Sell Rating for Nanofilm Technologies: Margin Weakness and Trade Tariff Risks

CGS-CIMB analyst William Tng has reiterated their bearish stance on MZH stock, giving a Sell rating yesterday.

William Tng has given his Sell rating due to a combination of factors impacting Nanofilm Technologies International Ltd. Despite a 12% year-on-year increase in revenue for the first quarter of 2025, the company’s gross margin has weakened, dropping from 33% in the previous year to over 27%. This decline is attributed to a softer contribution from the IEBU segment, which saw a significant decrease in revenue due to the timing of equipment deliveries.
Additionally, the potential indirect impact of newly announced US trade tariffs poses a risk to the company’s net profit outlook. The uncertainty surrounding the tariffs has led to a reduction in earnings per share forecasts for the fiscal years 2025 to 2027 by approximately 38-41%. Consequently, the target price for Nanofilm’s stock has been lowered to S$0.49, reflecting a more conservative valuation approach. The company’s high customer concentration and potential for increased operating costs as it expands into new markets further contribute to the downside risks, justifying the Sell rating.

According to TipRanks, Tng is a 4-star analyst with an average return of 11.7% and a 74.51% success rate.

In another report released yesterday, UOB Kay Hian also maintained a Sell rating on the stock with a S$0.46 price target.