Nova Wellness Group Bhd - Launched Nova Health Mart and ETERNER

Date: 
2025-01-01
Firm: 
PUBLIC BANK
Stock: 
Price Target: 
0.305
Price Call: 
SELL
Last Price: 
0.435
Upside/Downside: 
-0.13 (29.89%)

Summary

  • Based on its latest annual report, we understand that NOVA has launched two new initiatives: (i) the Nova Health Mart Licensing Programme and (ii) direct selling through multi-level marketing under the brand "ETERNER," both of which have the potential to drive revenue and earnings growth.
  • According to NOVA, ETERNER focuses on vibrant living, longevity, and natural wellness, offering products like preventive nutrition, protective skincare, and essential oils enriched with resveratrol, a powerful antioxidant. Individuals can join ETERNER as either distributors or customers.

ETERNER's Best sellers

  • Outlook: While we anticipate some positive developments in NOVA's direct selling segment, the ETERNER journey remains in its early stages, with measurable impacts likely to emerge only after a few quarters. This is due to the highly competitive direct selling market in Malaysia, where established brands are already ahead in offering age-defying products. Meanwhile, alongside the Nova Pharmacy Licensing Programme, NOVA has introduced the Nova Health Mart Licensing Programme, providing opportunities to own a health mart and expand its business. While these initiatives point toward business growth through an expanded distributorship and product offerings, based on recent quarterly results, we believe cost control is a more critical focus at this stage.

Valuation & Recommendation

  • Forecast. FY25f earnings are maintained at RM6.9m.
  • Maintain SELL with TP of RM0.305. We maintain a SELL recommendation with a target price of RM0.305, based on a P/E multiple of 14.0x applied to FY25f EPS of 2.17 sen. NOVA's dividend policy commits to distributing at least 30% of its net profit after tax.
  • Key risks include (i) Supply chain disruptions - Potential shortages of raw materials. (ii) Foreign currency risk - Exposure to USD-denominated raw material purchases and (iii) Demand slowdown - High inflationary pressures may prompt consumers to switch to more affordable brands.

Source: PublicInvest Research - 1 Jan 2025

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