Nanofilm sees revenue boost from 3C, automotive segments

MAINBOARD-LISTED Nanofilm Technologies MZH posted an increase in net profit of 13.2 per cent to S$44.3 million for the half-year ended Dec 31, 2021 on Wednesday (Feb 23), up from S$39.2 million the year before.

The tech manufacturer's topline rose 6.8 per cent in the same period to S$150.1 million, from S$140.5 million a year ago.

This was mainly due to a rise in revenue generated from its industrial equipment business unit, which grew by 81.6 per cent to S$25.6 million. Its advanced materials business unit remained stable, generating S$118.3 million in revenue while its nanofabrication business unit declined by 23.8 per cent to S$6.1 million.

The advanced materials business unit provides material science solutions through proprietary surface solutions nanotechnology, while its industrial equipment business unit designs and develops custom coating equipment, cleaning lines and automation systems. Its nanofabrication business unit manufactures and supplies nanoproducts in optical imaging lens and sensory components used in its customers' end products.

The company has recommended a dividend of S$0.01 per ordinary share that will be payable on May 20, 2022, subject to shareholders approval at the company's next annual general meeting on April 28, 2022.

Including the interim dividend of S$0.01 per ordinary share paid on Sep 8, 2021, dividends paid for the full-year adds up to S$0.02, higher than the S$0.019 per ordinary share paid out in FY2020.

For the full year ended Dec 31, 2021, the company's net profit climbed 7.7 per cent to S$62.5 million, while revenue rose 13 per cent to S$246.7 million compared to the same period a year earlier.

The company has also further diversified its revenue from other customers from its single largest customer, with their percentage of revenue contribution increasing to 39 per cent in FY2021, up from 32 per cent in FY2020.

Its advanced materials business unit and industrial equipment business unit both posted revenue growth of 6 per cent and 81 per cent to S$194 million and S$45 million respectively.

Notably, the company said that the group's revenue increased from its consumer electronics, communication and computers (3C) segment as well as the automotive segments within its advanced materials business unit. This was despite a shift in the 3C segment's peak period to the fourth quarter of 2021 and the first quarter of 2022.

Additionally, it noted that the industrial equipment business unit is looking at further penetrating the renewable energy industry by developing new equipment designs and solutions.

This was offset by a reduction in nanofabrication business, which declined 31 per cent year-on-year to S$8 million. Still, the company said that the business unit has commenced mass production of its first micro-lens array project for a new generation of wearables and production will ramp up progressively this year.

The company also noted that Sydrogen, its joint venture with an indirect wholly owned subsidiary of Temasek Holdings to carry out its hydrogen-related businesses, recognised a net loss of S$1 million.

"Sydrogen will continue to establish its foundation for technology and production capacity, and is on track to recognise initial revenue in an automotive project in the second half of FY2022," the company said.

In its outlook for the coming year, Nanofilm noted that the record performance in 2021 was achieved despite macroeconomic headwinds caused by supply chain disruptions. These supply chain bottlenecks are expected to ease to keep pace with solid customer demand, they said.

It also noted that investments made into the company's new Shanghai Plant 2, which will be approximately 2 times the size of Plant 1, will boost the group's long-term production capacity.

Said Nanofilm group chief executive Gary Ho: "This year, we will continue to strengthen our business unit-centric structure and operational excellence, while intensifying our business development and sales infrastructure.

"This will increase our sales coverage in various geographies and advance the adoption of our nanotechnology solutions across existing and new industry verticals."

Executive chairman Shi Xu also said that he is confident in the company's management team and that the company intends to capture promising opportunities such as greener composite materials, engineered optics and hydrogen fuel cell technologies and components.

Shares of Nanofilm rose 1.4 per cent or S$0.04 to close at S$2.87 on Wednesday before the results were released.

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