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.
Nevertheless, the Company expects its business outlook to be satisfactory:
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:
Based on a simple regression analysis between Hovid and Hovid Warrant, the current price of Hovid Warrant appears to be 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.
Forecast price of Hovid Warrant = -0.0767470 + 0.779978 (share price of Hovid)
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.
It is important to emphasise that the above desktop analysis is strictly for illustration and does not substitute the need for a detailed analysis.
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