NanoFilm's share price has rallied strongly and market exuberance may have outpaced fundamentals, in our view.
Nanofilm provided a 1Q26 business update
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AMBU saw revenue expand 24% y-o-y to S$49m, within which AMC and the Industrial segment (AMI) grew 32% and 9% y-o-y, respectively. Meanwhile, revenue from the Industrial Equipment Business Unit (IEBU) and Nanofabrication Business Unit (NFBU) grew 52% and 20% y-o-y to S$2m and S$3m, respectively. Sydrogen, however, was a laggard, as revenue fell 8% y-o-y to S$0.4m.
Notably, 1Q26 gross profit margin of 39% surprised to the upside, expanding 12 percentage points (ppt) y-o-y on better operating leverage and disciplined cost control. Reported revenue and estimated gross profit constituted around 20.7% and 21.2% of our initial full year forecasts, respectively, which we deem to be slightly ahead of our expectations.
Revised fair value estimate of S$1.06.
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We finetune our assumptions and raise our margin expectations as we turn incrementally more confident in NanoFilm’s earnings recovery. We also increase our target FY27 price-to-earnings (P/E) multiple from 23x to 25x, in keeping with half a standard deviation (s.d.) above the forward 12-month average. As a result, our fair value estimate for NanoFilm is raised significantly from S$0.705 to S$1.06.
Maintain HOLD.
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