PRLEXUS: Earnings Rebounded Strongly

Results Update

Prlexus returned to the black in the QE31/7/2019. It reported a net profit pf RM7 million as compared to a net loss of RM2.9 million in QE30/4/2019 on the back of a 72%-jump in revenue to RM112 million. As compared to the same quarter last year, net profit rose 5-fold while revenue was up 36%.

Improved revenue was due to higher sales orders received from the apparels division. This led to higher capacity utilization from the apparels division, which in turn led to a profit of RM 9,218,000 in the current quarter mainly as compared to a loss of RM 2,714,000 in the preceding quarter. Despite the jump in bottom-line, the company did not appear to be overly optimistic about its next quarter performance. Instead it merely stated that the performance is likely to be stable.

Table: Prlexus's last 8 quarterly results


Graph: Prlexus's last 44 quarterly results

Financial Position

As at 31/7/2019, Prlexus's financial position is deemed satisfactory with current ratio at 2.2 times and gearing ratio at 0.6 time.

Valuation

Prlexus (closed at RM0.69 yesterday) is now trading at a PE of 20 times (based on last 4 quarters' EPS of 3.46 sen). At this PER, Prlexus is deemed fully valued.

Technical Outlook

After it peaked at RM2.12 in November 2015, Prlexus dropped continuously to a low of RM0.41 in July this year. Since September 10, Prlexus has risen about 30 sen to RM0.70 now. Its immediate resistance is at the horizontal line at RM0.77.


Chart: Prlexus's weekly chart as at Sep 30, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on the improved financial performance and satisfactory financial position, I revised Prlexus' rating from a SELL to a HOLD. If the next quarter result shows further improvement, then its rating can be upgraded to a BUY.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.