• After several challenging years, the company is showing signs of a financial recovery --- revenue rose 4% to S$187 million in 9M2026, while EBITDA jumped 26% to S$54 million. • More encouragingly, its 3Q gross profit margin reached 45%, up five percentage points, thanks to automation, tighter cost controls and more efficient operations, despite sluggish sales in its core consumer business.
Source: Bloomberg, Company, OCBC Research
• The outlook for 2027 is promising.
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Excerpts from OCBC Research report
Analyst: Lai Gene Lih, CFA
• 9M26 EBITDA of c.SGD54m (+c.26% YoY) was in line with our expectations, as strong margin expansion offset softer-than-expected Advanced Materials – Consumer (AMC) revenue
• Consequently, we cut FY26-28E revenue by 6%; FY26-28E PATMI are unchanged as we adjust margin assumptions upwards |
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| Investment thesis |
We see Nanofilm (NTI) as a compelling operating leverage story entering its payoff phase.
Following a sustained period of heavy investments, the quality and breadth of growth is improving across existing and new customer accounts.
Beyond continued expansion within its core consumer domains, NTI continues to strengthen its proposition in highly attractive end-markets such as semiconductor tools, data centre and co-packaged optics (CPO).
As we see this to be a multi-year earnings expansion story, execution should be evaluated based on the broader horizon of NTI’s progress in establishing a definitive foothold across these diversified domains.
As progress may be non-linear, episodic share price pullbacks should be viewed as opportunities to BUY dips.
| Investment summary |
• 9M26 EBITDA in line – 9M26 revenue of SGD187m (+4% YoY; 67% of our previous FY26E forecast) missed our expectations.
Notwithstanding, EBITDA of c.SGD54m (+c.26% YoY) was in line (forming 74% of our previous FY26E). 3Q26 revenue grew 2% YoY to SGD74m, as strong growth in the Industrial Equipment Business Unit (IEBU, +66% YoY) on AI printed circuit board (PCB) drill bit coating equipment and the Nanofabrication Business Unit (NFBU, +120% YoY) on micro-lens array (MLA) sensor demand was partly offset by AMC (-19% YoY) on substrate changes at the key customer and the flagship ramp-up being delayed to late 3Q26.
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Broker |
Target Price (S$) |
Basis |
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OCBC |
1.35 |
31× FY27E P/E |
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DBS |
1.12 |
26× FY27F P/E |
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UOB Kay Hian |
1.09 |
24× FY27F P/E |
• Margins improve despite softer topline – 3Q26 gross margin rose 5ppt YoY to 45%, while EBITDA margin rose 5ppt YoY to 32%, which management attributes to automation and operational optimisation. For 9M26, gross and EBITDA margins were 41% and 29% respectively, both up 5ppt YoY.
• Transitory AMC softness; other segments buoyant – Management expects AMC smartphone contributions to soften temporarily, partly cushioned by the flagship programme, which is now at full capacity.
Engineering development on new substrates for a major component has commenced, targeting mass production in 2027, when the Advanced Materials Business Unit (AMBU) is expected to return to YoY growth, although the programme has yet to be secured.
Elsewhere, rising AI demand should drive further IEBU orders for PCB drill bit coating equipment, while NFBU has clear revenue visibility on its key smartwatch MLA programme into 1H27.
NFBU is looking to harvest across other brands and technology platforms, first from smartphones and watches, followed by automotive and smart eyewear.
Following the softer AMC topline, we cut FY26-28E revenue forecasts by 6%.
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 See also: NANOFILM: Has 31% Pullback Created a Better Risk-Reward Setup? |
