CGS-CIMB Research has forecast Nanofilm Technologies International to record earnings of $28.3 million, up 53.1% y-o-y, for 1HFY2021 results ended June 30.
This comes ahead of the expected release of the nanotechnology solutions provider’s maiden first half-year results on Aug 13.
CGS-CIMB has reiterated its “add” rating for the stock with an unchanged target price of $5.52.
The brokerage says its forecast is based on Nanofilm’s seasonality pattern.
According to CGS-CIMB, Nanofilm typically experiences a weaker first half year performance relative to its second half year performance in the last two financial years.
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But if Nanofilm’s earnings were to record $84.5 million in FY2021 and its first half year earnings comprise 33.5% of the full year earnings again, the company could register a surge in earnings for 1HFY2021.
In 1HFY2020, Nanofilm’s earnings stood at $19.3 million, comprising 33.5% of its full year earnings of $57.6 million.
CGS-CIMB believes the seasonality pattern may still hold true as the company’s customer Z, a major customer, reported higher y-o-y revenue of 36% to US$81.4 billion.
Customer Z’s higher revenue was driven by strong demand for its 5G phones and computing devices arising from the work-from-home situation, it says.
Given that customer Z had continued to experience strong demand for its wearables/computers offering, this suggests that customer Z had managed to catch up with “some production” in May/June, says CGS-CIMB.
“For Nanofilm, we believe the read though is that coating activities for customer Z also experienced a pick-up in May/Jun,” CGS-CIMB analysts William Tng and Darren Ong reason in an Aug 4 report.
Nevertheless, CGS-CIMB warns that Nanofilm could see lower earnings entering the “Sept 21 quarter”.
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The brokerage explains that customer Z expects component shortages to be more challenging than in the June quarter.
As at 2.16 pm, Nanofilm was up 5 cents or 0.8% at $6.20 with 244,800 shares changed hands.
