Novo Group

Novo Group: The steel trader which is dual listed on both SGX and HKEX, saw its share price surged ~56% over the last two days, to close at $0.25, sparking a trading query from HKEX, where the group highlighted that it was not aware of any reasons or info which could explain the recent price movements of its share price. Novo was recently placed on the SGX watchlist on 3rd Sep ’14, after recording pre-tax losses for the three recent financial years, and posting an average daily market cap of less than $40m over the last 120 trading days. In a feature by The Edge this morning, the magazine highlighted that despite the unknown reason on what had caused the surge in share price, Novo Group has had its work cut out in turning itself around, given that the group’s current market cap after the recent price surge now stands at $42.7m. The Magazine however cautioned that the group is still far from being out of the doldrums, with demand for steel in China having plummeted, coupled with abundant supply. Based on its FY14 financials, Novo group’s current ratio stands at only 0.82x with net gearing at 71%. Meanwhile, current liabilities exceed current assets by US$37.2m, suggesting weak liquidity ratios. At the current price, the group trades at 0.76x P/B.