Nanofilm Technologies International’s share price plunged by as much as a third at the start of trading this morning, following a weaker than expected earnings reported for its 1HFY2021, that missed analysts’ expectations “by a mile”.
For the six months ended June 30, the company, one of the hottest IPOs last year, recorded earnings of $18 million, down 3.1% y-o-y, and is barely a fifth of consensus full year forecast of $85 million.
While the drag on the bottom line was attributed to expansion costs of its production facilities, the company’s revenue growth fell short of expectations too.
To add to the jitters, the company separately announced that its COO Ricky Tan has resigned - just less than two months after CEO Lee Liang Huang quit for “health reasons”.
At an earnings call this morning, deputy CEOs Gian Yi Hsen and Gary Ho revealed that while the departure of Lee was “unplanned”, the resignation of Tan was “due to a combination of factors”.
Gian and Ho said that as the company was restructured into a “BU model”, (business unit) the need for the COO role was not “as relevant” with the new structure. Gian added that “we’ve been operating without him for a couple of months, [and] the impact has been very minimal."
See: Analysts downgrade Nanofilm, cut TP on weak 1H21 results, vacant COO role
See also: Nanofilm's COO quits, less than two months after CEO; earnings down 3.1% on plant expansion costs
He was referring to the period when Tan was on sabbatical leave due to personal reasons. Ho revealed that when Tan returned from his sabbatical leave, the personal issues were resolved, but “that changed his [Tan’s] thinking in terms of what's the long term, working arrangement. Because he's 59 years old. I think he's also wanting to take [more of] a backseat.”
Ho also added Nanofilm respected Tan’s desired requirements and worked with him to explore various roles, but was not successful in coming to an agreement, leading to Tan’s departure.
“Having carefully considered the options discussed, Mr Ricky Tan decided to pursue other opportunities outside of the group,” the company adds.
Ho then revealed that as Nanofilm considered the COO role “redundant” with its reorganisation, the company will not be looking for a replacement.
Currently, executive chairman Dr Shi Xu is holding the position of interim CEO, while the group searches for a replacement.
At the earnings call, the company management reiterates that the second half will be better, due to a ramp up in new products. The second half is also seasonally a busier one.
As at 1.30 pm, shares of Nanofilm traded at $4.38. It dropped to as low as $4.05 at one point, from previous close of $5.97. Nanofilm priced its IPO last year at $2.59.
