We added another 30,000 shares of Hovid at RM0.23/share yesterday, bringing the total number of Hovid shares in our Growth model portfolio to 60,000 shares (with a lower average cost now of RM0.245 (vs. RM0.26 previously). The stock has fallen 12% YTD mainly due to its tedious 1H13 results. However, the group’s prospect remains intact in our view judging by its continuous effort in exploring new overseas markets and introducing the registration of new products. Meanwhile, its new plant, which is located next to its existing plant, is likely to commence operation this year and will provide the group with a higher capacity to cater for the additional demand from its new overseas markets. Valuation-wise, the group is still trading at an undemanding FY13 PER of 8.5x, lower than the small cap pharmaceutical sector’s average PER valuation of 9.8x. Our target price is at RM0.26, based on a targeted FY13 PER

of 9.3x, offering a 13% upside from here.

 

Source: Kenanga