KUALA LUMPUR (Feb 13): Loss-making Careplus Group Bhd is disposing of its remaining 50% stake in Careplus (M) Sdn Bhd (CMSB) amid the challenging outlook in the glove market due to lower demand and increased competition.

Careplus said it is selling the stake in the rubber glove manufacturing unit for RM37.5 million to Ansell Services (Asia) Sdn Bhd.

With the sale, CMSB will cease to be a subsidiary of Careplus, and instead be wholly-owned by Ansell. The latter has bought its first 50% stake in CMSB from Careplus for RM26.97 million in May 2020.

At the time, Careplus agreed to grant Ansell the option to buy Careplus’ remaining stake in CMSB, or to sell back its stake in CMSB to Careplus, pending certain criteria such as change in Careplus shareholding or the period of the joint venture.

Despite exiting CMSB, Careplus still operates a rubber glove manufacturing business via 100%-owned subsidiary Rubbercare Production Products Sdn Bhd, according to its annual report.

Another wholly-owned unit, Careglove Global Sdn Bhd, manufactures and distributes hand-gloves, the annual report showed.

“The company has taken a strategic and commercial decision to exit its investment in CMSB and streamline its operations,” said Careplus on its exit from CMSB.

The disposal will enable the group to reallocate its resources to improve the operational and financial performance of its existing subsidiaries, it said. The proceeds will go towards its working capital.

This will also enable the group to realign its business direction, focusing on its core and principal product range of “Rubbercare”, “Nitrilecare” and “ORcare” brands, it added.

The group expects to record a pro forma gain of RM924,000 from the sale, based on the carrying value of the investment in CMSB of RM36.48 million.

CMSB, which makes surgical, latex and nitrile gloves, reported an estimated net loss of RM63.64 million for the year ended Dec 31, 2022, against a net profit of RM28.1 million a year earlier. This as revenue declined to RM235.01 million from RM266.35 million.

Meanwhile, Careplus posted a net loss of RM103.18 million for the nine months ended Sept 30, 2022, versus a net profit of RM236.99 million in the previous corresponding period. Revenue decreased to RM216.03 million from RM591.22 million a year earlier.

Careplus expects the disposal to be completed by the first quarter of 2023.

Careplus’ share price closed down 2.5 sen or 7.04% at 33 sen on Monday, valuing the group at RM186.47 million. The counter has fallen 31.25% year to date.