OCBC Investment Research
11 September 2025
Nanofilm Technologies: Navigating Earnings Recovery, Market Sentiment, and ESG in 2025
Overview: Re-examining Nanofilm Technologies Amidst Market Reforms and Global Momentum
Nanofilm Technologies International Ltd, a Singapore-based nanotechnology solutions leader, is experiencing renewed investor interest in 2025. The company’s share price momentum is buoyed by positive global equity sentiment and ongoing reforms in the Singapore equity market. However, with demand outlooks still uncertain and a gradual earnings recovery expected, OCBC Investment Research maintains its HOLD rating, revising its fair value to SGD 0.79 from SGD 0.72.
Investment Thesis: Unique Positioning and Strategic Initiatives
Founded in 1999, Nanofilm leverages proprietary technologies, advanced R&D, and engineering expertise to provide differentiated coating solutions across a multitude of end-markets. The company’s fortunes are tightly linked to the demand for its customers’ products, making it vulnerable to macroeconomic and industry-specific cycles. Recently, Nanofilm has navigated challenges such as digital downturns, inflationary pressures, and supply chain disruptions by:
- Continuously investing in capacity expansion and diversifying operations beyond China.
- Launching Sydrogen, a business unit focused on hydrogen economy solutions.
- Doubling down on R&D and customer-centric innovation to drive stickiness and long-term growth potential.
The result is a company poised for growth, supported by secular trends and a large addressable market. Notably, Nanofilm’s financial results in 3Q24 suggest the worst may be over, yet sustained sequential improvements are needed to solidify investor confidence.
Recent Share Price Performance and Market Dynamics
Nanofilm’s stock has climbed 8.6% since August 2025, hovering at year-to-date highs. This rally coincides with weakening US payrolls data, sparking expectations of Federal Reserve rate cuts, and a generally benign recession outlook. Positive sentiment is spilling over from US to global markets, including Singapore.
Back home, anticipation around the Singapore Equity Market Development Program continues to lift small and mid-cap stocks such as Nanofilm. However, OCBC cautions that the bulk of this appreciation appears sentiment-driven, rather than underpinned by material improvements in company fundamentals.
Given that the latest closing price of SGD 0.82 now exceeds the previous fair value estimate by more than 10%, OCBC has re-examined its assumptions:
- 2025 is expected to see less pronounced seasonality due to early ramp-up of new projects.
- Operational efficiencies could improve gross margins.
- Near-term earnings recovery remains gradual, justifying a measured stance.
The target FY26 P/E multiple is lifted from 20.6x to 23.0x, slightly above Nanofilm’s post-IPO average, pushing the fair value to SGD 0.79. The HOLD rating is reiterated.
Financial Performance: Key Figures and Trends
| Metric |
FY24 |
FY25E |
FY26E |
| Revenue (SGD m) |
204.3 |
237.8 |
261.3 |
| Gross Profit (SGD m) |
75.9 |
88.0 |
105.8 |
| PATMI (SGD m) |
7.7 |
13.2 |
22.5 |
| EPS (S cents) |
1.2 |
2.0 |
3.4 |
| DPS (S cents) |
0.7 |
0.7 |
1.2 |
| Revenue Growth (%) |
15.4 |
16.4 |
9.9 |
| Gross Profit Margin (%) |
37.1 |
37.0 |
40.5 |
| Net Profit Margin (%) |
3.7 |
5.4 |
8.4 |
| Dividend Yield (%) |
0.8 |
0.9 |
1.5 |
Key Security Information
- Ticker: NANO.SI / NANO SP
- Market Cap: USD 0.4 billion
- Daily Turnover: SGD 1.3 million
- Free Float: 44%
- Shares Outstanding: 652 million
- Top Shareholder: Shi (Xu) 46.5%
Detailed Financial Review
Income Statement (SGD Millions)
| Metric |
FY2020 |
FY2021 |
FY2022 |
FY2023 |
FY2024 |
| Revenue |
218.3 |
246.7 |
237.4 |
177.0 |
204.3 |
| Cost of Revenue |
98.6 |
124.5 |
126.0 |
111.5 |
128.4 |
| Gross Profit |
119.8 |
122.2 |
111.4 |
65.6 |
75.9 |
| Operating Income |
73.1 |
69.2 |
45.8 |
3.0 |
10.4 |
| Net Income |
57.6 |
62.2 |
43.8 |
3.1 |
7.7 |
| Basic Earnings per Share (SGD) |
0.1 |
0.1 |
0.1 |
0.0 |
0.0 |
Key Profitability and Credit Ratios
| Ratio |
FY2020 |
FY2021 |
FY2022 |
FY2023 |
FY2024 |
| Return on Common Equity (%) |
20.90 |
14.46 |
10.33 |
0.79 |
2.02 |
| Return on Assets (%) |
14.83 |
10.48 |
6.86 |
0.43 |
1.20 |
| Operating Margin (%) |
32.78 |
27.78 |
19.31 |
1.67 |
5.09 |
| Net Debt/Equity |
-0.41 |
-0.21 |
-0.15 |
-0.02 |
0.10 |
Business Breakdown: Business Units and End Markets
| Business Unit |
FY24 Revenue Share (%) |
| AMBU |
84.3 |
| IEBU |
8.8 |
| NFBU |
5.5 |
| Sydrogen |
1.4 |
| End Market |
FY24 Revenue Share (%) |
| Consumer |
69.2 |
| Industrial |
29.4 |
| New Energy |
1.4 |
Peer Comparison: Valuation Metrics Across the Sector
| Company |
P/E (FY25E) |
P/E (FY26E) |
P/B (FY25E) |
P/B (FY26E) |
EV/EBITDA (FY25E) |
EV/EBITDA (FY26E) |
Dividend Yield (FY25E) |
Dividend Yield (FY26E) |
ROE (FY25E) |
ROE (FY26E) |
| Nanofilm Technologies (NANO.SI) |
45.6 |
36.2 |
1.4 |
1.3 |
11.2 |
9.6 |
0.9 |
1.0 |
2.9 |
3.9 |
| Element Solutions Inc (ESI) |
17.5 |
15.8 |
2.3 |
2.2 |
13.5 |
12.5 |
1.2 |
1.3 |
14.0 |
13.7 |
| Frontken Corporation Bhd (FRKN.KL) |
39.2 |
32.9 |
8.1 |
7.1 |
24.7 |
20.7 |
1.1 |
1.3 |
22.9 |
22.9 |
| Sunny Optical Technology Group (2382.HK) |
22.9 |
19.2 |
2.9 |
2.5 |
10.4 |
9.0 |
0.8 |
1.0 |
13.0 |
13.7 |
| ULVAC Inc (6728.T) |
16.8 |
13.9 |
1.3 |
1.3 |
6.3 |
5.5 |
2.8 |
3.0 |
10.0 |
10.7 |
ESG and Sustainability: Progress and Opportunities
Nanofilm is actively supporting the transition towards a low-carbon economy, with significant investments in hydrogen economy solutions. The company has:
- Installed advanced data collection for enhanced oversight, targeting a 40% reduction in GHG intensity and 80% reduction in production wastewater discharge intensity by 2030.
- Already surpassed its 2030 target of sourcing at least 50% of total energy from renewables or carbon credits (achieved in FY23).
- Extended sustainability initiatives to its value chain, screening 100% of critical direct suppliers for human rights, environmental, and health & safety risks.
Areas for improvement include increasing staff training hours (which dropped to 14 hours per employee in FY24, down from 31 in FY22 and 21 in FY23) and enhancing board and management diversity (currently 80% male in FY24).
Opportunities and Risks: What Could Move the Stock?
Potential Catalysts:
- Resumption of customer CAPEX and production increases
- Easing supply chain challenges
- Positive revenue and cash flow from Sydrogen
- Earlier-than-expected new product launches
Key Risks:
- Sustained weak demand from end-markets
- Inability to protect proprietary IP
- Dependence on R&D success for future growth
- Emergence of new competitors
Company Profile: Nanofilm at a Glance
Nanofilm Technologies delivers advanced, environmentally sustainable nanotechnology-based surface solutions, primarily using its patented filtered cathodic vacuum arc (FCVA) technology. Its offerings serve diverse industries including consumer electronics, automotive, precision engineering, printing, and new energy.
Nanofilm is listed on the Singapore Exchange and features in key indices such as FTSE ST All-Share, FTSE ST China, FTSE ST Large & Mid Cap, FTSE ST Mid Cap, MSCI ACWI Small Cap, MSCI Singapore Small Cap, and MSCI World Small Cap.
Conclusion: A Measured Approach Amidst Recovery
While Nanofilm Technologies appears to be turning a corner, with early signs of financial recovery and robust ESG initiatives, the company’s fundamentals still require sustained improvement for a more bullish outlook. Investors are advised to remain cautious, as much of the recent share price appreciation is sentiment-driven. OCBC’s HOLD rating and updated fair value of SGD 0.79 reflect a balanced view for the coming year.
