltd (ApexTech) and used to develop and provide vacuum coating solutions and coated products for battery components (bus bars, battery covers, battery connectors), packs and systems in electric vehicles and new energy storage applications (Advanced Battery Business) in China. Refer to NanoFilm's announcement dated 2022-09-28. The JV will have a registered capital of ~S$10.0m, with NanoFilm Technologies having a 60% stake.
- Initial production is targeted to commence in the first half of 2023F with plans to reach industrial-scale mass production by 2024F. NanoFilm Technologies expects capex to be between S$30m-50m for the JV over the next 3-5 years.
- For a start, the JV will be targeting the domestic China market via its JV partner, Everwin, and NanoFilm Technologies believes that its coating solution can be cost competitive to the existing electroplating solution. In addition, as electroplating is a pollutive process, it has been difficult for suppliers to obtain approval for capacity expansion.
- In its announcements, NanoFilm Technologies also shared that based on studies by the International Energy Agency, the total addressable market (TAM) of advanced batteries for electric vehicles in China is estimated to be above 6.5m units, amounting to US$79bn in 2023F and growing at a compounded annual growth rate of 10% to reach US$156bn in 2030F. NanoFilm Technologies believes the total addressable market for advanced batteries used in electric vehicles could grow from an estimated US$239bn in 2023F to US$782bn in 2030F.
- Our arget price for Nanofilm Technologies is unchanged at S$3.05 (-1 standard deviation P/E multiple over Oct 20 to Aug 22 of 23.3x). Earnings potential from the JV is not modelled into our forecast for now as we await further progress on the JV.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
William TNG CFA CGS-CIMB Research | Izabella TAN CGS-CIMB Research | https://www.cgs-cimb.com 2022-09-29 2022-09-29
Read also CGS-CIMB's most recent report:
2023-01-16 Nanofilm Technologies - Holding For Possible Re-Rating In FY24.
Previous report by CGS-CIMB:
2022-11-16 Nanofilm Technologies - FY22 Possibly First Net Profit Decline Since IPO.