Small Cap Trading: Nova Wellness (Malaysia)

Company Profile

Nova Wellness Group Bhd is engaged in providing dietary supplements which include vitamin, mineral, and herbal supplements, functional food products under brand name activmax and sustinex, and skincare products sold under brands novavis and SP8.

Quick Market Stats

Fundamentals

Net cash + Growing EPS & Net Asset Per Share and ROE > 10%

Technicals

Appears to be on uptrend. Resistance @ $1.25, whilst support at $0.82

Latest Developments / Prospects

Transfer to Main Market: We refer to the announcement made on 7 September 2020 in relation to the Proposals (“Announcement”). Unless otherwise defined, the definition set out in the Announcement shall apply herein. On behalf of the Board, Kenanga IB wishes to inform that the application in relation to the Proposed Transfer has been submitted to the SC today. 

Indicative Desktop Valuation

Strictly for illustrative purpose only

Key assumptions

  • EPS : RM0.04
  • EPS growth rate @ 10% p.a for next 10 years
  • Discount rate @ 10%
  • Terminal growth rate 3%
  • Estimated indicative fair value = RM0.99 per share

Final Thoughts: In this case, the desktop level indicative fair value of RM0.99 per share is relatively lower than the current share price of RM1.05 per share. However, the current price trend appears to be on an ‘uptrend’. Hence, I will consider this stock as a short term trading opportunity (instead of a long term investing candidate).

Disclaimer: This post is not an investment advice or endorsement. Please refer to the general disclaimer of this blog.

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