[%BRRc%]
Research by Malacca Securities
Sell - Target Price RM0.73

"Declined sales order and increased expenses dragged margin"

• As the reported earnings came in below our expectations, we slashed the earnings forecast by 12.9%, 11.2%, and 15.2% to RM14.8m, RM16.6m, and RM17.8m for FY23f, FY24f, and FY25f respectively. The forecasted earnings take into account the slower than expected growth on the contribution from House Brand segment, as well as the higher contribution from OEM segment.

• We remained our SELL recommendation on NOVA, with a revised target price of RM0.73 (previous TP: RM0.75) as we rolled over to FY24f forecasted earnings. The target price is derived by ascribing a P/E of 14.0x to FY24f EPS of 5.2 sen. Meanwhile, NOVA remained committed to deliver its dividend policy of distributing not less than 30.0% of its annual net profit after tax.

• Risks to our recommendation include the possibility of supply chain disruptions, both domestically and internationally, which may impact the availability of raw materials. Besides, the group is exposed to foreign currency risk relating to USD as a significant portion of its raw material purchases from abroad are denominated in USD. Any depreciation in ringgit against USD will result in increased costs

Analyst:
Ng Hui Yee
[%sVZK%]

$KLSE-NOVA
Research by Malacca Securities
Sell - Target Price RM0.73

"Declined sales order and increased expenses dragged margin"

• As the reported earnings came in below our expectations, we slashed the earnings forecast by 12.9%, 11.2%, and 15.2% to RM14.8m, RM16.6m, and RM17.8m for FY23f, FY24f, and FY25f respectively. The forecasted earnings take into account the slower than expected growth on the contribution from House Brand segment, as well as the higher contribution from OEM segment.

• We remained our SELL recommendation on NOVA, with a revised target price of RM0.73 (previous TP: RM0.75) as we rolled over to FY24f forecasted earnings. The target price is derived by ascribing a P/E of 14.0x to FY24f EPS of 5.2 sen. Meanwhile, NOVA remained committed to deliver its dividend policy of distributing not less than 30.0% of its annual net profit after tax.

• Risks to our recommendation include the possibility of supply chain disruptions, both domestically and internationally, which may impact the availability of raw materials. Besides, the group is exposed to foreign currency risk relating to USD as a significant portion of its raw material purchases from abroad are denominated in USD. Any depreciation in ringgit against USD will result in increased costs

Analyst:
Ng Hui Yee
hyng@msec.com.my

$NOVA / 0201 (NOVA WELLNESS GROUP BERHAD)