,“The pandemic has certainly resulted in extraordinary earnings, ” executive director and group CEO Lim Kwee Shyan tells StarBizWeek.
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FROM a loss-making company to one that made a net profit of RM42mil in its latest quarter, Careplus Group Bhd deserves more than a second glance by investors.
Then again, this is not just any company.
And turning in such a healthy improvement in its financial performance is not an occurrence unique to itself.
Careplus is a glove company and like most, if not all glove companies, it has performed above and beyond expectations in the past one year amid the Covid-19 pandemic that grew global demand for gloves like never before.
“The pandemic has certainly resulted in extraordinary earnings, ” executive director and group CEO Lim Kwee Shyan tells StarBizWeek.
It wasn’t too long ago that the Negeri Sembilan company was struggling to stay afloat as bottomline took beating after beating, no thanks to low sales volumes and high costs.
Today, it hopes to be able to sustain the positive momentum.
But Lim, who together with his spouse controls around 24% of the company maintains that these are extraordinary times.
“We do hope it (demand) will be all the way up from here, ” he says, but adds that by this, he means all the way up from pre-pandemic demand levels and not from the current exceptional levels.
Nevertheless, the company has made some solid investments to increase production in a sure sign that it is confident that the outlook remains bright.
For instance, in February it said it will spend some RM9mil to buy a company which owns a piece of land at Oakland Industrial Park in Seremban, Negeri Sembilan to enable it to produce more gloves.
“We have purchased land for our Factory 5 and Factory 6. Factory 5 is under construction now with 9 lines to be installed.
“With this we will have the ability to house 60 production lines, excluding Factory 6, from the current 33 lines, ” Lim says, adding that these new lines will be completed in stages until the end of 2022.
Most of the funding for the company’s expansion plans will be internally generated with very minimal borrowings, he adds.
“The (recent) exceptional earnings and growth have put us in a much stronger position.
“But they cannot last.”
According to Lim, earnings may continue to see extraordinary growth for another quarter or two, before they come down largely due to lower average selling prices.
Observers also point out that Covid-19 vaccine roll-outs which are starting to gather steam globally are playing a role in cooling down the frantic demand for personal protective equipment.
“How long can such earnings be sustained before they start to decline and move towards more normal earnings? That is the key question now..., ” he says.