Growth Investing
CAREPLUS INVESTOR BRIEFING : BUY RATING
Careplus (investor briefing)
Turnover could easily exceed RM500 mil with current facility back to 90% utilisaton (in 2019 disrupted by plant modifications and changes for improvement) compared to 83% for FY 2019 (88% FY 2018) and the ASP increase could easily exceed 20% compared to 2019.
You can buy upto price of 170. My valuation based on PE15 to 18 using a projected ASP increase by 25% is from 223 to 267. However with a 20% increase, the valuation would be 180 to 216, CAREPLUS Catalyst for Investment and Investment Merits • •
Completion of disposal of 50% equity interest in Careplus (M) S/B (CMSB), a wholly owned subsidiary to Ansell for RM 27.0 mil, improving its net current liability position at 31 Dec 2019 • • Sale at 150% of the 50% Net Asset value of CMSB and realized a profit on disposal of about RM17.98mil which is about 3.07 Sen EPS in Q2 FY 2020.
• • Net proceeds of cash RM28.5 mil coming to Careplus after netting of additional share capital of RM10.5 mil for reinvestment in CMSB for subscription of new shares for expansion in CAPEX and repayment by CMSB of inter co loan of 12 mil
Careplus’on-going structural transformation could translate into sustainable earnings growth. •
Margin expansion and improving profitability: Underpinned by high ASP (driven by COVID19 outbreak), lower raw mat cost and improved plat utilization rate •
The plant modification and improvement in FY 2019 will see plant utilization rate increased from 83% in 2019 to almost 90% •
Synergistic JV with Ansell: Leverage on Ansell’s global footprints and market leadership to sustain long term earnings growth Careplus’s prospect has improved significantly with Ansell (world largest surgical glove brand) JV in CMSB (on a 50:50 basis) and earnings growth accelerated with increase capacity with 9 new production lines which will be commissioned by end 2020 and another 2 will be installed in 2021.
The JV will increase production capacity from 4.1 billion pcs to 5.6 bil pieces by end 2020 and 6.5 bil pieces by end of 2021 barring any interruption. A 52% increase in production capacity with 9 new production lines by 2022: Expected to add capacity by 2.2 bil pcs/year to achieve total capacity of 6.3bil pcs/year by year 2022 (4.1 bil 2019) •
Shifting to higher value product offering: Increasing production mix with higher value surgical gloves making about 30% of the total revenue compared to 5% in FY 2019
- Insight on Careplus -
Profit Projection
Need not worry of Q1 result there is kitchen sinking of RM4 mil stock written off which I believe it is non recurring. Refer to the cash flow from operations there is 4 million written off.
Without the written off of RM4 million, they would have achieve 6 million profit for Q1 due to higher ASP.
Turnover could easily exceed RM500 mil with current facility back to 90% utilisaton (in 2019 disrupted by plant modifications and changes for improvement) compared to 83% for FY 2019 (88% FY 2018) and the ASP increase could easily exceed 20% compared to 2019. with 20% margin they could achieve 10million (EPS of 3 cents). with PE of 20, it could value their share at RM 2.40.
Their earnings moving forward will be better than normal and at minimum of 10 million profit. Watch Q2 for the report guidance.
-TAYOR-
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Discussions
8 people like this. Showing 18 of 18 comments
clap clap clap
thank you for this sharing
increase asp to 20-30%
profit 10-20 million
eps 3.0 annualised
pe 20 will be rm2.40 far (below my estimate rm3.50)
1.50 now is still undervalue.
look out for the next QR report to boost into black black result
abang kakak sekalian
please hold your position
do not sell your shares to depress the pricing limit up......wakkkkakkaka !
2020-06-09 19:43
Please read the Financial result carefully! the second column "Preceding Year
Corresponding To Date 31-Dec-2019" there is a value of 4.535m inventory write off!
Don't tell me it is 1 time write off!
2020-06-09 20:20
Jack Khan, talk to management and its most likely one time write off. they bought over careglove and most likely due to that acquisition its a one-time write-off. without this one time write off, they would have achieve 5 to 6 million profit as guided by management this morning
2020-06-09 21:20
Watchout for investment bank to issue a rating. POV. but by that time it would already increase in price
2020-06-10 00:33
tha ks for sharing. heard the same news for those attended the investor briefing.
2020-06-10 00:37
you meant the amount of product been write off is equivalent to the amount of profits??..ayoo
2020-06-10 00:39
lol its just for sharing purposes. there is a saying, if you having nothing good to say, dont say. no one is forcing anyone to buy.
2020-06-10 00:51
Shhh.... Here's some bonus info...
Right after the briefing, one director came to me and said he personally couldn't believe his fortune. So many speculators inflated the stock price and he took the opportunity to sell 500k shares. He was trying to suppress his laughter when he said the actual value should only be 20sen...or less. Anyway he thanked all of you for making him rich.
2020-06-10 00:51
u still 1 years old meh. go talk nonsense. ppl discussing make sense stuff. my god. how old are u man.
2020-06-10 00:53
I am sure this guy got stock in carepls. That is why he aggressively promoting carepls! Game over for glove!
This darling stock will make a comeback!
https://klse.i3investor.com/blogs/winningstocks/2020-06-10-story-h1508724518-THIS_DARLING_STOCK_WILL_COMEBACK_AFTER_GIVE_A_WAY_TO_GLOVE_STOCKS.jsp
2020-06-10 15:53
Just let sharks play as high as they want.....
....cut win and don't look back
2020-06-10 15:54
Believed in your own position and strategy in investing . I am not good in accounting and figures and there are many out there who feels the same and that doesn't necessarily translate that you are not a good investors.
One simplest logic reasons is l possesed with the highest degree of common sense that l survived the hardest hits in stock markets horrible crashes beyond comprehension and l still survived today with surplus and excess resources at stake .
Investments itself is not completely and solely based on corporate earnings and restructuring exercises at times. Stock counters with quarterly losses sometimes shares price instead continued to move forward steadily at a better pace unjustifiably .
If everybody's profited in the stock markets , by obvious reasons there are people out there losses..... right !!! Simply bcos to some to them it's a buy called and to some it's a sell called , but one thing your overall losses must not exceed your profits position and no one can claim that every stocks he purchased is safe and secure in a winning position .
2020-06-11 00:13
Hope it helps. Careplus result coming out. Those that criticise back then please have a relook at the current share price. Thanks
2020-07-22 23:10
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
sharkdododo
Thanks for the insight! First time careplus had investor briefing. HOOT tmr!
2020-06-09 18:48