Hovid Bhd (+ve)
HOVID (Fundamental: 2.1/3, Valuation: 0.3/3) was last picked by our momentum algorithm on Feb 9, 2015. Since settling at a low of 32.5 sen mid-December last year, Hovid’s share price has surged 38.5% to close at 45 sen yesterday, approaching its prior high of 46.4 sen back in July 30, 2014.
Ipoh-based Hovid is a major manufacturer of generic drugs. It derives half of its USD-denominated sales from exports, particularly to Asia and Africa and as such, will benefit from the ringgit’s depreciation.
Since disposing its loss-making biodiesel subsidiary Carotech in 2011, Hovid saw its net profit grow at a 2-year CAGR of 7.4% to RM18.1 million in FY2014, on the back of revenue of RM183.5 million. A new plant to be completed this year will alleviate capacity constraints and drive future growth.
The stock trades at a trailing 12-month P/E of 17.47 times and 2.07 times book.
This article first appeared in The Edge Financial Daily, on February 24, 2015.