Nanofilm Technologies International and Yangzijiang Financial Holding (YFH) are two closely-watched companies that have resumed share buybacks following their respective firsthalf earnings announcements.
Nanofilm, which provides its coating for parts using its proprietary technology, bought back a total of 271,800 shares between Aug 12 and Aug 17. The company paid between $2.09 and $2.29 for the shares.
In addition, the company’s founder and executive chairman Shi Xu, on Aug 15 acquired 500,000 shares via a vehicle he jointly owns with his wife Jin Xiao Qun. This brings Shi’s total interest to nearly 337.1 million shares, equivalent to 51.07%, up from 50.99% previously.
The last time Nanofilm did buyback was back in January. Over four days, the company acquired a total of two million shares — with 500,000 shares bought each day — between $3.36 and $3.50 each.
On Aug 11, the company announced earnings of $18.8 million for 1HFY2022 ended June 30, up 5.1% y-o-y. Revenue in the same period was $111.3 million, up 15.3% y-o-y.
The company plans to pay a higher interim dividend of 1.1 cents per share, versus one cent paid for 1HFY2021.
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Analysts were earlier bracing for a possible slowdown in the company’s numbers as its key operating centre is in Shanghai which was locked down for two months to combat its worst Covid outbreak in April and May.
In its earnings commentary, CEO Gary Ho says that the company has “mitigated and overcome these short-term challenges well.”
The company claims that because of how labour and logistics flow in Shanghai were hampered, it incurred a revenue loss of some $8 million. In its outlook, Nanofilm is positive that its so-called “deep-tech solutions” can capture business opportunities in markets across different phases of growth and that the company is independent of short-term macroeconomic trends.
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Following the earnings announcement, DBS Group Research’s Lim Lee Keng has kept a positive view on the stock. She notes that the company is steadily expanding and diversifying in terms of its customers, product categories as well as production sites. “The group is well positioned to capture a higher market share with the investments made,” writes Ling, who has a “buy” call and a $3.21 target price.
“With the worst in supply chain disruptions likely behind us, barring any further lockdowns globally, the group is expected to rebound strongly. Nanofilm has not seen any indication of a cut in customer orders so far,” notes Ling.
Following the earnings announcement, DBS Group Research’s Lim Lee Keng is staying positive about the stock, with a ‘buy” call and $3.21 target price.
She believes that Nanofilm, included in Apple’s 2021 supplier list, may benefit from a possible production shift by Apple’s manufacturing contractors from China to Vietnam. Nanofilm has a facility at Hai Duong, 60km away from Bac Giang, where major Apple manufacturing contractors Hon Hai and Luxsure operate. “We expect a stronger 2H performance as supply chain disruptions unclog,” says Ling.
From shipbuilding to asset management
Similar to Nanofilm, YFH has started buying back its shares right after reporting its 1HFY2022 ended June earnings. Between Aug 12 and 17, the company bought back 26 million shares at prices ranging from 35 to 39 cents.
The investment firm, which was spun off from Yangzijiang Shipbuilding (Holdings), reported on Aug 11 its maiden earnings of $136.4 million, down 30.6% y-o-y. Total income in the same period was down 27.3% y-o-y to $173.8 million.
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Breaking it down, interest income was down 3% y-o-y to $184.9 million due to a lower average debt investments balance in 1HFY2022. Non-interest income, meanwhile, reversed to a loss of $11.1 million for 1HFY2022 from $48.5 million in 1HFY2021. The reversal was mainly because of a lower fair value of YFH’s investments in financial assets.
Other reasons for the lower numbers came from overall market losses from listed shares within the private equity funds invested by the company.
YFH on June 8 announced a $200 million share buyback programme. The share buyback was something the company said it would do as it got ready for its public listing. As at June 30, YFH has an AUM of $4.6 billion. It holds net assets worth some $4.23 billion and its net asset value per share was $1.07.
Prior to Aug 12, YFH had spent just $9 million on its share buybacks. The company maintains it is on track to achieve its long-term target of allocating 50% of its AUM in Singapore for offshore investments, as it reduces its exposure to China.
“We continue to like YFH as a yield stock,” says CGS-CIMB’s Liew Siew Khee, referring to the company’s dividend payout ratio guidance of 40%, which could translate into a FY2023 yield of 8.64%. Lim is keeping her “add” call and 74 cents target price on the stock.
