Top Stock Market Highlights of the Week: Nanofilm Technologies, Wilmar International and Digital Core REIT

Welcome to this week’s edition of top stock market highlights.

Nanofilm Technologies (SGX: MZH)

Nanofilm Technologies reported an encouraging business update for its 2024 first quarter (1Q 2024).

Revenue came in at S$39 million for the group, up 19% year on year, driven principally by the consumer business.

Advanced Materials Business Unit, or AMBU, saw revenue jump 41% year on year to S$34.7 million, making up 89% of Nanofilm Technologies’ overall revenue for 1Q 2024.

Within AMBU, the 3C sector, represented by Computer, Communication and Consumer, saw a 51% year-on-year revenue jump while the Automotive segment recorded a 24% year on year revenue increase.

Nanofilm’s onboarding of a new customer within the Smartphone sub-segment helped to contribute significantly to revenue growth within AMBU.

The group’s recently completed acquisition of AxynTeC also contributed to this growth by demonstrating a 21% year on year revenue jump.

The Nanofabrication Business Unit, which contributed 5% of group revenue, saw revenue remain flat year on year in line with its projects’ current production status.

As for its Industrial Equipment Business Unit or IEBU, revenue plunged by 66% year on year because of a lower order book.

However, IEBU also made up just 5% of the group’s total revenue.

Gross profit also improved, rising from S$9.8 million in the prior year to S$12.8 million in 1Q 2024.

Gross margin increased slightly from 30% to 33% over the same period.

Nanofilm is expanding its production capabilities with preparation in India for small-batch production commencing in the second half of 2024.

Meanwhile, in Vietnam, the group has completed renovation for Site 2 Phase One and is commissioning equipment for initial production to start in the current quarter.

Wilmar International Limited (SGX: F34)

Wilmar confirmed that a tank terminal facility owned by its 80% Ukrainian subsidiary was struck by a missile on 19 April.

The group reported that there were no casualties arising from this incident.

After an assessment of the damage, the agri-business giant estimated that it would take approximately six months to rebuild the oil tanks destroyed in the missile attack.

Investors should note that Wilmar operates a chain of facilities and processing plants across different markets as part of its integrated business strategy.

Fortunately, the group assured that there will be no material impact on its 2024 results.

In the coming weeks, operations will resume once clearances are obtained from the relevant authorities.

Digital Core REIT (SGX: DCRU)

Digital Core REIT, or DCR, also reported its 1Q 2024 business update.

Revenue dipped by 8.2% year on year to US$24.6 million while net property income fell by 9.5% year on year to US$15.8 million.

Distributable income, however, dipped by just 2.4% year on year to US$10.6 million.

The data centre REIT’s aggregate leverage stood at just 35.1% as of 31 March 2024 with 93% of its loans on fixed rates.

The average cost of debt stood at 3.9% with an interest coverage ratio of 3.2 times.

Debt headroom stood at US$115 million before the REIT hit the 40% gearing level.

The REIT’s occupancy stood high at 95% as of 31 March 2024 but there was still customer concentration with its largest tenant, a Fortune 500 software company, making up nearly 38% of annualised rental income.

Its recent acquisitions of an additional 10% stake in an Osaka data centre, coupled with the acquisition of an additional 24.9% interest in the Frankfurt facility, will generate a 5.6% addition to the REIT’s distribution per unit (DPU).

Meanwhile, DCR also repurchased 7.9 million units from the market at an average price of US$0.579, helping to generate a DPU uplift of 0.6%.

DCR’s sponsor, Digital Realty Trust (NYSE: DLR), still has a US$15 billion pipeline of data centre assets that can be injected into the former in the future.

DCR also has a right-of-first-refusal on more than 300 data centres with a minimum occupancy of at least 90% and with an average rental rate comparable to the market.

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Disclosure: Royston Yang owns shares of Digital Core REIT.

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