Malaysian listed retailer Caring Pharmacy has seen its share value soar 85 per cent in just two months.
And no one seems to know why…
The company has 106 pharmacies across Malaysia, just two more than it had three months ago, and has projected expansion at a rate of 10 to 12 outlets next year – barely one a month.
Even more remarkable, is that such a rise has occurred in a depressed retail climate and a decidedly sluggish business environment, at best.
A survey released by Nielsen this week showed consumer confidence in the country has reached a 10 year low of 78 points – 11 points lower than three months ago. That seems driven by the unpopularity of the GST introduced on April 1 and a massive depreciation in the local currency – in part at least, linked to evidence of massive corruption in government leadership.
The only theory behind Caring Pharmacy’s sudden popularity is that the chain may have been marked down unfairly in a generally bearish market, and its value is now being restored to reasonable levels.
Year on year, the company has delivered a net profit in the latest first quarter jumping 83.94 per cent to RM1.02 million from RM 554,000 a year ago.
One analyst urges caution” Hong Leong Investment Research (HLIR) said Caring Pharmacy could yet face further challenges ahead.
“We feel there will be more downside risk on its expansion plans due to high competition and start-up costs,” HLIR said in a research note.
“Also with inflationary cost pressure as well as weak consumer sentiment, we believe its profit margin will be under pressure with longer gestation period.”