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    Careplus Group BHD: Case Study

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    Khaw Seek Chuan
    Careplus Group Bhd manufactures rubber gloves in Malaysia and has gradually increased production capacity over the past 3 years. However, the company has reported losses in the last two quarters due to pressures in selling prices and costs. As of January 2018, Careplus has a price-to-book ratio of 1.41 but has not paid dividends since July 2016. The short-term and long-term stock price trends have both been declining based on the SMA crossover analysis.

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    Careplus Group BHD: Case Study

    Uploaded by

    Khaw Seek Chuan
    47 views6 pages
    Careplus Group Bhd manufactures rubber gloves in Malaysia and has gradually increased production capacity over the past 3 years. However, the company has reported losses in the last two quarters due to pressures in selling prices and costs. As of January 2018, Careplus has a price-to-book ratio of 1.41 but has not paid dividends since July 2016. The short-term and long-term stock price trends have both been declining based on the SMA crossover analysis.

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    Careplus Group Bhd manufactures rubber gloves in Malaysia and has gradually increased production capacity over the past 3 years. However, the company has reported losses in the last two quarters due to pressures in selling prices and costs. As of January 2018, Careplus has a price-to-book ratio of 1.41 but has not paid dividends since July 2016. The short-term and long-term stock price trends have both been declining based on the SMA crossover analysis.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    47 views6 pages

    Careplus Group BHD: Case Study

    Uploaded by

    Khaw Seek Chuan
    Careplus Group Bhd manufactures rubber gloves in Malaysia and has gradually increased production capacity over the past 3 years. However, the company has reported losses in the last two quarters due to pressures in selling prices and costs. As of January 2018, Careplus has a price-to-book ratio of 1.41 but has not paid dividends since July 2016. The short-term and long-term stock price trends have both been declining based on the SMA crossover analysis.

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    Case Study: 

     
    Careplus Group Bhd 
    (January 31, 2018) 

    Step #1:  
    What does it do?  

    Careplus Group Bhd (Careplus) derives income from manufacturing rubber


    gloves in Malaysia.

    Step #2:  
    Check Growth Story 

    Careplus has 3 factories. Since Q3 2014, Careplus has gradually increased its
    production capacity from 2.1 billion gloves to 3.9 billion gloves in Q3 2017.

    Source: Quarterly Reports of Careplus

    Step #3:  
    Check Financial Results 

    Bursaking.com.my 
    I’ve compiled the quarterly revenue and earnings since Q1 2014.

    Source: Quarterly Reports of Careplus

    Source: Quarterly Reports of Careplus

    Bursaking.com.my 
    Figures in RM ‘000
    Period Q4 2016 Q1 2017 Q2 2017 Q3 2017 Total

    Sales 69,442 87,041 80,551 78,982 316,016

    Earnings 1,792 3,758 -3,412 -1,442 696

    Observations:

    1. Careplus has achieved growth in sales which was in line with its
    growth in production capacity over the last 3 years.

    2. Careplus did not report higher profits despite higher sales achieved.
    This is due to pressures in selling prices, higher cost per unit, labour
    shortages, and deferred deliveries during the period.

    Step #4:  
    Check Balance Sheet 

    I’ll check three things:

    1. As at 30 September 2017, Careplus has reported RM 10.37 million in


    cash reserves.

    2. As at 30 September 2017, Careplus has current ratio of 1.08. It is like


    a person that has put aside 1.08 years worth of savings aside to fund
    his living expenses.

    Formula:
    = Current Assets / Current Liabilities
    = RM 130.84 million / RM 121.10 million
    = 1.08

    Bursaking.com.my 
    3. As at 30 September 2017, Careplus has gearing ratio of 34.3%. It is
    like a person that has RM 34.30 in long-term debt for every RM 100
    he has.

    Formula:
    = (Long-Term Debt / Shareholders’ Equity) x 100%
    = (RM 33.93 million / RM 98.80 million) x 100%
    = 34.3%

    As I write, Careplus is trading at RM 0.275 a share. Is this a good time to buy


    / hold / sell shares of Careplus?

    Step #5:  
    Check P/E Ratio 

    I would not calculate P/E Ratio for Careplus as P/E Ratio is best used for
    stock that grow profits consistently.

    Step #6:  
    Check P/B Ratio 

    As at 30 September 2017, Careplus has reported RM 0.1951 in net assets a


    share. At RM 0.275, Careplus’s current P/E Ratio works out to be 1.41.

    Year 2013 2014 2015 2016 31/1/2018

    P/B 1.67 2.35 3.47 1.18 1.41

    Step #7:  
    What’s my Dividend Yields?  

    Bursaking.com.my 
    The last dividend paid was on 5 July 2016. Since then, it has not declare or
    pay out any dividends to its shareholders. Thus, I would expect no or little
    dividend income from Careplus if any.

    Step #8:  
    Check SMA-Crossover Method 

    Screenshot of BursaMarketPlace

    Blue Line: Actual Stock Price


    Green Line: SMA-40 (Tracks Short-Term Stock Price)
    Black Line: SMA-100 (Tracks Long-Term Stock Price)

    Observations:
    Since Point A, the Green Line was moving on top the Black Line. All 3 lines:
    Blue, Green and Black have sloped downwards, thus, it has moved on a
    downtrend.

    Snapshot:  
    As at 31 January 2018, we have the following:

    Bursaking.com.my 
    Step Criteria Results

    Past Gradual Increase

    1 Present Loss over the last 2 quarters

    Future Capacity: 3.9 billion gloves a year

    P/E Ratio n/a

    P/B Ratio 1.41


    2
    Gross Dividend Yields 0.0%

    SMA-Crossover Method Mid-Term Downtrend

    Regards 
    Ian Tai 
    Creator of Bursaking.com.my

    Disclaimer: 
    The strategies outlined in this article / report / written material is intended
    for education & illustration purposes. It is strictly not intended to be an
    investment advice & must not be relied upon as personal financial advice. If
    you need specific investment advices, please consult the relevant
    professional investment advices.

    No warranty is made with respect to the accuracy, adequacy, reliability,


    suitability, applicability, or completeness of the information contained.

    The author disclaims any reward or responsibility for any gains or losses
    arising from direct and indirect use & application of any contents of the
    article / report / written material.

    Bursaking.com.my 

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