Forensic Analyst

Jason Yap, CFA

Forensic Accounting

<p><a href="https://www.smartkarma.com/entities/nanofilm-technologies-international" target="_blank" data-smartkarma-citation="entities:29700:1" rel="noopener">Nanofilm (NANO SP)</a> is a Singapore-based nanotechnology solutions provider. Its principal business is the manufacturing and distribution of advanced materials and nanoproducts for the consumer electronics, communications, and automotive industries.</p><p>Founded in 1999 by Executive Chairman Dr Shi Xu, who was then an associate professor at Nanyang Technology University (NTU)'s School of Electrical and Electronic Engineering, Nanofilm raised approximately SGD470.1 million in IPO proceeds in October 2020.</p><p>During its short history as a public company, the company had to endure significant regulator and investor scrutiny following sub-par H1 2021 results and senior management changes, including the abrupt resignations of former CEO, Mr Lee Liang Huang and former COO, Mr Ricky Tan, in quick succession (June and August 2021 respectively). </p><p>Dr Shi, assumed the role of interim CEO, until the <a href="https://www.businesstimes.com.sg/companies-markets/nanofilm-appoints-new-ceo-says-it-continues-to-see-growth-momentum-for-business#:~:text=MAINBOARD%2DLISTED%20Nanofilm%20Technologies%20International,on%20Thursday%20(Oct%2014)." target="_blank" rel="noopener">recent appointment</a> of Mr Gary Ho Hock Yong, as Nanofilm's CEO.  Dr Shi served as the company's CEO from 1999 to 2017. </p><p>On 14 October 2021, Nanofilm provided a business update for Q3 2021, which highlighted continued growth momentum despite a volatile business environment, amid the COVID-19 pandemic and supply chain disruptions. </p><p>In this Insight, we examine Nanofilm's financial and business risks based on its IPO prospectus disclosures and certain new risks that emerged given latest available facts and developments, including but not limited to the following: </p><ol>
<li>High Customer Concentration  </li>
<li>Competition from Alternative Products and Solutions</li>
<li>Significant Management Changes </li>
<li>Management Share Disposals </li>
</ol><p>Accordingly, we highlight the key areas of concern for investors. </p>

Nanofilm (NANO SP) is a Singapore-based nanotechnology solutions provider. Its principal business is the manufacturing and distribution of advanced materials and nanoproducts for the consumer electronics, communications, and automotive industries.Founded in 1999 by Executive Chairman Dr Shi Xu, who was then an associate professor at Nanyang Technology University (NTU)'s School of Electrical and Electronic Engineering, Nanofilm raised approximately SGD470.1 million in IPO proceeds in October 2020.During its short history as a public company, the company had to endure significant regulator and investor scrutiny following sub-par H1 2021 results and senior management changes, including the abrupt resignations of former CEO, Mr Lee Liang Huang and former COO, Mr Ricky Tan, in quick succession (June and August 2021 respectively). Dr Shi, assumed the role of interim CEO, until the recent appointment of Mr Gary Ho Hock Yong, as Nanofilm's CEO.  Dr Shi served as the company's CEO from 1999 to 2017. On 14 October 2021, Nanofilm provided a business update for Q3 2021, which highlighted continued growth momentum despite a volatile business environment, amid the COVID-19 pandemic and supply chain disruptions. In this Insight, we examine Nanofilm's financial and business risks based on its IPO prospectus disclosures and certain new risks that emerged given latest available facts and developments, including but not limited to the following: 
High Customer Concentration  
Competition from Alternative Products and Solutions
Significant Management Changes 
Management Share Disposals 
Accordingly, we highlight the key areas of concern for investors. 

Understanding Nanofilm (Nano SP)'s 3Cs - Customer Concentration, Competition and Management Changes

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/nanofilm-technologies-international" target="_blank" data-smartkarma-citation="entities:29700:1" rel="noopener">Nanofilm Technologies International (NTI SP)</a> designs, manufactures, and assembles its proprietary coating equipment (and auxiliary equipment and spare parts), and develops and provides its surface solutions and advanced materials in-house. At the proposed IPO price of S$2.59 per share, Nanofilm will have a market cap of S$1.7 billion ($1.3 billion). Nanofilm will raise proceeds of S$470 million ($346 million) with primary/secondary spilt of 42.5%/57.5%. Thirteen cornerstone investors will subscriber for 104.3 million of the offer shares.  </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/nanofilm-technologies-ipo-initiation-layer-by-layer" target="_blank" rel="noopener">our initiation note</a>, we highlighted that Nanofilm is an attractive growth story underpinned by proprietary technology, growing addressable markets, high customer stickiness, attractive margin profile and strong cash conversion. Our valuation analysis suggests that the IPO valuation is attractive. </p></div></div></div>

Nanofilm Technologies International (NTI SP) designs, manufactures, and assembles its proprietary coating equipment (and auxiliary equipment and spare parts), and develops and provides its surface solutions and advanced materials in-house. At the proposed IPO price of S$2.59 per share, Nanofilm will have a market cap of S$1.7 billion ($1.3 billion). Nanofilm will raise proceeds of S$470 million ($346 million) with primary/secondary spilt of 42.5%/57.5%. Thirteen cornerstone investors will subscriber for 104.3 million of the offer shares.  In our initiation note, we highlighted that Nanofilm is an attractive growth story underpinned by proprietary technology, growing addressable markets, high customer stickiness, attractive margin profile and strong cash conversion. Our valuation analysis suggests that the IPO valuation is attractive. 

Nanofilm Technologies IPO: Valuation Insights

Switzerland

OC Oerlikon Corporation AG manufactures industrial equipment. The Company produces vacuum pumps, equipment to supply PVD coatings for tools and precision components, man-made textile machines, and transmission driveline equipment.

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Oc Oerlikon Corp Ag (OERL SW)

Understanding Nanofilm (Nano SP)'s 3Cs - Customer Concentration, Competition and Management Changes

In its short listed history, Nanofilm endured significant regulator and investor scrutiny following sub-par results, management share disposals and...

Jason Yap, CFA

Nanofilm Technologies IPO: Valuation Insights

Nanofilm will raise proceeds of S$470 million ($346 million) with primary/secondary spilt of 42.5%/57.5%. Our valuation analysis suggests that the...

Arun George

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