MORNING CALL: 22/8/23

Kenanga Research said Nova Wellness Group’s FY23 core net profit was within its expectations

Transcript

00:00 Our stock in focus is Nova Wellness Group, Kenanga Research keeping its outperformed

00:06 rating on the counter with a target price of 96 cen. The stock settled yesterday at

00:11 71 cen. In its note, Kenanga said Nova's FY23 core net profit fell 10% to RM14.3 million,

00:20 which was within its expectations. The research house sees growth in FY24 being fuelled by

00:25 the gradual ramp-up of Nova's new plant and full-year impact from the introduction

00:30 of 35 new SKUs in FY22. These include six low-glycemic index bread, six health supplements

00:38 and 23 ActiveMax and Sustenex range of functional food products. Kenanga also noted that Nova

00:44 has made further inroads over the past 18 months, penetrating local public hospitals,

00:51 which currently account for less than 5% of revenue for its nutritional products. The

00:56 group also saw doubling of distributors to over 900, with an expansion target of 1,200

01:02 by FY25. Kenanga maintaining its FY24 net profit forecast at RM20.4 million and introducing

01:10 its FY25 estimate of RM23.1 million. Sales volume growth assumptions for FY24 and 25

01:18 have been unchanged at 15% and 13% respectively. Now, according to Bloomberg data, Kenanga

01:24 is the only research house with a recommendation on the stock. To recap, that's one buy with

01:29 a target price of 96 cent. Nova last traded at 71 cent, so that's a potential return

01:35 of some 35%.

01:37 [music]