Friday 12 Apr 2024
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KUALA LUMPUR (Nov 26): Shares of Nova MSC Bhd rose as much as 7.89% in the early morning trades after The Edge Research said the Goods and Services Tax (GST) may raise investors interest towards the counter.

As of 11.18am, the counter gave up some of its gaining momentum to settle at 20 sen, up 1 sen or 5.26% as compared to a high of 20.5 sen it recorded earlier.

Some 45 million shares were seen having been traded, making it the third largest traded counter across the bourse.

With the current price, Nova MSC has a market capitalisation of RM77.5 million.

Nova MSC was featured as a Stock with Momentum in The Edge Financial Daily today.

The Edge Research said in a report that the share price of Nova MSC had almost doubled to a 3-year high of 19 sen over the last month, with the stock gaining 8.6% yesterday.

"However, it is unclear if the rally is sustainable, or whether Nova is just another stock riding high on GST-themed investing that has raised interest in the IT companies," it said.

According to the report, it said the financial performance appears unexciting, with annual turnover hovering between RM22 million and RM33 million since financial year ending March 2010.

"Nova fell into red in FY2012 with net loss of RM4.4 million, which widened slightly to RM4.6 million before returning to black in FY2014 with a net profit of RM726,491," The Edge Research said.

"Nevertheless, investors should note that stripping out a writeback of impairment loss for intangibles of RM0.9 million would tip the company back to being loss-making for FY2014," it added.

For the 1QFY15, The Edge Research said, the company saw its revenue grew 5% to RM8.7 million, which increased net profit by 23% to RM449,000.

"Its orderbook as of June 30, 2014 was almost double that of the immediate preceding quarter at RM46.8 million- enough to sustain the company for around one-and-a-half-year," it noted.

"Despite its lacklustre financial, Nova's stock trades at a premium at three times book with a trailing 12-month price to earnings ratio (PER) of 88.1 times. Net debt was RM0.6 million as at June 30, 2014, with a low 2.8 net gearing ratio," it added.

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