Intelligent Investor's Notes
DuPont Analysis - MAGNI vs PRLEXUS
Intelligent Investor
Publish date: Mon, 26 May 2014, 12:25 AM
Table 1 and Table 2 show how the Latest 10 Years ROE of MAGNI and PRLEXUS were achieved based on DuPont Analysis respectively.
|
Year
|
2013
|
2012
|
2011
|
2010
|
2009
|
2008
|
2007
|
2006
|
2005
|
2004
|
|
Net Profit Margin
|
6.3%
|
5.7%
|
3.9%
|
4.4%
|
3.0%
|
3.0%
|
2.1%
|
1.3%
|
1.1%
|
2.9%
|
|
Sales Turnover
|
2.08
|
2.22
|
2.10
|
1.95
|
2.17
|
1.97
|
1.20
|
0.95
|
0.94
|
0.84
|
|
Financial Leverage
|
1.31
|
1.29
|
1.35
|
1.31
|
1.32
|
1.34
|
1.37
|
1.19
|
1.20
|
1.29
|
|
ROE
|
17.3%
|
16.4%
|
11.0%
|
11.2%
|
8.5%
|
7.9%
|
3.6%
|
1.4%
|
1.3%
|
3.1%
|
Table 1: ROE for MAGNI
|
Year
|
2013
|
2012
|
2011
|
2010
|
2009
|
2008
|
2007
|
2006
|
2005
|
2004
|
|
Net Profit Margin
|
7.3%
|
5.4%
|
2.5%
|
2.5%
|
0.2%
|
-1.8%
|
-3.2%
|
-2.0%
|
-2.6%
|
-3.5%
|
|
Sales Turnover
|
2.05
|
2.09
|
1.93
|
1.59
|
2.01
|
2.13
|
1.90
|
1.68
|
1.65
|
1.40
|
|
Financial Leverage
|
1.42
|
1.40
|
1.79
|
1.78
|
2.13
|
2.31
|
2.59
|
2.40
|
2.25
|
2.24
|
|
ROE
|
21.1%
|
15.9%
|
8.6%
|
7.0%
|
0.8%
|
-8.8%
|
-15.9%
|
-7.9%
|
-9.6%
|
-11.1%
|
Table 2: ROE for PRLEXUS
It is clear from the table above that PRLEXUS has achieved a much higher ROE of 21.1% compared to that of MAGNI of 17.3%. The higher ROE of PRLEXUS was achieved with a relatively high income margin of 7.3% compare to MAGNI – 6.3% and higher financial leverage (1.42 vs 1.31). Both companies have a similar sales turnover of 2.0.
Figure 1: Trends of ROE of MAGNI and PRLEXUS
Based on the last 10 years results, the ROE for MAGNI is growing from 3.1% to 17.3% (CAGR 21%) while PRLEXUS’s ROE was in negative zone on the first five year (2004-2008) and experience a very high growth on the next 5 years - 2009 to 2013 (0.8% - 21.1%).
The growing of MAGNI’s ROE was achieved with growing Net Profit Margin and Sales turn over while the financial leverage is maintained. This show that MAGNI is not only improving its earning quality but in the same time produce more product with the asset.
While, PRLEXUS’s able to increase its ROE by increasing the Net Profit Margin and Sales turn over; and in the same time reducing the financial leverage. PRLEXUS net profit margin is turning from red to green on year 2009 and overtake MAGNI on year 2013.
MAGNI is a debt free company and it can increase the financial leverage and improves its ROE. However, financial leverage is a double edge sword it can hurt ROE badly in the bad times. And, high leverage can make a company’s balance sheet unhealthy and become risky during economy downturn.
From the above analysis, we can conclude that both companies is able to create value for its shareholder and PRLEXUS latest financial year ROE is much better than MAGNI. However, MAGNI presented a positive (and it is growing) ROE and net profit margin on the pass 10 years but PRLEXUS only turn to green 5 years ago. Furthermore, MAGNI is a debt free company and it can further increase the ROE by using financial leverage. In my own opinion, MAGNI provide a lower risk investment option if compare to PRLEXUS.
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
calvintaneng
I have been watching these 2 counters and let me tell you the similarity & differences.
Similarity
1) Both Insiders Bought & Bought Back Company Shares.
2) Both Are Growth Stocks.
3) Both Recommended by Growth Investors.
4) Both Have Also Gone Up In Prices.
Differences
1) On Appearance Prolexus seem to grow better than Magni
2) But For 10 Years Magni is All In The Money - Profitable Throughout. For Prolexus 5 years were losses and 5 years gain.
3)Prolexus is involved in Apparel While Magni Is More Diversified It Its Business.
4) From Historical Deductions We see Magni is more resilient than Prolexus.
5) THE FUTURE IS YET AHEAD WITH ANOTHER POSSIBLE CRISIS. AND CAN PROLEXUS WITHSTAND THE CRISIS BETTER THAN MAGNI?
I only give my opinions here as I don't own either P'lexus or Magni shares.
2014-05-26 09:13