Nanofilm Technologies Targets Growth Through Commercialisation of Deep Tech Solutions October 21, 2026
Brief Overview
Phillip Securities Research expects Nanofilm Technologies to benefit from higher demand for its functional hinge coatings driven by customer Z’s foldable phone launch in 4Q26e, whilet the company’s proprietary coating solutions are moving from R&D into commercial applications across semiconductor, industrial, and automotive sectors. The research house anticipates that the Industrial Equipment Business Unit revenue could increase more than 35% from FY25 to FY27e as products transition to commercialisation.
Investment Positives
The investment case centres on Nanofilm’s expanding opportunities across multiple business segments. In the 3C sector, customer Z’s new foldable phone model launching in 4Q26e is expected to drive demand for Nanofilm’s functional hinge coatings. Additionally, customer Z has transitioned premium-tier smartwatch housings from aluminium to titanium, expanding Nanofilm’s decorative coating product range. These new 3C programmes are expected to ramp up in 2H26e and into 2027e, potentially driving Advanced Materials Business Unit revenue up more than 25% from FY25 to FY27e.
The commercialisation of new products presents significant growth potential. Several products are reaching the commercialisation stage, particularly in printed circuit board drills, advanced packaging, and hydrogen fuel cells. Nanofilm’s rainbow tetrahedral amorphous carbon extends PCB drill bit life by 3.3x, addressing growing needs as layers increase in AI server boards. The company’s approximately 1-nanometre barrier coating providessolutions for 3D AI packaging by evenly lining deep, narrow through-silicon vias (TSVs) and through-glass vias (TGVs) that conventional sputtering struggles to coat. Notably, Sydrogen secured new business worth at least tens of millions in revenue with a leading Chinese automaker for its SydroDIAMOND hydrogen fuel cell coating.
Operational improvements are driving margin expansion. Since the founder returned as CEO in January 2025, there has been a refocus from R&D to commercialisation, workshop consolidation in Singapore and China, and prioritisation of asset utilisation. Gross margins expanded by 6 percentage points year-on-year to 39% in 1H26, the highest since FY22.
Challenges
The report does not explicitly identify specific investment risks or challenges facing Nanofilm Technologies.
Outlook
With Nanofilm’s cost base largely fixed through staff costs and depreciation making up about two-thirds of FY25 expenses, rising volumes should flow through to margins. The major capex cycle is largely complete, and new 3C, semiconductor, industrial and automotive programmes are expected to raise utilisation from 2H26e into 2027e. This should lift net margin from 4.9% in FY25 to 8.6% in FY27e, with the ramp-up and stabilisation of new programmes expected to drive net profit growth by more than 75% from FY25 to FY27e.
Recommendation & Target Price
Phillip Securities Research initiates coverage with a BUY recommendation and target price of S$1.20. The target price is based on 28x FY27e P/E, in line with peers’ average.
Frequently Asked Questions
Q: What is driving the expected growth in Nanofilm's 3C business?
A: Customer Z's new foldable phone model launching in 4Q26e is expected to drive demand for functional hinge coatings, while the transition of premium-tier smartwatch housings from aluminium to titanium expands the decorative coating product range.
Q: Which new products are reaching the commercialisation stage?
A: Several products are reaching commercialisation in printed circuit board drills, advanced packaging, and hydrogen fuel cells, including rainbow tetrahedral amorphous carbon for PCB drills and barrier coatings for AI packaging applications.
Q: How much could the Industrial Equipment Business Unit grow?
A: The IEBU revenue could increase more than 35% from FY25 to FY27e as more products move from R&D to commercialisation.
Q: What operational changes has Nanofilm implemented?
A: Since the founder returned as CEO in January 2025, there has been a refocus from R&D to commercialisation, workshop consolidation in Singapore and China, and prioritisation of asset utilisation.
Q: How are margins expected to improve?
A: Net margin is expected to lift from 4.9% in FY25 to 8.6% in FY27e, driven by rising volumes flowing through to margins as the cost base is largely fixed.
Q: What is the significance of the Sydrogen business win?
A: Sydrogen won new business worth at least tens of millions in revenue with a leading Chinese automaker for its SydroDIAMOND hydrogen fuel cell coating.
Q: What is Phillip Securities' valuation methodology?
A: The target price of S$1.20 is based on 28x FY27e P/E, in line with peers' average.
Q: What net profit growth is expected?
A: Net profit growth is expected to exceed 75% from FY25 to FY27e driven by the ramp-up and stabilisation of new programmes.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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About the author
Yik Ban Chong
Ben covers fundamental research on construction and semiconductor companies. He graduated from the National University of Singapore with a Second-Upper Honours Degree in Industrial and Systems Engineering.
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