DBS Group Research has kept “buy” on Nanofilm Technologies International as it sees the supply chain disruption stabilising.
To be sure, DBS analyst Ling Lee Keng expects the company to report strong figures for the 4QFY2021 ended Dec 31, 2021, and that the 3QFY2021 could be the “worst quarter” for Nanofilm on the supply front.
“Overall, the group is projected to report a positive growth in earnings of 8% for FY2021, despite expectations of higher costs, including one-off and higher operating costs as the group expands,” she writes in her Jan 21 report.
On this, Ling has raised her earnings estimates for the FY2021 by 12%, but has kept her estimates for the FY2022 and FY2023 unchanged, which is pending more visibility on the supply chain recovery.
To this end, Ling has lowered her target price (TP) estimate to $4.12 from $4.96 previously due to a lower growth rate assumption for the FY2022.
As the worst of the supply chain disruption is likely to be over, Ling has forecast “strong growth” for the company in 2022, which includes contribution from Nanofilm’s new Shanghai Plant 2, which has been officially certified.
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“Upside could come from: Stronger momentum for the 3C segment; higher contribution from the Nano Fabrication Business Unit (NFBU) segment, as various projects are in the mass production stage; and [the] successful entry into new segments, e.g., semiconductor tools, automotive, and industrial equipment,” she says.
“At current price-to-earnings ratio (P/E) of 24.5 times for FY2022, the group is trading at -2 standard deviation (s.d.) of its average P/E since listing in October 2020. It is also closer to its peers’ average of 22.7 times,” she adds.
Shares in Nanofilm closed 4 cents lower or 1.34% down at $2.95 on Jan 21, or an FY2021 P/B of 4.1 times and dividend yield of 0.6%.
Photo: The Edge Singapore
