MAGNI VS PRLEXUS -WHICH IS BETTER???

Posted by faberlicious > 2013-04-13 13:32 | Report Abuse

Both in similar industry, 1>garment manufacturing 2>in net cash (Magni- 58 sens p/share, Prolexus -75 sens p/share) 3> trading at low PER-both <5 4>Magni's dividend yield higher than Prlexus 5.Prlexus has risen from 91 sen to currently 1.36. 6> On the other hand Magni has risen from 1.42 to 1.55 currently. So,any sifu or expert out there care to share your advice,opinions please do.

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5 comment(s). Last comment by kcchongnz 2013-04-17 08:25

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-04-16 16:11 | Report Abuse

The old fashion garment manufacturing industry seems to see some light recently when their financial performance is improving for the last couple of years.

Magni Prolexus
Revenue 43% 61%
EBIT 38% 78%
NI 40% 25%
Equity 18% 31%

Both Magni and Prolexus grow at very high rate both in terms of revenue and profit last year as shown in the table above. Prolexus appears to grow at a higher rate, mainly because of its smaller size.

Profitability Magni Prolexus
Gross Margin 14.5% 15.4%
EBIT margin 8.3% 7.5%
NI margin 6.4% 6.9%
ROE 17.1% 18.7%
ROIC 22.1% 34.0%

In terms of profitability, both companies did very well with ROIC and ROE well above 15%. Again Prolexus appear to do slightly better, mainly because of its tax credit benefits from losses some years before. What about their market valuations?

Market stats Magni Prolexus
No. of shares 108488 40000
Price 1.53 1.36
Mar Cap 165986.64 54400
MEV 87818 34471
EPS $0.322 $0.311
P/E 4.7 4.4
MEV/EBIT 1.9 2.0
DY 3.9% 2.3%
P/B 0.81 0.82

Again both companies present superb investing opportunities with their low market valuations; PE less than 5; P/B <1.0, and extremely low EV/Ebit <2. Both companies also have healthy balance sheet. So which would you prefer?

I personally prefer Magni because of its more stable return and longer history in operations. It has a higher market capitalization and has been giving higher and good dividend yield for a long time.

Joshua Lee

25 posts

Posted by Joshua Lee > 2013-04-16 20:44 | Report Abuse

KC, what about looking 'deeper', such as the management and shareholders. I eyed this Magni since last year but never went it due to such 'deeper' concerns.

faberlicious

545 posts

Posted by faberlicious > 2013-04-17 07:40 | Report Abuse

thanks kc for that indepth comparison. I also prefer Magni bcoz its earnings is more consisten n it gives a higher dividend.

faberlicious

545 posts

Posted by faberlicious > 2013-04-17 07:42 | Report Abuse

Joshua, anything wrong with management u want to share here?

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-04-17 08:25 | Report Abuse

Earnings Power Valuation for Magni-tech.

Revenue,000 534123
Normalized EBIT 28962
NOPAT=EBIT*(1-tax rate) 21709
Average maintenance capex -4273
Add average D&A 2137
Normalised EBIT 19572
Cost of capital, R 10%
Capitalized earnings=Nor Ebit/R 195723
Add cash 42433
Investment Securities 19341
Less debts 0
EPV 257497
Less minority interest 0
EPV to common shareholders 257497
Number of shares 108488
EPV/share 2.37
Price 16/4/13 1.53
Margin of safety 36%

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