Prolexus' plan to build Vietnam plant delayed

PETALING JAYA: Prolexus Bhd’s plan to build an apparel factory in Vietnam as part of its expansion drive has been delayed, according to a source.
It was stated in Prolexus’ circular dated May 20, 2016 relating to its rights issue that the plant would be completed and fully commissioned by the third quarter of this year, with an initial production capacity of about 4.5 million pieces a year.
The source told SunBiz the delay is due to some changes in the architecture design, which hindered the group from obtaining a construction permit.
Prolexus did not respond to queries as at press time, citing the group’s disclosure policy.
Proceeds from the rights issue are to be utilised for the specified reasons within 24 months of the completion of the exercise. The rights issue was completed in June 2016.
The Vietnam plant was to have been financed with the rights issue that raised up to RM62.53 million. The plant was to allow the group to take advantage of the generally lower cost of production as well as the availability of a larger pool of labour force.
In its 2016 annual report, Prolexus said it had secured the lease of two parcels of industrial land measuring 61,950 square metres in Long Jiang Industrial Park, Tien Giang Province, Vietnam.
The initial phase of this apparel factory was expected to be commissioned in the second half of 2017. However, no update has been reported as yet on the progress of work on the plant.
Besides being used for the Vietnam plant, part of the proceeds from the rights issue were also earmarked for the setting up of a new fabric mill in Kluang, Johor, in a bid to expand into upstream fabric production.
The rights issue was undertaken on the basis of one rights share for every existing Prolexus share held, together with one warrant for every two existing shares held.
According to Prolexus’ website, it has three manufacturing plants in Malaysia and China.
Prolexus’ apparel retailing business has it own brands under Be Elementz and Bixiz Kids. Its products are exported to international markets, including Australia, and countries in North America, the European Union and Asia.
For the third quarter ended April 30, 2017, Prolexus reported a 53.9% slump in net profit to RM1.59 million from RM3.45 million in the previous corresponding period, due to lower contribution from the apparel division. This brought its nine-month net profit to RM15.68 million, 13.8% lower than the RM18.2 million previously.
Prolexus’ share price closed up 3 sen at RM1.20 on 128,100 shares done yesterday, giving the company a market capitalisation of RM208.4 million.