Hiccup in end demand growth
Cut earnings by 5% on near-term demand weakness
Recovery in supply but end demand dampened. Nanofilm was affected by the supply chain disruptions last year while demand was strong. With the worst in supply chain disruptions likely behind us, we could see a strong earnings rebound. However, given the recent weakness in end market demand for electronic devices, we have toned down our earnings projection for FY22F and FY23F.
Earnings and Recommendation
Cut FY22F/23F earnings by 5% each. With the 3C segment contributing at least 50% to group revenue, weaker demand could affect the bottom line. We have revised down earnings for FY22F and FY23F by 5% each. We now project earnings growth of 22%/17% for FY22F/23F, vs. 29%/17% previously.
Maintain BUY with lower TP of S$3.70. We have switched the valuation methodology from PEG to a PE basis, to be in line with other technology stocks in our coverage. Our new TP of S$3.70 is pegged to 32x PE on FY22F earnings. This level is -0.5SD from the average since listing and also coincides with the PE upon listing in October 2020. Maintain BUY.