KUALA LUMPUR: Hovid Bhd shares rose as much as 10.9% on Bursa Malaysia yesterday as investors were optimistic that one of its manufacturing plants in Perak has been granted permission to restart its operations.

Hovid’s share price hit its intraday high of 35.5 sen before closing 2.5 sen or 7.94% higher at 34 sen yesterday, with 58.91 million shares done. Its market capitalisation stood at RM278.98 million.

On Monday, Hovid — whose manufacturing licences were revoked by the health ministry in January — said it had received the manufacturing licence for its Chemor plant. The licence — valid from March 6, 2017 — is to be renewed three months before the expiry date on Dec 31, 2017.

Operations at its Ipoh plant, however, are still suspended given the more complex changes required. Hovid aims to obtain the licence by end-May this year.

In a note to clients yesterday, CIMB Research said although the delay in the reissuance of the manufacturing licence for the Ipoh plant is slightly negative, it still views the latest development as an overall positive.

“This is due to the fact that Hovid’s Chemor plant contributes 70% of its total capacity. Hence, the group will be able to increase working shifts to offset any capacity loss beyond the original estimate of only a 60-day hiatus for its Ipoh plant,” the research firm added.

CIMB is expecting Hovid to post weak results for the third financial quarter ending March 31, 2017 (3QFY17) due to the two-month manufacturing hiatus at the Chemor plant, as well as negligible revenue contribution from the Ipoh plant during the period.

“Although existing inventories were allowed to be marketed, we doubt it was sufficient to offset the negative impact from the loss of production and the inability to fulfil clients’ orders during the period. This is reflected in our projected 19.4% year-on-year decline in net profit for the financial year ending June 30, 2017,” said CIMB. It has a “reduce” call on Hovid, with a target price of 30 sen.