Nova Wellness Group Bhd’s FY2026 earnings met expectations, with Kenanga Research maintaining its Market Perform call and target price of RM0.38.
The research house said it was keeping its earnings forecasts unchanged and retaining its valuation of 13 times FY27 forecast earnings per share (EPS), representing a 15% discount to its peers’ average due to Nova Wellness’ smaller market capitalisation.
Kenanga said the stock’s main attraction was its estimated 4.7% dividend yield, although limited near-term earnings growth catalysts constrained its outlook.
Nova Wellness recorded FY2026 net profit of RM9.4 million, up 21% year-on-year, achieving 98% of Kenanga’s full-year forecast.
The group declared an interim dividend of 1.6 sen per share, in line with the research house’s expectations.
FY2026 revenue increased 12% year-on-year, driven mainly by stronger demand for Nova Wellness’ house brands, which grew 15% and accounted for around 80% of total revenue.
Original equipment manufacturer (OEM) revenue increased 1%.
Kenanga attributed the stronger demand partly to consumers increasing purchases of health supplements amid rising cases of common flu and influenza-like illnesses, as well as higher sales through public hospitals.
EBITDA increased 19%, supported by lower other operating expenses and significant reductions in selling and distribution expenses.
On a quarter-on-quarter basis, fourth-quarter FY2026 revenue declined 5%. However, net profit rose 33%, which Kenanga believes was supported by a product mix skewed towards higher-margin products, alongside lower other operating and selling and distribution expenses.
Looking ahead, Kenanga expects Nova Wellness to face intense competition in the consumer healthcare and supplement market.
The research house said the likelihood of players resorting to price discounts and promotional bundles could increase, potentially putting downward pressure on margins.
Kenanga has introduced FY2028 forecasts but made no changes to its existing earnings projections or RM0.38 target price.
The valuation remains based on 13 times FY27F EPS, with the 15% discount to peers reflecting Nova Wellness’ smaller market capitalisation.
Kenanga also made no ESG-related adjustment to its target price, based on its three-star ESG rating for the company.
Key risks to its call include intense competition from existing and new local and foreign players, as well as product safety and regulatory risks.
