Karex share price on 05 Jan 2018 = RM1.28 and 07 Mar 2018 = RM0.79, drop 38% but increase back to RM1.28 needs 62%. (When 3rd quarter of 2018 report announced on 28 Feb 2018)
Lesson learned: If you feel and believe the next quarter's profit still bad. Don't buy 1st! The share price will drop and drop again. Need to believe yourself based on homework and judgment made. Especially the company has a lot of small shareholders. Karex has 11,042 shareholders as at the end of the financial year 2017. The 2 large shareholders hold 38.59% of shares, the less hold 61.41% of shares. From the number of shareholders, can conclude that a lot of small shareholders which easily affect the share price of the company.
The fundamental of Karex is still strong. Revenue is keeping increasing. The profit drop is mainly due to the increase in selling and distribution expenses and administration expenses. Increase in selling and distribution expenses is due to the increase in marketing and freight costs. Higher marketing costs due to the launch of the MyOne range of condom in the US. Higher freight costs were due to the increase in fuel price during 2017 as compared to 2016. Higher administration expenses due to hiring more staffs. It should be hired the staffs for office in the US. Do business, got no people how you expand your business so need to hire lo.
If buy Karex, need prepare to hold for 1 to 2 years. You cannot expect today do marketing, tomorrow then can get a lot of people buy your product. Obtain customers always take time. You need to give people time to use and like your product. The marketing costs and staff costs are controllable, if really the company's strategy unsuccessful, they can cut the costs meanwhile their profit will increase back. However, it really take time for implementing their strategy, if have business sense, are you will easily give up if you can't see the result in 1 year time? Gain market share also take time and money. Not you say want to gain then can gain. However, I also will wrong, see how was the future of Karex.
The above information for my future reference. Not a Buy and Sell call.
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