Intense competition hits Caring Pharmacy’s 2Q performance

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KUALA LUMPUR (Jan 27): Lower selling prices due to intense competition contributed to lower profit margin at Caring Pharmacy Group Bhd, during its second quarter ended Nov 30, 2014 (2QF15).

The retail pharmacy group announced its results today, which showed profit before tax falling 17.17% to RM2.96 million, from RM3.57 million a year ago.

“The decrease in profit before tax for the current quarter compared to the corresponding quarter in the preceding year, is mainly due to lower profit margin arising from lower selling price resulted from market competition,” it said.

Net profit rose 14.8% to RM2.09 million during the quarter, from RM1.82 million a year ago, mainly due to lower taxation.

Caring’s (fundamental: 2.05; valuation: 0.3) revenue for the quarter rose 5.4% to RM89.01 million, from RM84.45 million previously.

Caring said the higher revenue was mainly contributed by 12 new outlets which commenced operations in the second half of FY2014, and four new outlets that open in the first half of FY2015.

For the six months to Nov 30, 2014, net profit plunged 63.4% to RM2.6 million, from RM7.2 million a year ago; although revenue rose 5.8% to RM177.4 million, from RM167.7 million.

“In the view of stiff market competition, the group will re-look its marketing strategies to improve sales and maintain market share,” Caring commented on its prospects.

The firm remained confident that it will continue to perform profitably in the next quarter.

Caring ended 1 sen or 0.8% lower at RM1.19 a share, giving the group a market capitalisation of RM259.07 million.

The share price of the pharmacy operator had tumbled below its initial offer price of RM1.25, and further below its debut price of RM1.75 on Nov 13, 2013.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)