Tuesday 29 September 2020

Prolexus: ProXmask To The Rescue

While Supermax's latest single quarter net profit in FY20Q4 was better than its previous 48 months results combined, Prolexus's latest single quarter net profit in FY20Q4 is about its previous 42 months combined.

And there's no significant one-off gain. Not bad indeed.

Simple reason given by the management: fabric mask.

Prolexus recorded revenue of RM97.9mil and PATAMI of RM23.9mil in its final quarter of FY20 ending in July. 

This is a record profit by a huge margin despite a lower revenue YoY. Its previous average quarterly PATAMI was around RM6-7mil during its good time. 

This means that its profit margin has improved tremendously.

In respond to Covid-19 pandemic, Prolexus swiftly utilized its expertise to come out with reusable fabric face mask called ProXmask90v.

ProXmask90v is a 5-layer fabric mask with anti-virus and anti-bacterial technology. It is washable and reusable for up to 60 times.

The masks are sold locally online through Shopee & Lazada at approximately RM60 for 2 pieces, and sold overseas via Amazon at USD20 for 5 pieces. 

It is made by using only a few small pieces of fabric manufactured by itself, and sold at RM20-30 per mask. You can imagine how high its profit margin can be, while all 3-ply face mask manufacturers are struggling with margin due to government's ceiling price.

Thanks to this mask venture, its textile division which was the main reason for its poor financial performance for the past 2 years, has turned profitable for the first time. 

In the first 9 months of FY20, textile division has accumulated loss of RM8.6mil. In this quarter alone, it achieves RM6.9mil of net profit.

Together with the profit from mainly selling ProXmask90v, its overall net profit jumped to RM26mil.

Can Prolexus repeat this kind of result in its next few quarters? Only the management will know for sure but personally I think there is a good chance to do so.

With the fact that Covid-19 is still rampant in most parts of the world, the sales of its fabric mask might be able to sustain until next year.

The single quarter EPS for FY20Q4 is 13.67sen. You can guess its next few quarters' results and calculate by yourself its projected forward PE at current share price of 78sen.

Frankly, I don't expect Prolexus to post such a good result, even though I think it should be at least profitable.

I hope that it can continue to do well in the future and pay more dividends like it used to do, as it has already turned net cash since venturing into upstream fabric production.

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