Ada Lim of OCBC Investment Research has initiated coverage on Nanofilm Technologies International MZH . In her Nov 26 note, Lim observes that the company, which provides coating services for electronics manufacturers and other companies, is seemingly reversing a downtrend suffered in the past three years.
Lim acknowledges that the company, which operates largely out of China, faces near-term uncertainties.
Yet, the company, throughout the downturn, has continued to invest in alternative locations, beefing up capacity and capabilities, including in a new business unit focusing on capturing growth in the emerging hydrogen economy.
"Differentiated solutions, a large total market potential, and favourable secular trends support Nanofilm’s long-term growth outlook," suggests Lim.
Citing the management, Lim says that the company expects both revenue and earnings for the current FY2024, which would mark the first year of growth since FY2021.
Lim points out that Nanofilm has turned in what might be an inflexion point for its financial performance, suggesting that the worst is over.
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"Nonetheless, we would prefer to see further sequential, sustainable improvement to build up confidence around the name.
"All things considered, we initiate coverage on Nanofilm with a 'hold; rating and a fair value estimate of 76 cents," says Lim.
Nanofilm shares closed at 79 cents on Nov 26, up 1.29% for the day but down 14.67% year to date.
