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Careplus to diversify into EV business amid challenges in glove market

Careplus to diversify into EV business amid challenges in glove market

04 Sep 2023

Loss-making glovemaker Careplus Group Bhd on Monday said it is diversifying into the electric vehicles (EV) business.

This comes after the group announced in June that it is exploring the business of EV selling and manufacturing with its joint venture (JV) partner GoAuto Group Sdn Bhd.

In its latest announcement, Careplus said it has been continuously seeking opportunities to diversify into other viable businesses, given the challenges faced by all the major glove players in the market.

“In line with this strategy, the group has identified the EV business as a new and sustainable income source, which is expected to mitigate the group’s reliance on the glove business,” it said in a filing to Bursa Malaysia.

Careplus said that the diversification is expected to augur well for the group as it leverages the technical expertise and experience of GoAuto and the Neta brand EV.

The group will also optimise its 74-acre piece of land in Chembong, Negeri Sembilan to build an EV manufacturing and assembly hub, as well as its Careplus Mall as a dealership and distribution centre.

“Barring any unforeseen circumstances, the board believes the proposed diversification will contribute to the group’s future earnings.

“Notwithstanding the proposed diversification, the group is committed to continue improving the operational efficiencies and profitability of its gloves business,” it added.

Meanwhile, the group has proposed to provide financial assistance to Nexv Manufacturing Sdn Bhd to undertake the EV manufacturing hub project, and to Intro Synergy Sdn Bhd to undertake EV distributorship.

The financial assistance consists of an additional loan of up to RM10 million for Nexv. Meanwhile, for Intro Synergy, Careplus will provide a loan of up to RM10 million and a corporate guarantee of up to RM25 million.

The total financial assistance to be provided by Careplus to Nexv currently stands at about RM47 million.

As at June 30, 2023, Careplus’s balance sheet remains healthy, with total borrowings of RM44.6 million, while its cash balance stood at RM37.27 million.

Shares of Careplus settled half a sen or 1.92% lower at 25.5 sen on Monday, with a market capitalisation of RM148.43 million. Year-to-date, the stock has fallen 46.87% from 48 sen.

Source: The Edge Malaysia