Nanofilm’s Strategic Acquisition: Full Ownership of Hydrogen Tech Target at Discounted Valuation Signals Bold Bet on Clean Energy Future

Key Points for Investors

• Nanofilm Technologies International Limited is moving to acquire full ownership of Sydrogen, its hydrogen technology subsidiary, at a substantial discount to its previous 2021 valuation.
• The acquisition eliminates over S\$51 million in non-current financial liabilities and removes the minority interest associated with the Vendor’s 35% stake.
• This move is positioned as a long-term bet on the hydrogen economy, leveraging China’s anticipated national policy shift to make hydrogen a “strategic future industry.”
• The acquisition is expected to create operational synergies, deeper technology integration, and scale advantages for Nanofilm.
• Full control over Sydrogen is expected to unlock further value, especially as China’s hydrogen market is set for rapid expansion.

Details and Shareholder-Relevant Information

Substantial Deal Discount and Elimination of Liabilities

Nanofilm confirmed that there have been no prior payout events related to the preference shares held by the Vendor, and the proposed acquisition of Sydrogen is at a substantial dollar discount compared to the 2021 deal valuation. This discount was reached on a willing-buyer, willing-seller basis. By moving to full ownership, Nanofilm will eliminate S\$51.7 million in non-current financial liabilities arising from a Put Option agreement. This also removes corresponding minority interests from its financial statements. Notably, the base price of the Put Option (S\$17.5 million by 2029) is higher than the current consideration for the acquisition, signaling an immediate financial benefit and risk reduction for Nanofilm shareholders.

Goodwill and Intangible Assets

The balance sheet of Sydrogen contains approximately \$50 million in goodwill, primarily reflecting anticipated business synergies, expected revenue growth, future market development, and the value of Sydrogen’s assembled workforce. The identifiable assets largely consist of cash and patents, while the goodwill highlights the market value placed on Sydrogen’s growth prospects, customer relationships, and technological assets.

Growth Trajectory and Commercial Prospects

Sydrogen has rapidly evolved from a development-stage entity into a top-five provider of advanced coatings for metallic bipolar plates in China. It has expanded into new sectors, such as air-cooled fuel cell stacks and advanced coatings for green hydrogen generation. While management refrains from disclosing detailed revenue forecasts, the company expects steady business volume growth, driven by project conversions, broader technology adoption, and the accelerating clean energy market. Notably, the acquisition will enable Nanofilm to leverage Sydrogen’s technologies beyond the hydrogen sector, creating new commercial opportunities.

Bullish on Hydrogen: Policy and Market Tailwinds

Management cites China’s forthcoming 15th Five-Year Plan (2026–2030), which is expected to designate hydrogen as a “strategic future industry,” on par with quantum technology and nuclear fusion. If implemented, this policy shift would move the sector from pilot demonstrations to large-scale commercialisation, supported by government planning and industrial cluster initiatives. Such policy support, combined with growing demand for green hydrogen and hydrogen-powered transport, positions Sydrogen—and by extension, Nanofilm—at the forefront of a sector poised for exponential growth.

Strategic Use of Cash vs. Shareholder Payouts

Management frames this acquisition as a strategic investment supporting long-term sustainable growth, rather than using available cash for dividends or share buybacks. The company believes that fully integrating Sydrogen will enhance management control, accelerate commercialisation, and create operational synergies that will ultimately drive greater shareholder value over time. Importantly, the acquisition preempts the risk and higher cost of a future Put Option exercise by the Vendor.

Potential Share Price Impact

• Acquiring a high-growth, clean energy asset at a discount while removing significant financial liabilities is likely to be viewed positively by the market.
• China’s planned policy support for hydrogen as a strategic industry could create a major tailwind for Nanofilm’s hydrogen business, justifying management’s bullish outlook and potentially driving re-rating of the shares.
• The elimination of future Put Option obligations reduces uncertainty and risk for investors.
• However, investors should note that the benefits of this acquisition may take time to materialise, and the hydrogen sector remains in the early stages of commercialisation.

Summary

This Extraordinary General Meeting announcement signals a transformative step for Nanofilm, as it consolidates its hydrogen business at a favorable valuation, eliminates financial overhangs, and positions itself to capture the next wave of clean energy growth in China. For investors, this is a potentially price-sensitive development that could materially affect Nanofilm’s share value, especially as the market recognises the strategic implications of China’s policy moves and the company’s enhanced control over its clean energy assets.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should perform their own due diligence and consult with a qualified financial advisor before making any investment decisions. The information is based on company disclosures and management statements as of 30 October 2025.

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