Nanofilm reports rise in revenue and earnings in 'challenging' 1HFY22, raises dividend by 10%

Lim Hui Jie
4-min read

Its dividend for 1HFY2022 rose to 1.1 cents per share, up from 10% the same period a year ago.

Nanotechnology solutions company Nanofilm has reported revenue of $111.3 million for its 1HFY2022 ended June 30, a 15.3% jump y-o-y.

Earnings also grew 5.1% to $18.8 million, a 5.1% rise y-o-y.

In a release, Nanofilm said this was achieved despite the “challenging operating environment” during the Shanghai Covid-19 lockdown.

The lockdown resulted in a loss of revenues across all business units, a continued incurrence of direct and fixed overheads, and additional Covid-19 related expenses of S$2.5 million from manpower & logistic restrictions.

It added its production capacity in Shanghai was also hampered by a lack of labour and logistics flow, resulting in an estimated $8 million revenue loss from these restrictions.

Nanofilm also faced a $1.9 million or 51% y-o-y drop in other operating income for 1HFY2022, largely due to a reduction and timing difference in recognition of government grants and incentives;

Meanwhile, depreciation & amortisation expenses grew 30% y-o-y to $3.6 million, and Sydrogen, its joint venture with state investment firm Temasek Holdings, saw a net loss of $1.2 million for expansionary expenses.

Nanofilm CEO Gary Ho said that the company have “mitigated and overcome these short-term challenges well,” assuring shareholders that it will “continue to focus our energies on our BU-driven strategy that will fuel our growth for the longer term.”

Ho also added that the company strategy will be to “deliver positive results, with deeper and wider application expansion of our nanotechnology solutions with existing and new customers across different industrial verticals.”

Dividend rise

Nanofilm has also proposed an interim dividend of 1.1 cents per share, a 10% rise from 1HFY2021’s figure of 1 cent.

The company says this was after considering its “well-capitalised balance sheet and cash-generating operations,” adding that its strong financial position makes it uniquely positioned to select and expand its business in areas with attractive returns, including tie-ups in joint ventures (JVs) or M&As, navigate the macroeconomic environment, and deliver continuing sustainable growth.

All segments firing 

In its release, Nanofilm revealed all its business segments have reported increases in revenue. Most notably, its nanofabrication business unit (NFBU) grew 336.8% to $7.3 million from $1.7 million in 1HFY2021, largely due to a production ramp-up.

Its Advanced Materials Business Unit (AMBU) still provided the lion’s share of revenue, recording $84.5 million for 1HFY2022, a 11.3% rise y-o-y.

Elsewhere, Nanofilm’s industrial equipment business unit (IEBU) contributed $19.5 million to the revenue for 1HFY2022, which was a 2.4% increase from $19 million in 1HFY2021, with new contributions from Miller Technologies which was acquired in October 2021.

Sydrogen, its hydrogen fuel cell joint venture with Temasek, achieved its maiden revenue of $15,000 in 1HFY2022 with the provision of coating services for a customer, with Nanofilm saying that “while Sydrogen has yet to make a material financial contribution, it has made a significant “Zero to One” breakthrough.”

Optimistic outlook 

Moving forward, Nanofilm is optimistic about the outlook of the markets it serves and believes that its deep-tech solutions will address the business opportunities available in these markets.

Nanofilm says it remains focused on executing its growth strategy in the following key strategic areas, namely, geographical diversification and coverage, new segments with capability and product expansion, JVs and M&As, as well as R&D and engineering product development.

Most notably, Nanofilm revealed that it will be expanding its coating services footprint with a coating facility in Osaka, Japan in the second half of 2022.

It is currently in the midst of qualifying its advanced materials solutions with a customer for application on ceramic products.

In Singapore, Nanofilm will be expanding its Sydrogen, AMBU and IEBU production capacity at its Ayer Rajah Crescent location, as well as moving its new corporate headquarters in the fourth quarter and setting up the Nanofab engineering centre, at Tai Seng Drive.

Separately, Nanofilm also unveiled its near term objective for a joint venture. It says it is in “active discussion” with a local strategic partner to set up a JV for the advanced batteries components for EVs in China.

Shares of Nanofilm closed on Aug 11 at $2.11, up five cents or 2.43% higher than its previous close.

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