For Thin Film Electronics ASA (SG:THIN), 2016 has been principally dominated by a steadily growing list of new client partnerships, preparations for the move to the new R2R plant and a successful $61.7m funding round. The restart of EAS orders in January adds to revenue security this year. THIN is also shortly to scale up go-to-market activities for the Smart ElastiTag solution with hang-tag specialist, Bedford Industries, including a joint marketing road-show. This is expected to accelerate new NFC product field trial numbers in 2017, helped also by the recent launch of THIN’s cloud-based software portal CNECT. Earnings for 2016 were affected by higher than expected stockpiling costs and one-off FX losses, with no material impact on our forecasts. Our DCF valuation remains NOK8.19 per share.
Fourth-quarter results affected by one-offs
Thinfilm reported Q4 revenue of $1.0m, up 23% q-o-q, reflecting increased contributions from a number of ongoing projects. EAS production ahead of the expected disruption from the move to the new site in Q216 was higher than we had forecast, leading to higher than expected expensed material costs. The group also incurred unexpectedly high forex losses due to the impact of the weak year-end NOK on the cash reserves boosted by the December equity raising. The recent completion of purchases of EAS roll-to-roll (R2R) equipment for the new production facility completes around one-third of the capex plans for the new R2R facility. Management has stated that the outlay was within 10% of the run-rate expected for the total planned $32m total R2R capex outlay.
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