"At its 1HFY2025 results briefing, management sounded optimistic about maintaining growth across its business units for the rest of this year, in our view – notwithstanding a still uncertain macroeconomic environment," she adds.
Having said so, Lim is keeping her earnings estimates for now although she has slightly raised her valuation multiple from 20.6x FY2026 earnings to 23x.
She points out that the $5 billion market boosting programme is supporting a re-rating of small and mid-cap stocks, including Nanofilm.
"We think that much of the share price run-up this year has been driven by sentiment rather than a significant improvement in fundamentals, and therefore advocate for investors to exercise caution," warns Lim.
At 82 cents as of Sept 11, this is a level that has already exceeded her earlier fair value estimate of 72 cents by more than 10%, thereby prompting her to re-examine her assumptions and rating.
"The company is likely to experience less pronounced seasonality this year due to earlier ramp-up of new projects, while operational efficiencies may drive improvements in gross profit margins going forward.
"Nonetheless, near-term earnings recovery may be gradual," says Lim, who is maintaining her "hold" call.
Nanofilm Technologies shares closed at 81 cents on Sept 11, down 1.83% for the day but up 4.55% year to date.
