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CGS-CIMB keeps 'hold' call on Nanofilm, eyes FY2024 as 'key' year for possible re-rating

The Edge Singapore
The Edge Singapore1/17/2023 11:10 AM GMT+08  • 2 min read
CGS-CIMB keeps 'hold' call on Nanofilm, eyes FY2024 as 'key' year for possible re-rating
Photo: Nanofilm Technologies International
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CGS-CIMB’s William Tng and Izabella Tan have maintained their hold call on Nanofilm Technologies International, but with a slightly higher target price of $1.39 from $1.37 earlier, as China’s re-opening might lead to a potential re-rating of the stock.

As described by Tng and Tan in their Jan 16 note, Nanofilm’s operations in 4QFY2022 ended Dec have been hurt by China’s abrupt re-opening recently as Covid-19 cases increased.

“We believe normalcy has returned to its China factories since Jan 2023,” the analysts write.

Nanofilm provides coating for parts used in consumer electronics, and counts major brands in mobile and computing devices as its main customers.

They see the coming FY2024 as a “key” year for the company, given how its increased production capacity in Vietnam will come on stream come 3QFY203.

In addition, Nanofilm’s various joint ventures, such as ApexTech, which provides coating for battery parts used in electric vehicles, and Sydrogen, which coats parts used in hydrogen fuel cells, could start to see some revenue contribution too.

See also: CGS-CIMB sees $25 bil order book for ST Engineering with MINDEF, Taiwan rail contracts

Nonetheless, there are downside risks from high customer concentration and emerging competition, the analysts caution.

As at 11.09 am, Nanofilm shares traded at $1.42, unchanged for the day, and down 59.31% over the past year.

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