Nanofilm Technologies - CGS-CIMB Research 2023-01-16: Holding For Possible Re-Rating In FY24

Nanofilm Technologies - Holding For Possible Re-Rating In FY24

  • Since China abolished its zero-COVID strategy in Dec 2022, the country has experienced its first wave of infections, which led to production and logistics challenges in the supply chain in China. We think NanoFilm Technologies (SGX:MZH) similarly experienced production disruptions as its workers contracted COVID-19. We believe normalcy has returned to its China factories since Jan 2023.
  • As at 16 Jan 2023, Bloomberg consensus’ FY22F revenue and net profit forecasts for NanoFilm Technologies of S$273.25m and S$63.89m, respectively, are too optimistic, in our view. We cut our FY22F revenue forecasts by 9.4% to S$237.8m, leading to a 16.1% decrease in our FY22F net profit forecast to S$46.1m.
  • FY24F would be a key year for NanoFilm Technologies, given:
    1. the mass production potential from its new 40,000 sqm-Vietnam hub (target completion date and customer qualification by end-3Q23F),
    2. ApexTech targets to commence mass production of coating of advanced battery components for electric vehicles, and
    3. Sydrogen (coating of hydrogen fuel cells components) could also see some revenue contribution.
  • Global macro economic conditions would, however, limit NanoFilm Technologies’s FY23-24F financial performance, in our view. Given concerns over FY23-24F’s global economic outlook, we cut our FY23-24F revenue forecasts by 8.4-9.6%, leading to a 13.9-16.0% decrease in our FY23-24F net profit forecasts for NanoFilm Technologies.
  • We think NanoFilm Technologies would release its FY22F results in the week of 20 Feb 2023. We maintain our P/E-to-growth ratio of 1.0x for NanoFilm Technologies, which implies a 12.6x FY24F P/E. Target price for NanoFilm Technologies is raised slightly to S$1.39 on rollover; reiterate HOLD.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

William TNG CFA CGS-CIMB Research | Izabella TAN CGS-CIMB Research | 2023-01-16

Previous report by CGS-CIMB:
2022-11-16 Nanofilm Technologies - FY22 Possibly First Net Profit Decline Since IPO.

Price targets by 2 other brokers at NanoFilm Target Prices.
Listing of research reports at NanoFilm Analyst Reports.

Relevant links:
NanoFilm Share Price History,
NanoFilm Announcements,
NanoFilm Dividends & Corporate Actions,
NanoFilm News Articles

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