Our opinion on the current state of NOVUS(NVS)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. With effect 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 has decided in the short term to abandon the company's acquisitions and focus on consolidating the business and improving its operating performance. The board may also look to sell the company's tissue business. The company 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 year to 31st March 2024, the company reported revenue up 24% and headline earnings per share (HEPS) of 78.8c compared with a loss of 7.4c in the previous year. The company said, "The increase in operating profit to R393.5 million (2023: R6.9 million) and gross profit margin improvement of 9.9% to 28.7% (2023: 18.8%), is attributable to a R264 million operating profit generated by MML and improved profitability in both Print and Packaging. Overhead costs were well contained throughout the Group."
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 92% of its NAV. We suggested waiting for a convincing break up through a 65-day moving average before investigating further. That has happened on 8th October 2020 at 88c, and the share has since moved up to 550c. The share trades about R225,000 worth of shares a day, which makes it practical for private investors.
