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NanoFilm Technologies - Maybank Kim Eng 2021-06-21: Multiple Growth Drivers

NANOFILM TECHNOLOGIES INTL LTD (SGX:MZH) | SGinvestors.io NANOFILM TECHNOLOGIES INTL LTD (SGX:MZH)

NanoFilm Technologies - Multiple Growth Drivers


Investment case: highly differentiated technology

  • NanoFilm Technologies (SGX:MZH) is currently the only company globally to offer filter cathodic vacuum arc (FCVA) coating technology. Nanofilm’s FCVA technology is highly differentiated as it allows coating to be done in room temperature across substrates such as ceramics and plastics, contrasting traditional methods like PVD, which requires higher temperatures.
  • In turn, this has enabled the products of its blue-chip customers to achieve enhanced aesthetics and functionality. As such, we see NanoFilm Technologies’ prospects leveraged to long-term growth prospects of 3C (computer, communication and consumer electronics), automotive, and even in other new markets.



Catalysts: leveraged to several megatrends

  • As FCVA can be done at room temperature, it is not just more economical, but also environmentally friendlier. FCVA is used to make products last longer and more aesthetically pleasing and resilient – in turn allowing blue-chip customers to make their products more premium. NanoFilm Technologies currently has around 50 patents, with another 20 pending applications. NanoFilm Technologies is usually the sole supplier for its offerings, and customer relationships are sticky due to the lack of alternatives.
  • NanoFilm Technologies’ technology is industry agnostic so it can be applied across 3C, automotive, new energy, biomedical, and the optical lens and sensors industry. As such, this opens up opportunities for NanoFilm Technologies to ride megatrends in 5G, smart vehicles, and nanotech in medical implants and devices.


Valuations: scarcity premium

  • NanoFilm's share price is trading at 40.9x consensus FY21E P/E. This is a premium to SG-listed technology stocks at 15x FY21E P/E. Separately, advanced materials peers are trading at 30.8x FY21E P/E. We believe NanoFilm Technologies’ high P/E is due to scarcity premium.

Risks: customer concentration and competition






Gene Lih Lai CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-06-21
SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998 SAME 99998



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