NANOFILM TECHNOLOGIES INTL LTD (SGX:MZH)
Nanofilm Technologies - 2021 Results In Line; Expect Higher Expenditures To Fund Growth
- NanoFilm Technologies's 2021 earnings of S$62m (+8% y-o-y) was in line, meeting 96% of our estimate. 2H21 saw a rebound with earnings growth of 145% h-o-h and 12% y-o-y.
- NanoFilm Technologies is optimistic of its sustainable growth outlook in 2022 with its BU-driven strategy in accelerating the adoption of its nanotechnology solutions. However, we remain cautious as we expect NanoFilm Technologies to incur higher costs to enhance its future growth.
Nanofilm's 2021 results in line withhealthy h-o-h recovery.
- NanoFilm Technologies (SGX:MZH)'s 2021 earnings of S$62m (+8% y-o-y) was in line, meeting 96% of our estimate. 2H21 saw a rebound with earnings growth of 145% h-o-h and 12% y-o-y.
- Revenue for the advanced material business unit (AMBU) increased 6% y-o-y to S$194m in 2021, mainly led by the increased revenue contribution from the Consumer Electronics, Communication and Computers (3C) and automobile segments. The 3C segment grew despite a shift in the peak period to 4Q21 and 1Q22.
- On the other hand, the industrial equipment business unit (IEBU) delivered a revenue growth of 81% y-o-y in 2021, driven by a sustained recovery in the capex cycle of its customers.
- Nanofilm is optimistic of its sustainable growth outlook in 2022 with its business unit (BU)-driven strategy in accelerating the commercialisation and increasing adoption of its nanotechnology solutions across multiple existing and new areas. Investments made in the new Shanghai Plant 2 (approximately 2x the size of Plant1 ) and additions of 59 coating equipment to 235 have significantly boosted NanoFilm Technologies’s long-term production capacity.
- Coupled with the increased spending in R&D and engineering, NanoFilm Technologies believes it is well-positioned for future growth. In addition, NanoFilm Technologies expects global supply chain bottlenecks to ease and keep pace with customers’ solid underlying demand.
We remain cautious due to higher costs.
- Despite a positive outlook, we remain cautious as we expect NanoFilm Technologies to incur higher costs due to more aggressive hiring of staff and more new product introduction costs to enhance its future growth. These additional costs may limit near-term earnings growth.
Focus on operational excellence.
- NanoFilm Technologies aims to focus loss of S$1m in FY21 related to operating expenses incurred in building its business fundamentals. Sydrogen will continue to establish its foundation for technology and production capacity, and is on track to recognise initial revenue in an automotive project in the 2HFY22.
Nanofilm Technologies - Earnings forecast and recommendation
- We have trimmed our 2022 and 2023 earnings forecasts for NanoFilm Technologies by 2% than our forecast of S$65m. Our target P/E multiple of 23x 2022F P/E is at a slight discount vs NanoFilm Technologies’s peers’ 25x 2022F P/E.
- See
- Catalysts:
- Better-than-expected ramp-up of nanofabrication business.
- New application in the advanced material segment such as automobile (bi-polar plate electrodes in fuel cells) and FMCG.
John Cheong
UOB Kay Hian Research
|
https://research.uobkayhian.com/
2022-02-25
SGX Stock
Analyst Report
2.72
UP
2.670
