Date of Report: 17 September 2024
Broker Name: Lim & Tan Securities

Nanofilm’s Role as a Key Supplier for Apple

Nanofilm, a Singapore-listed company, is identified as a key supplier for Apple Inc. The company’s fortunes are closely tied to Apple’s product launches, particularly its new iPhone 16 series. Analysts were optimistic about Nanofilm’s prospects, expecting sales growth of 20% and a threefold profit increase, reaching S$12 million for FY2024.

Impact of Weak iPhone 16 Demand

Despite earlier optimism, the weaker-than-expected demand for Apple’s iPhone 16 Pro model is expected to have a significant impact on Nanofilm’s sales and earnings for the second half of 2024. The report highlights that this demand shortfall could lead to downside surprises for Nanofilm, as the success of Apple’s products is directly linked to Nanofilm’s revenue.

Rich Valuations and Analyst Outlook

Nanofilm’s rich valuations also present concerns. For FY2024, the company is expected to have a price-to-earnings (PE) ratio of 49x, a price-to-book (P/B) ratio of 1.5x, and a relatively low dividend yield of 1%. Given these high valuations and the weaker-than-expected demand for Apple’s products, the broker highlights significant downside risks for Nanofilm’s stock price.

Consensus Target Price and Rating

The Bloomberg consensus target price for Nanofilm stands at S$0.60, representing a potential downside of 27% from current levels. Given the rich valuations and weaker prospects, Lim & Tan Securities maintains an “Underperform” rating on Nanofilm.

This detailed analysis is based on information from the Daily Review report by Lim & Tan Securities, dated 17 September 2024.