Careplus Group Berhad: Navigating Challenges with Strategic Shifts in Q1 2025

Careplus Group Berhad (Careplus), a name familiar to many in the Malaysian investment landscape, has just released its unaudited financial report for the quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s ongoing efforts to streamline operations and diversify its revenue streams amidst a challenging global economic environment. While the traditional glove manufacturing sector continues to face headwinds, Careplus’s strategic pivot towards new energy ventures is beginning to show its impact.

Let’s dive into the numbers to understand how Careplus performed and what lies ahead for the group.

Q1 2025 Performance: A Glimmer of Improvement

For the individual quarter ended 31 March 2025, Careplus demonstrated a notable improvement in its financial performance compared to the same period last year. The group managed to significantly reduce its losses, primarily driven by a robust increase in revenue.

This represents a substantial 32.82% increase in revenue. The growth was largely propelled by the Electric Vehicle (EV) division, which contributed RM6 million, while the glove division added a further RM1.56 million to the top line. This highlights the early positive impact of the group’s diversification strategy.

The group successfully narrowed its loss before tax by 35.96%, moving from RM9.3 million in Q1 2024 to RM5.9 million in Q1 2025. Similarly, the loss after taxation (LAT) also saw a significant reduction of 35.07%, from RM9.315 million to RM6.048 million. This improved performance was mainly attributed to higher sales volume and increased average selling prices (ASP) for certain product ranges within the glove division.

Cumulative Performance: Nine Months to 31 March 2025

Looking at the cumulative nine-month period, Careplus continued its positive trajectory in revenue growth and loss reduction.

The group’s revenue for the nine months ended 31 March 2025 increased by 37.14%, or RM21.7 million, compared to the corresponding period last year. Both the EV and glove divisions were key drivers of this revenue expansion.

The cumulative loss after taxation saw a reduction of 6.92%, or RM1.8 million. This improvement was mainly attributed to lower depreciation expenses within the glove manufacturing division, indicating some operational efficiencies or reduced capital expenditure impact.

Segmental Contributions (9 Months Ended 31 March 2025)

The segmental report clearly illustrates the significant revenue contribution from both glove manufacturing and the burgeoning new energy segment. While glove manufacturing still bears the brunt of the group’s losses, the new energy segment is nearly breaking even at the segmental results level, showing promising early signs.

Financial Health and Cash Flow

As of 31 March 2025, Careplus’s total assets stood at RM352.3 million, a decrease from RM366.4 million at 30 June 2024. Total equity also saw a decline to RM272.7 million from RM281.6 million over the same period, leading to a net asset per share attributable to owners of the Company of 35.70 sen (down from 40.39 sen).

However, a positive highlight from the cash flow statement is the significant improvement in operating activities. For the nine months ended 31 March 2025, Careplus generated net cash from operating activities of RM5.248 million. This is a substantial turnaround from the net cash used in operating activities of RM56.538 million in the corresponding period last year, indicating improved operational efficiency in managing working capital.

Despite this, overall cash and cash equivalents at the end of the period decreased to RM10.745 million from RM33.699 million, influenced by net cash used in investing activities (RM14.397 million, mainly for property, plant, and equipment purchases) and financing activities (RM411,000, shifting from a positive inflow last year).

Prospects and Navigating the Road Ahead

Careplus acknowledges that the outlook for its glove manufacturing business remains challenging. The industry is grappling with low average selling prices (ASP), intense competition, and low plant utilisation rates. In response, the group plans to focus on producing higher-value products to enhance profitability within this segment.

The strategic expansion into the New Energy Vehicle (NEV) and Solar Energy businesses is a cornerstone of Careplus’s future. The construction of the CKD (Completely Knocked Down) plant in Chembong and the NEV distribution network is progressing, with the new plant expected to be completed by the end of 2025. The management remains optimistic about the long-term prospects of these new ventures.

Contingent Liabilities and Legal Landscape

The report also details several ongoing legal cases, which are important for investors to be aware of:

• Rubbercare Protection Products Sdn Bhd v Petrolife Aero Sdn Bhd: A settlement has been reached regarding the LNG supply dispute. Careplus’s subsidiary agreed to waive its right to recover a RM1.5 million deposit and pay Petrolife RM1.6 million in instalments. Provision for this settlement has been made.
• Test Rite International Company Ltd v Careglove Global Sdn Bhd: A subsidiary, Careglove Global, is facing claims of USD1.5 million and USD1 million from Test Rite for alleged breach of a supplier agreement. Careglove Global has counterclaimed to forfeit a USD2.78 million deposit. While a summary judgment was allowed against Careglove, an appeal has been filed. The directors believe these suits are not expected to have a material business and operational impact.
• Rubbercare Protection Products Sdn Bhd v Liew Kwan Yong: A dispute over invoices for works not carried out, with claims and counterclaims. The case is fixed for trial in mid-2025. Directors do not expect a material impact.
• Careglove Global Sdn Bhd v Director General of Royal Malaysia Customs Department: Careglove Global is challenging a RM1.7 million sales tax bill. While the tax has been paid to comply with the law, judicial review has been granted, with a hearing set for October 2025.
• Teo Yun Hock v Intro Synergy Sdn Bhd, NexV Manufacturing Sdn Bhd & 17 Others: Careplus’s associate and subsidiary are among defendants in a suit claiming RM4.1 million related to a share acquisition. An application for Mareva Injunction against them was dismissed. Directors are of the opinion that this suit is not expected to have any material impact on the business and operations of the Group.

It’s reassuring that for most of these cases, the directors do not anticipate a material impact on the Group’s operations, and provisions have been made where necessary, such as for the Petrolife settlement.

What are your thoughts on Careplus Group Berhad’s latest financial performance and its strategic direction? Do you think the company can maintain this momentum and successfully transition into a diversified energy player? Share your views in the comments below!