Our opinion on the current state of 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 1-4-18, 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 six months to 30th September 2022 the company reported revenue down 3% and headline earnings per share (HEPS) of 2,89c compared with 28,49c in the previous period. The company said, "Operating profit decreased to R23,3 million (2021: operating profit of R90,3 million) and gross profit margin decreased to 16,9% (2021: 24,0%) due to paper price increases and energy surcharges levied by European paper suppliers, and higher logistical costs experienced throughout the period". In a trading statement for the six months to 3th September 2023 the company estimated that HEPS would be 28,77c compared with 2,89c in the previous period. Technically, the share price fell steadily since listing in March 2015 until March 2021. Then it began to move up and 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 has happened on 8-10-20 at 88c and the share has since moved up to 410c. The share trades about R230 000 worth of shares a day which makes it practical for private investors.