Our opinion on the current state of NOVUS(NVS)

10 июн.

Novus (NVS) is South Africa's largest printing company with 11 printing plants. Until recently, it had the monopoly contract to do all of Media24's printing. However, from 1st April 2018, that contract was reduced to roughly 58% of Media24's printing, and the price paid by Media24 for printing was also reduced. The company appointed a new CEO, Neil Birch, who decided to abandon acquisitions in the short term to focus on consolidating the business and improving its operating performance. The board may also consider selling the company's tissue business. Novus has a level 4 BEE status but will need to improve that to become more competitive.

On 12th August 2022, the company announced that it would acquire 75% of Pearson South Africa. In its results for the six months to 30th September 2023, the company reported revenue up 36.8% and headline earnings per share (HEPS) of 28.77c compared with 2.89c in the previous period. The company said, "The financial results for the six months ended 30 September 2023 ("period") improved when compared to the prior period, largely through the inclusion of the results of Maskew Miller Learning Proprietary Limited ("MML") in the Education segment."

In a trading statement for the year to 31st March 2024, the company estimated that HEPS would improve by at least 1000% compared with the 7.35c loss in the previous year. Technically, the share price fell steadily since listing in March 2015 until March 2021. Then it began to move up and it currently trades at 54% of its NAV. We suggested waiting for a convincing break up through a 65-day moving average before investigating further. That happened on 8th October 2020 at 88c, and the share has since moved up to 535c. The share trades about R263,000 worth of shares a day, which makes it practical for private investors.

Novus appears to be on a recovery path with significant improvements in financial performance and a strategic focus on consolidating and enhancing its core operations. The acquisition of Maskew Miller Learning and the strong growth in the education segment are positive indicators. However, potential investors should keep an eye on the company's ability to maintain and further improve its market position and BEE status, as well as any strategic moves regarding its tissue business.