Report Summary

• Stock: Nanofilm Technologies International Ltd (Bloomberg Ticker: NANO SP)
• Action: Rating raised to BUY
• Target Price: SGD 1.65 (previously SGD 0.68)
• Last Traded Price: SGD 1.43
• Key Idea: Significant earnings upgrade (+95% for FY26F, +107% for FY27F) following strong 1Q26 results and broad-based margin improvement.
• Highlights:
  • Nanofilm’s proprietary nanotechnology coating solutions are superior, cost-effective, and environmentally friendly, supporting diversified sector expansion.
  • Strong, structural margin rebound: Gross margin expanded to 39% and EBITDA margin to 26%, driven by operating leverage, better product mix, and disciplined cost control.
  • Growth in semiconductor, automotive, consumer electronics, and new applications (smart eyewear, health sensing, AI data centres, robotics) reduces reliance on traditional 3C demand.
  • FY26–27 revenue forecasts raised by 15–16%, net profit estimates revised sharply higher; valuation remains undemanding at 0.5 standard deviations below four-year historical average.
  • Key risks: Intellectual property protection, demand recovery, supply chain disruption.
• Implication: The company’s diversified demand pipeline and structural margin improvements underpin a positive earnings outlook, supporting the BUY call with a higher price target.