Prolexus Berhad Continues to Climb Greater Heights!

Prolexus Group has grown to be the forerunner in Malaysia's apparel industries, making its mark across the world. Prolexus was established in 1976 and listed on the Kuala Lumpur Stock Exchange since 1993. It is principally involved in designing and manufacturing of garments, while its subsidiaries are in apparels retailing and outdoor advertising.

Prolexus Group has 3 manufacturing plants under apparels manufacturing business unit, located in Malaysia and China with a combined production area of 50,000 square meters, a total production capacity of 10 million pieces per annum and employs over 3,000 employees.

Their products are exported to international markets which comprises of North America, Europe, Australia and Asia. In the retailing business unit, Prolexus group has its own brands under Be Elementz and Bixiz Kids. In the outdoor advertising business unit, Prolexus group owns Powersceen, which is Malaysia’s No 1 out-of-home TV media with national coverage.

Based on Financial Year (FY) 2015 full year results, Prolexus achieved RM 350 million revenue, which is considered as mid-size enterprise. Other aspects of the company’s latest financial results are illustrated in the table below.

Since FY2010, Prolexus Group revenue has been growing consistently from RM136 million to RM 350 million in FY2015. This represents a 2.6 times growth in a span of 5 years or an average year to year growth of 20.71%. In terms of net earnings, Prolexus also achieved similar growth of 5.5 times in 5 years or an average year to year growth of 37.38%. Having a net profit growth rate higher than revenue growth rate is a great sign of effective cost management and the company is able to sustain its product profit margin. However net profit margin wise, Prolexus scores a 6.1% which is slightly low in the manufacturing sector.

In terms of company’s debt, Prolexus has a low total debt to equity ratio of 0.20. Such low liability business operation model leads to good current ratio of 2.179 and cash ratio of 1.028, which are strong characteristics of being a company that can withstand tough economic situations.

As for dividend yields, Prolexus has only started paying out dividends in FY2015 at 0.682%. This yield may not be attractive for dividend seekers but on the bright side the company has just started its dividend payment and may be more in the future.

In conclusion, besides a low dividend yield and below average net profit margin, Prolexus financial performance has been great, especially in terms of revenue and net profit growth. In current FY2016, Prolexus revenue and net profit already surpass FY2015 with merely two quarters of results.

This is an amazing achievement and great indication of future share price growth as it is already confirm that the full year results of FY2016 will be better than FY2015. Moreover, with the current low PE ratio of 9.63, Prolexus is a good investment for long term investors.

iVolume Spread Analysis (iVSA) & comments based on iVSAChart software – Prolexus

For Prolexus, after the registration of two sign of weakness in end Jan 2016, at RM2.23 and another in end Feb 2016 at RM2.12, this stock has likely hit the market bottom around RM1.83 support level. The volume during downtrend has been somewhat average to below average.

So far, the market has built a base around RM1.83 - RM1.90 but we have yet to see any sign of strength. We need to see more sign of strength on iVSAChart to confirm the reversal of downtrend before buying and hence should wait until more sign of strength emerges.

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This article only serves as reference information and does not constitute a buy or sell call. Make your own assessment before deciding to buy or sell any stock.