We are expecting a strong rebound in earnings in 2H21 vs 1H21. In fact there is a high chance that they can beat DBS estimates of S$55.6m net profit for FY21E.
Fundamentally, though the supply disruption issues still persist, Nanofilm’s customers are generally seeing an improvement from 3Q21 and there is no drop in orders from their customers. The group is also able to fulfil these orders as their plant 2 in Shanghai is already in full operation.
On the share price performance, the group has transferred the ownership of some shares (about 8m to 9m) back to their employees which include some retirees. Suspect some could be sold in the market recently. Nanofilm has also started share buyback in the last 1 to 2 weeks.
In the mid to longer term, believe the group would be able to reap the returns from their current investments, including, Shanghai plant 2, which pave the way for the group to take on more projects from new and existing customers, and also Sydrogen, which can provide coatings for bi-polar plates for cars.