Nanofilm Technologies International Unveils Strategic Joint Venture in Dongguan, China

Key Highlights

• Joint Venture Established: Nanofilm Technologies International Limited (“Nanofilm” or “the Company”) is forming a joint venture (“JVCo”) in Dongguan, China with local partners Ms. Cheng Xiao Na, Mr. Dai Di Sen, and HeChuang Tech Pte. Ltd.
• Investment Details: The JVCo will have a registered capital of RMB 6.5 million, with Nanofilm contributing RMB 2.0 million for a 30.8% stake. The remaining ownership is split among Ms. Cheng Xiao Na (38.4%), Mr. Dai Di Sen (15.4%), and HeChuang Tech Pte. Ltd. (15.4%).
• Convertible Loan: Nanofilm’s wholly-owned subsidiary, Nanofilm Vacuum Coating (Shanghai) Co., Ltd (“NVC”), will provide a convertible loan of RMB 2.0 million at 15% annual interest, convertible into equity.
• Business Scope: The JVCo will focus on the marketing, promotion, sale, and distribution of vacuum coating and related equipment, as well as offering coating and testing services for a variety of high-growth sectors.
• Strategic Partnership: The venture is designed to be Nanofilm’s commercial platform for Southern China, enhancing market access and accelerating growth.
• Board Structure: The JVCo will have a five-member board, including two directors nominated by Nanofilm, and one each by the other partners, plus an independent director.
• No Material Financial Impact Expected: The deal is not expected to materially affect Nanofilm’s net tangible assets or earnings per share for FY2026.

Detailed Report

Nanofilm Technologies International Limited has announced the signing of a shareholders’ agreement to establish a joint venture company in Dongguan, China, named Dongguan Najin Technology Co., Ltd. This strategic initiative aims to bolster Nanofilm’s presence in Southern China—a region recognized for robust demand in optics, automotive, consumer electronics, semiconductor, robotics, and advanced manufacturing sectors.

Equity Structure and Capital Contribution

The JVCo will be set up with a registered capital of RMB 6.5 million. The ownership breakdown is as follows:

• Nanofilm Technologies International Limited: RMB 2.0 million (30.8%)
• Ms. Cheng Xiao Na: RMB 2.5 million (38.4%)
• Mr. Dai Di Sen: RMB 1.0 million (15.4%)
• HeChuang Tech Pte. Ltd.: RMB 1.0 million (15.4%)

All parties are required to fund their contributions in cash within five years of the JVCo’s establishment. Funding can come from future dividends or other internal resources.

Business Focus and Strategic Intent

The JVCo is set to serve as Nanofilm’s strategic commercial partner in Southern China. Its primary business includes:

• Marketing, promotion, sale, and distribution of vacuum coating equipment, other coating equipment, and ancillary facilities
• Sourcing, coordination, and arrangement of coating and testing services for clients in multiple industrial sectors

The JVCo intends to leverage the local market expertise and networks of its Chinese partners, which is expected to significantly enhance Nanofilm’s market penetration and operational efficiency.

Profile of Partners

• Ms. Cheng Xiao Na: Brings established business networks in optoelectronics and advanced manufacturing in Southern China, supporting JVCo’s business development and customer acquisition.
• Mr. Dai Di Sen: Experienced in the technology sector and a seasoned investor in tech enterprises, Mr. Dai is expected to provide valuable commercial and strategic insights.
• HeChuang Tech Pte. Ltd.: An investment holding company wholly owned by Mr. Jin Xiao Zhe (a key Nanofilm executive with over 26 years of industry experience). Mr. Jin is also related to major shareholders and the Group’s Executive Chairman. This provides Nanofilm with strong technical guidance and close operational alignment through the JVCo.

Governance and Control

The JVCo will be governed by a five-member board:

• 2 directors nominated by Nanofilm
• 1 director each by Ms. Cheng and Mr. Dai
• 1 independent director nominated by JVCo shareholders

Certain key matters require Nanofilm’s approval, ensuring it retains substantial influence over major decisions.

Convertible Loan Financing

NVC, Nanofilm’s subsidiary, will provide a RMB 2.0 million convertible loan to JVCo for working capital and business expansion. This loan bears a high interest rate of 15% per annum and is convertible, at any time within five years, into registered capital at a 1:1 basis. This arrangement gives Nanofilm the potential to increase its equity stake if desired and aligns JVCo’s funding structure with shareholder interests.

Strategic Partnership Agreement

The JVCo will enter a strategic partnership agreement with Nanofilm, ensuring alignment in procurement, distribution, and supply of group products and services to customers. This partnership is structured to create a direct and mutually beneficial sales channel for Nanofilm’s advanced materials offerings.

Rationale and Expected Impact

The JVCo is designed to be a high-growth platform, using Nanofilm’s technology and the local expertise of its partners to capture emerging opportunities in China’s industrial heartland. The Company expects this structure to accelerate market access, drive revenue growth, and maximize commercial efficiency.

Importantly, the Company has stated that none of the financial metrics (including capital contribution and loan amount) exceeds 5% of the thresholds set out in the Singapore Exchange’s Listing Manual. As such, this transaction is not expected to have a material impact on Nanofilm’s net tangible assets or earnings per share for the year ending 31 December 2026.

Potentially Price-Sensitive Information

• The formation of the JVCo, along with the convertible loan, marks a significant strategic move into Southern China—a region with high growth potential, which may create new revenue streams for Nanofilm.
• The high (15%) interest rate on the convertible loan is notable, potentially reflecting the high expected returns or risks associated with the JVCo’s business plan.
• The involvement of Nanofilm’s top management and related parties in the JVCo may be of interest to shareholders, particularly given the alignment of interests through direct and indirect shareholdings.

Cautionary Statement

The Company cautions that there is no certainty or assurance that the JVCo will be successful. Shareholders and investors are urged to exercise caution in trading Nanofilm’s shares and consult their professional advisers if in doubt.

Conclusion

In summary, Nanofilm’s joint venture in Dongguan represents an important strategic initiative targeting high-growth industrial sectors in Southern China, leveraging both technology and local business networks. The JVCo’s success could enhance Nanofilm’s growth prospects and market positioning in Asia, but investors should be mindful of execution risk and the fact that financial impact for FY2026 is expected to be immaterial.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should refer to official company filings, seek professional advice and conduct their own due diligence before making investment decisions. The future success of the joint venture is subject to various risks and uncertainties as highlighted by the Company.

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