Wednesday, March 27, 2013

Prlexus- a very attractive stock

Background

Prolexus Bhd ('Prlexus') is involved in the manufacture & sale of apparel (here). It also has a small division that is involved in outdoor advertizing (here). The corporate structure is given in the table below:


Table 1: Prlexus's Corporate Structure

Recent Financial Performance

Prlexus's net profit rose 43% q-o-q or 67% y-o-y to RM4.9 million while revenue increased by 30% q-o-q or 32% y-o-y to RM64 million. The "increase in revenue is due to the increase in revenue of the garment division while profit for the current quarter is a significant increase when compared with that of the preceding quarter due to improved profits from both the Malaysian and China plant".


 Table 2: Prlexus's last 8 quarterly results

 
 Chart 1: Prlexus's last 18 quarterly results

Financial Position

Prlexus's financial position as at 31/1/2013 is deemed healthy with current ratio at 2.6 times while gearing ratio is negligible at 0.03 time. It has a substantial cash balance of RM33 million (or, 86 sen per share- arrived at by dividing cash balance with shares outstanding of 38.51 million, after deducting Treasury shares).

Valuation

Prlexus (closed at RM0.91 yesterday) is now trading at a PE of 2.5 times (based on last 4 quarters' EPS of 36 sen) or at a Price to Book of 0.44 time. If we deduct the cash of RM0.86 from the share price of RM0.91, we are paying 5 sen for this stock which earns 36 sen. I haven't seen anyone cheaper for a long time.

Technical Outlook

Prlexus is in an uptrend. Its immediate resistance is the horizontal lines at RM1.00 & then at RM1.50.

 
 Chart 2: Prlexus's weekly chart as at Mar 26, 2013 (Source: Tradesignum)

 
 Chart 3: Prlexus's monthly chart as at Mar 26, 2013 (Source: Tradesignum)

 Conclusion

Based on good financial performance & position, attractive valuation and positive technical outlook, Prlexus is a good stock for medium to long-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Prlexus

1 comment:

Kong Hui CHONG said...

haha... up 24% this morning. Wonder if still good to buy.