Nanofilm Q1 revenue up 27% amid growth in all business units

SINGAPORE (THE BUSINESS TIMES) - Mainboard-listed Nanofilm Technologies posted a 27 per cent increase in revenue year on year in the first quarter of 2022.

In its business update released on Tuesday (April 19), the nanotechnology solutions provider noted that its advanced materials business unit contributed 81 per cent of revenue in the first quarter. The consumer electronics, communication and computers (3C) segment contributed 77.8 per cent of revenue within the unit.

"Barring any potential logistics and production challenges arising from the Covid-19 situation in China, the 3C segment's business pipeline visibility is strong, as the group enters into its typical peak season in the second half of the year," the company said.

Its nanofabrication business unit contributed 6 per cent of its revenue in the first quarter of the year. Mass production projects such as its micro-lens array project for wearables' sensors and a Fresnel lens project led the unit.

The industrial equipment business unit contributed 14 per cent of revenue in the first quarter, led by equipment sales projects as the company looks to sell equipment instead of directly providing coating services to certain markets.

The company also expects Sydrogen Energy, its joint venture with Singapore's investment company Temasek to explore solutions for using hydrogen as an energy source, to contribute revenue to the group in the second half of this year.

It noted that Sydrogen's production lines in the group's Shanghai Plant 2 have been qualified by an automotive original equipment manufacturer.

"Nanofilm's proprietary advanced materials solution enables the production of stainless steel bipolar plates, a key critical and high-cost component in proton-exchange membrane fuel cells, by potentially reducing its adoption cost while at the same time extending its longevity," the company said.

Still, the company acknowledged that the Covid-19 lockdown in Shanghai since the end of last month has affected the flow of logistics and labour. The company has two operational plants in Shanghai.

While the company has been able to continue operations in a closed-loop manufacturing arrangement with stringent health measures in place, Nanofilm said that it may affect the group's operations if the situation is prolonged.

The company also noted that while raw material costs have risen, they represent a relatively small portion of the group's cost structure. Instead, it believes that increased raw materials prices will drive stronger adoption of the group's advanced materials, which offer better performance at greater cost efficiency in their customers' end-products.

Shares of Nanofilm closed down four cents, or 1.4 per cent, at $2.76 on Tuesday, before the release of its business update.