KUALA LUMPUR: Nova Wellness Group Bhd made a firm debut on the ACE Market of Bursa Malaysia on Friday, opening at 66 sen, which was 11 sen above its offer price of 55 sen.
At 9.02am, shares of the pharmaceutical company was trading at 76 sen, up 12 sen.
Turnover was 12.91 million shares at prices ranging from 65 sen to 81 sen.
The FBM KLCI was down 1.14 points or 0.06% to 1,758.10. Turnover was 73.37 million shares valued at RM40.40mil, There were 109 gainers, 78 losers and 169 counters unchanged.
Under its listing exercise, its 16 million shares offered to the public were oversubscribed by 2.84 times.
Nova Wellness is involved in the development, production and sales of nutraceutical and skincare products under its own brand original equipment manufacturer (OEM) services for manufacturing dietary supplements and functional food products.
Nova Wellness raised RM44.91mil from its listing exercise, of which 36.74% of the proceeds would be to build a good manufacturing practice (GMP) compliant plant. Another 25.83% would be used for research & development activities.
About 11.13% of the proceeds would be used to expand retail market presence while 20.51% of the proceeds would be working capital while the remainder at 5.79% for listing expenses.
PublicInvestment Bank Research had accorded a fair value of 62 sen, pegging a 15 times price-to-earnings (PE) multiple to Nova’s FY2019F EPS of 4.1 sen.
“The 15 times multiple is derived from ascribing a 10% discount to average PE multiple of peers operating within the health industry.
“This is justified given Nova’s thick profit margin despite its small market capitalization and business scale.
“Earnings going forward are expected to be slightly affected due to the expiry of tax exemption, but will be cushioned by stable topline growth supported by expansion of retail market presence, new product launches as well as additional production capacity from the new plant,” said PublicInvest Research.
Meanwhile, InterPacific Research had a fair value of 61 sen.
It said the nutraceutical industry in Malaysia is forecasted to grow with the backing of the increase in awareness and demand for preventive healthcare.
In addition, Nova Wellness is also looking to expand its presence in the skincare products segment.
“We favour Nova Wellness for the reasons:
1) Nova has an in-house R&D department;
2) An experienced management team;
3) Intended dividend payout policy of 30% offers a good yield; and
4) Capacity expansion after new GMP-compliant production facility is ready,” it said.