Careplus plans 20% private placement to raise up to RM49.8m

KUALA LUMPUR (Jan 12): Glove maker Careplus Group Bhd is planning to place out up to 114.6 million new shares or 20% of its enlarged issued share capital to raise as much as RM49.8 million before the end of this year, mainly for capital expenditure and working capital.

The group said in a Bursa Malaysia filing on Thursday (Jan 12) that the shares will be placed out to third-party investors in one or more tranches over a six-month period. The proposed exercise will require shareholders' approval.

The group's cash and bank balances — inclusive of fixed deposits — halved to RM61.97 million as at end-September last year, from RM126.09 million as at end-2021.

For the third quarter ended Sept 30, 2022 (3QFY2022), Careplus reported its fourth straight quarter of net loss of RM30.21 million, versus a net profit of RM8.37 million a year ago, as the glove making industry, swamped by overcapacity, sees cooling demand for protective gear following the lifting of Covid-era curbs.

Revenue dropped 52% to RM48.32 million for 3QFY2022 from RM100.84 million in 3QFY2021, amid depressed glove selling prices and lower sales order from key customers. For the first nine months of FY2022, the group incurred a net loss of RM103.18 million — as opposed to a net profit of RM236.99 million in the same period in FY2021 — as revenue declined 63% to RM216.03 million from RM591.22 million.

The estimated proceeds to be raised from the placement is based on an indicative issued price of 43.5 sen per placement shares, its filing showed.

Careplus shares closed at 41.5 sen on Thursday, unchanged from its previous trading day's close, giving it a market capitalisation of RM237.8 million.

The stock, which was trading above RM4 at the height of the pandemic in 2020, has more than halved from RM1 a year ago.