Worst over for Nova MSC, to return to black in FY19

Nova MSC's intelligent building automation & control systems help our customers to balance between resource demand and sustainability.

KUALA LUMPUR: Nova MSC (Nova), an ACE-listed company primarily involved in developing and supplying smart e-solutions, believes the worst is over and all the kitchen-sinking exercises have been done. 

“It is confident of returning to the black in FY19F, thanks to: i) a record-high order book, ii) better overall cost control, and iii) more potential contract wins,” said CIMB Equities research on Tuesday. 

Nova has no direct peers given its unique exposure to smart healthcare solutions. In the e-solution space (including e-government product providers), its closest peers are MyEG, Dnex, Datasonic and GHL, which collectively trade at CY19F Bloomberg consensus P/E of 15.9 times.

“Although it has been loss-making in the past two years (FY17-18), Nova strongly believes the worst is over,” it said.

Nova develops and supplies smart e-solutions in three main segments: i) smart healthcare, ii) government digitalisation and iii) building automation and control. 

It targets both government and private entities. All its software is fully developed in-house. Nova’s current operations are mainly in Singapore (98% of its FY18 revenue) but it also has presence in other Southeast Asian countries such as Brunei, Malaysia and Indonesia. 

The crown jewel of Nova’s digital government systems segment is the Construction and Real Estate Network (CORENET) that it developed 100% in-house and has been used by the Singapore government since 2001. 

The system connects 16 Singapore government agencies, providing a one-stop point for the e-submission and processing of all applications related to the construction and real estate industry. 

In October 2017, Nova announced that it had secured an RM83mil contract to upgrade the system to CORENET 2.0 and maintain it until October 2023F. 

CIMB Research pointed out a report by McKinsey & Company, the government digitalisation industry globally is estimated to be worth US$1 trillion annually. 

As Nova is confident in its strong track record for providing e-government services to well-recognised clientele such as the Singapore and Brunei governments in various business segments, the group believes that it could stand to benefit from the growing demand. 

Nova's total reported outstanding order book at end-March 2018 (end-FY18) was at an all-time high of RM232mil. 

Nova also promotes smart healthcare by developing e-solutions to automate and streamline the operations of healthcare institutions. 

This includes its multi-organisation architecture system (Vesaluis.geo) that integrates multiple healthcare systems involving frontline, clinical, ancillary support and backend services into one. 

Users of this system include highly-established hospitals such as Novena Medical Centre (Singapore), Changi General Hospital (Singapore) and Penang Adventist Hospital (Malaysia).