FIGURE 1: CAREPLUS GROUP
BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2019 annual report.
1.
GENERAL
INTRO: CAREPLUS is one of the major latex and nitrile gloves manufacturers
in Malaysia.
2.
NOTABLE
POINTS:
a. Currently,
Malaysia successfully kept her position as the market leader in medical gloves
export with a commanding 63% of the total global demand, followed by Thailand,
China and Indonesia at 18%, 10% and 3% respectively. The global glove demand
rose from 268 billion in 2018 to 300 billion in 2019. In 2020 this demand is
expected to reach 330 billion on the back of a surge caused by the outbreaks of
the COVID-19 pandemic.
b. Overall,
the glove industry continues to face challenges from labour shortages, both
foreign and local. Regulations and trade barriers over the sales of gloves
continue to challenge Malaysian manufacturers to upgrade and improve on their
processes and systems to comply with the latest requirements. In 2018, the
Group installed vision cameras to its existing automation system for auto
stripping and stacking machine. In 2019, it enhanced the efficiency by
installing new auto packing machine to reduce manpower requirements. The
industry continues to deal with ongoing issues of energy costs, currency
fluctuations, seasonal latex shortages and water rationing during the drought
season.
c. The
Group produced more nitrile gloves in 2019 compared to the previous years. Out
of the total capacity of 4.1 billion pieces, a total of 3.5 billion pieces were
produced in 2019 generating a capacity utilization efficiency of 85%. Of these
2.4 billion pieces (69%) were latex glove, 0.9 billion pieces (26%) nitrile
gloves and 0.2 billion pieces (5%) surgical gloves. In the coming years the
Group project more nitrile and surgical gloves to be produced to meet rising
demands.
d. In
FY 2019, performance wise the Group sustained a loss after tax of RM7.8 million
compared to a profit after tax of RM3.7 million for 2018. Contributing factors
are sales price erosion and high overheads from one of its subsidiaries. The
losses were reversed to profitability in 2020 due to surging gloves demand
brought about by the COVID-19 pandemic.
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE
RANGE (RM million): 365.1 million as reported in 2019 annual report, this is a medium
revenue company.
b. SHARE
PRICE: from 2016-2021, share price surged from around RM0.10 to a peak of
RM4.00 at the start of the COVID-19 pandemic and then subsequently dropped back
to current level of around RM2.20.
c. EARNING
PER SHARE (EPS): earning per share in last 5 years was overall poor, which
ranged from -1.55 to 0.16 sen, except for FY2020, the increased gloves demand
brought about by the COVID-19 pandemic enabled CAREPLUS to realise an earning
per share of up to 15.06 sen.
d. PRICE
TO EARNINGS (P/E) RATIO: current P/E ratio is at 15.08, which is not too high.
e. FUTURE
POTENTIAL/PROSPECTS: share price expect to be stable in the next few years
f.
CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 20.3
million, which is around 7% of total assets.
4.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND
YIELD: in 2019 financial year, CAREPLUS did not declare a dividend payout to
shareholders.
b. DIVIDEND
PAYOUT RATIO: N/A.
c. CONSISTENCY:
the dividend payout was not consistent, the dividend paid to shareholders in
the last five years ranged from 0 to 0.3 sen.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN
ON EQUITY (ROE): in 2019 financial year, CAREPLUS reported a poor return of
shareholders’ equity, at -8.07%. This was significantly reversed to 42.56% in
FY2020 due to the increase in earnings.
b. COST-TO-INCOME
RATIO: N/A.
6.
OTHER
INDICATORS:
a. CASH
FLOW: cash flow is positive but quite low, around RM 6.11 million, equivalent
to RM 0.01 per share.
b.
SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is not well supported by institutional investors, there are only 4 institutional
investors at top 30 major shareholders list, not including insurance companies/investment
funds. Its major shareholders are Thinking Cap Sdn. Bhd. (10.73%), Lim Kwee
Shyan (19.66%) and Ng Shu Si (5.5%).
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