The Capital Group Companies, a deemed substantial shareholder of Nanofilm Technologies International, has sold nearly 3.14 million shares at an average of $3.95 each.

The selling via the open market was done on Aug 18.

With that, Capital Group has cut its stake to nearly 43.7 million shares, or 6.61%, from 7.09% previously.

Capital Group was one of the more than a dozen cornerstone investors of the IPO.

Temasek Holdings is another substantial shareholder, with a total stake of around 7% held by its various entities.

Nanofilm, arguably the hottest IPO last year, shocked the market with a drop in earnings for its 1HFY2021.

Instead of continuing on a growth trajectory as widely expected, the company reported earnings of $17.9 million, down 3.1% y-o-y on higher one-off costs. Revenue grew by 24% y-o-y, but wasalso at a slower pace than expected.

Investors were also spooked by the resignation of its COO, which came less than two months after the resignation of its CEO.

The company's founder and executive chairman Shi Xu (picture) is now the interim CEO while the company searches for a replacement.

The results and the news triggered downgrades and price target cuts by various analysts covering this stock.

In response, Shi told analysts and journalists at a call on Aug 18 that the higher costs incurred were one-off and that the second half will be a busier one for the company.

<strong>See also: <a href="https://www.theedgesingapore.com/issues/tech/nanofilm-back-track-after-wobble">Is Nanofilm back on track after a wobble?</a></strong>

Meanwhile, Nanofilm has continued with its share buyback in the wake of the earnings surprise.

On Aug 19, the company spent $3.98 million to buy back one million shares at between $3.95 and $4.

On Aug 18, it paid $3.5 million for 877,700 shares at between $3.93 and $3.97.

On Aug 17, it paid $5.81 million for 1.49 million shares at between $3.81 and $4.07.

On Aug 16, the first trading day after the earnings was out after market was closed last Friday Aug 13, the company spent $6.8 million to buy back 1.55 million shares at between $4.21 and $4.52.

In total, Nanofilm has spent just over $20 million on share buybacks.

Nanofilm shares closed Aug 20 at $3.99 up 0.76%. It reached a peak of $6.67 following its IPO last October at $2.59.

<i>Photo: Albert Chua/The Edge Singapore</i>

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