Friday 29 Mar 2024
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KUALA LUMPUR, (July 29): Shares of Caring Pharmacy Group Bhd rose as high as RM1.17 or 6.4% in morning trades today, on news of its net profit more than doubling to RM2.63 million or 2 sen per share for its fourth financial quarter ended May 31, 2015 (4QFY15), from the previous year.

As at 10.46am, shares of Caring Pharmacy was up 6 sen or 5.45% at RM1.16, with some 54,000 shares changing hands.

The market capitalisation at the time was RM239.48 million.

HLIB Research in a note today maintained its "Sell" call with fair value of 93 that is under review.

The research house in its rating on the stock said the company has an established and trusted pharmacy chain, with reliable service and competitive product pricing; full-time registered pharmacists available throughout retail operating hours; benefits from economies of scale and shared services; the only pure retail pharmacy chain listed locally.

"Negatives — are its higher working capital and start-up costs for new outlets; overaggressive expansion; intense competition impact selling prices; shares are tightly held, resulting in relatively low trading volumes," it added.

HLIB said Caring Pharmacy faces risks due to its overaggressive expansion that resulted in margin compression, which may continue to drag earnings growth, apart from keen competition from other pharmacy chains such as Guardian and Watsons.

It also noted a slowdown in consumer discretionary spending.

In a filing with Bursa Malaysia yesterday, Caring Pharmacy said it posted a net profit of RM2.63 million or 2 sen per share for its fourth financial quarter ended May 31, 2015 (4QFY15), from RM1.28 million or 0.59 sen per share a year earlier.

This was contributed by new store openings and revenue growth from existing outlets.

Revenue for 4QFY15 rose 8% to RM95.41 million, from RM88.64 million in 4QFY14.

It also declared final dividend of 2 sen per share for the financial year ended May 31, 2015 (FY15), pending to shareholders' approval at the forthcoming annual general meeting.

Despite noting that the implementation of the goods and services tax in April has dampened consumer sentiment, Caring remained cautiously optimistic of its performance for the next financial year.

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