NOVA has around 960 outlets distributing its products currently, which is slightly below its earlier target at 980 outlets. Nevertheless, NOVA remains committed to increase its number of distributors to 1,100 in FY23 to gain more market share. We believe the additional market share brought in by new distributors will be the key driver for NOVA’s growth.

With the absence of orderbook replenishment in recent times, we expect a softer performance in the construction segment, while the balance EPC works at Vietnam is expected to be recognised only in 2HFY23. Moving forward, outstanding orderbook of more than RM200.0m will provide revenue visibility over the next 2 years. Meanwhile, JAKS tenderbook remain relatively unchanged at RM4.00bn, mainly in water infrastructure and building-related works.

Outlook remain challenging amid the rising building material costs continues to affect the margins in the general construction industry. Moving forward, their outstanding construction orderbook of RM442.0m (as at end-2QFY22) will provide earnings visibility over the next 2-3 years.

In view of the rising cost of materials, we note that SCOMNET has performed a revision on their products pricing in April 2022. To keep margins intact and little signs of tapering of inflationary pressure, the second revision of product pricing were also performed during August 2022. Moving forward, we reckon that net margins could chalk in slightly above 20.0% mark in subsequent quarters amid the favourable exchange rates, coupled with the gradual introduction of new medical devices that yields decent margins.

The FBM KLCI jumped on a broad-based recovery as bargain-hunting activities took place following a six-session decline. As sentiment across regional markets have shown signal of improvement, we believe follow-through buying activities may emerge on the local bourse. However, investors should trade in a cautious undertone ahead of Malaysia’s inflation rate which is due to be released at noon.

The FBM KLCI continues to decline further below the 1,500 psychological level as foreign buying interest faded. Given the flattish performance on Wall Street we expect trading interest may stay muted on the local front, especially ahead of the Jackson Hole meeting, where traders are speculating a more hawkish tone from the Fed. However, we think some bargain hunting activities may emerge within the technology sector after the selldown, at least for today.

The construction of the second jetty at Sapangar Bay Oil Terminal (SBOT) is largely on track for completion in 4Q22 in bid to ease the current congestion and reduce vessel waiting time. Upon completion, SBOT will be able to handle 2 vessels at the time and accommodate vessels up to 60,000DWT (from 30,000DWT previously).

Moving forward, we expect the medical segment to remain as the key contributor to the overall group revenue. On the operational standpoint, SCOMNET will be undertaking multiple launches of new products within the healthcare equipment and automotive sector in line with the growing demand. We expect demand for medical devices to remains healthy in line with the rising cardiovascular diseases which is the leading cause of death globally, affecting approximately 17.9m of the global population yearly.