How long does Prolexus (8966) allow making mistakes or retrieve a hopeless situation?
Some people say, Prolexus going to bankrupt soon. I don't agree with the view, because none of their situation has reached such a pessimistic point. The core reason is they still have the resources can be dissipating or wasting.
It’s true that the chances of falling into bankruptcy are not impossible, then we should consider how long does Prolexus (8966) allow making mistakes or retrieve a hopeless situation?
As we all know, they had three main core buyers before, namely Nike, Under Armour and Asics. If Nike and Asics are determined left them already, then the key point will be Under Armour. Undoubtedly, it will determine the life and death of their business. Because the development of new customers and the acquisition of huge orders cannot be achieved in short period.
Similarly, the loss of customers is definitely not a sudden occurrence in a short time, it is definitely traceable. Big brand customers are all related. Once a brand chooses to leave, a knock-on effect often occurs. We need to closely observe is it obvious decline in the apparel business in the next two quarters of financial reports. Once Under Armour's orders are gradually reduced, such a terrible conjecture may become a reality.
We might as well use the SWOT to analyze Prolexus. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT Analysis is a technique for assessing these four aspects of the business.
I won’t rob their Executive Director's opportunity to perform here. So I just talk about analysis of threats in the purpose to help and give them an early warning to prevent them from going bankrupt unfortunately.
- Domino effect, customers leave one after another based on the needs of the general environment and the company cannot meet the relevant development needs of brand.
- Wrong marketing strategy. I heard from Sujibaby that Prolexus plans to develop its own apparel brand. According to the historical Annual Report of Prolexus, found that they have proposed to develop the brand many years ago, but the development seems to have failed so far. The resources needed to develop the brand is huge, and there is difficultly occur the economic benefit in the short term. So it’s likely that their decision-making will speed up and use up the remaining resources because of this.
- Prolexus is valuable for people in need, but Prolexus is worthless for people who don't need it. We may see such a situation in the future, people continue to buy but the fundamentals of Prolexus have not changed, there mean that may be a serious wave of selling in the coming future. Because there may be will have a competitor preparing to acquire their company, but they will try to suppress the price of Prolexus as much as possible. The lowest price that we can't imagine, and confirm that it will lower than the current price at least 50% (maybe).
- The ability of the management team is one of the most interesting topics. This is the most critical and not easily accessible part when analyzing listed companies. At first glance, the Prolexus’s board of directors has fewer people involved in operations and management. Strictly speaking, there are currently only two people (Lau Mong Ying & Choong Chee Mun). In other words, these two people should be the soul of the company, the key person to decide the success or fail. So, this is the key factor in determining Prolexus’s success or failure in the future.