Prolexus (8966) plunged as expected in 2021Q3. Profitability disappeared? Do you still dare to hold it? Will Prolexus face the panic selling?
Fri, 23 Jul 2021, 8:56 PM
Prolexus started the fabric mask business during the pandemic, and its performance has brought excellent performance in QR 2020-07, with a net profit of 23.9million.
But the good times did not last long. The next three quarters were not satisfactory, and both revenue and profitability plummeted, especially 2021 Q3, profit margin drop into negative, and revenue just only RM 35,371,000 (Lowest revenue since Year 2009). Obviously, fabric mask orders have been greatly reduced, and the profit margin of fabric masks is no longer as high as the profit at the beginning due to the market have a lot of high quality disposable mask now.
Prolexus’s quarterly earnings report has been declining for 3 consecutive quarters, and the Revenue of 2021 Q3 has even dropped to 35 million only, shown negetive profit margin. Believe that the contribution of fabric masks is almost gone after this quarter. Strongly believe that the next quarterly earnings report will continue to decline, and continue to cannibalize and consume the remaining cash flow.
Business data to focus on:
1. 2021 Q3-Apparel module drops to only RM 30,871,000. It proves that Prolexus's apparel orders have been severely reduced, and the rumor has a high probability of being eliminated by NIKE and Ascis. It means that the upcoming quarterly orders and revenue are not very good either..
2. The Intel-Segmeny Sales of Textile modules drop from RM18.567 million to RM 0.382 milliom only, proving that Prolexus' orders for masks have almost disappeared. (Related Sales fell to only 2%) The huge profits have disappeared, and Prolexus' transformation plan has failed! It's time to see the truth!!!
3. Proceeds from disposal of property, plant and equipment - 11 million. During this severe epidemic, we can be sure that the price of selling land is very unsatisfactory, just like you want to sell your house now.
What important message does the choice of disposal of property, plant and equipment represent?
It's means that your cash flow is not enough, and their need to sell assets in exchange for cash flow. Because the main reason for the company's bankruptcy is that there is a problem with the cash flow turnover!!!
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....