Moderating Growth

Latest quarterly result of Hovid

Latest Quarterly Results

We posted our first article about Malaysian-listed pharmaceutical / consumer product manufacturer company, Hovid Berhad (“Hovid”) in see link . The company has recently reported its financial period ended 30 June 2016 on 30 August 2016.

Latest FY16 unaudited financial result seem to suggest that the growth rate for the Company appears to be moderating. Further, recent volatility in exchange rate has led to higher variability in earnings.

Hovid_Financials.png

Nevertheless, the Company expects its business outlook to be satisfactory:

Hovid_Outlook.png

Defining Relationship Between Hovid and Hovid-W

The share prices of both the Company’s ordinary shares and warrants have declined since reaching their peak in 2015:

Hovid & Warrant_TS

Based on a simple regression analysis between Hovid and Hovid Warrant, the current price of Hovid Warrant appears to beĀ  relatively lower than the predicted value (predicted RM0.227 vs actual RM0.21 per warrant) as per the regression analysis. At Hovid’s current price of RM0.21 per share, the 95%-confidence interval for Hovid Warrant ranges from RM0.195 to RM0.260 per warrant.

Regression relationship:

Forecast price of Hovid Warrant = -0.0767470 + 0.779978 (share price of Hovid)

Hovid Vs WarrantHovid_Regression

Determining Forecast Price Range

Based on a simple desktop analysis, assuming price-to-earning ratio of 17.0x (based on Hovid’s average PER since 1 Jan 2015) and forecast FY17 EPS of between RM0.023 – RM0.024 per share, it is anticipated that Hovid may possibly trade between a range of RM0.39 – RM0.41 per share. Using the regression relationship established above, this will translate into potential forecast price range for Hovid Warrant of between RM0.233 and RM0.245 per warrant.

Forecast Price.png

It is important to emphasise that the above desktop analysis is strictly for illustration and does not substitute the need for a detailed analysis.

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES OR INSTRUMENTS MENTIONED ABOVE.

Author: Ken Utau

Markets Observer + Food Lover

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