Monday, March 28, 2011

Carotec 0076 GN3 - avoid!

Carotec is under GN3 now which it means it is a financial distressed company. This is due to some cash flow problems existing in the company which leading to the Company defaulting on its principal and interest servicing in respect of certain banking facilities from financial institutions.

Due to its over expanding at year 2008, now the company cannot sustain cash flow to pay its debt. This is a serious mistake done by the management. The management is hoping the overall market can be recovered back and hence re-boost back its cash flow, however from its latest quarter financial report, it showed a huge drop in its revenue, from last year RM 46.6 million to current RM 10.4 million. It seems the business is getting worse now. How are they going to clear its debt?

In the same quarter report, the inventory and trade receivables are also showed a significant drop back. Cash in hand is RM 1.5 million, BUT current debt is RM 258 million! I am wondering why they do not want to declare bankruptcy straight away?

Avoid this share even it is given as free~ because if own this share, that means you are joining its boss to clear the debt! AVOID!!

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.