YB Ventures completes its 18% investment into Prolexus

Main Market-listed tiles manufacturer and Information Technology company YB Ventures Berhad  (“YB Ventures” or “Company” or “Group”) has completed its investment into Prolexus Berhad (“Prolexus”). Combining the Company and its Executive Director Datuk Au Yee Boon’s stake, they are now the largest shareholder of Prolexus.

The Group has an indirect interest of 18.3% or 48.90 million shares, while Datuk Au holds 5.99% or 16,023,700 million shares in the main market listed apparel company.

YB Ventures Berhad Executive Director Datuk Au Yee Boon said: “We are confident that the investment into Prolexus will derive synergies and create values for both companies in FY2022 and FY2023. Both YB Ventures and Prolexus have strong capabilities in their manufacturing arms and we believe that the asset rationalisation and sharing of expertise and experience will push forward our ambition to embrace smart manufacturing.”

According to Datuk Au, the shift towards Industrial 4.0 will improve production efficiency, leading to a better economy of scale and driving a higher profit margin for both companies. 

Aside from that, Datuk Au also noted that there are similarities between YB Ventures and Prolexus as both the companies are pushing forward their self-developed brands. 

“At YB Ventures, we have our own negative ions tiles brand “Talos Living Tiles”, which serves as functional tiles to improve indoor air quality. Meanwhile, Prolexus has launched its own brand, “Arumn”, a crafted modest wear brand that women across all ages, regardless of colour and creed, can experience without compromising style. As both companies shared their experience on branding, this will help to elevate the brand values of their products,” Datuk Au said. 

While some of the initiatives to improve research & development (“R&D”) capabilities, cost savings, an improvement in procurement processes and even a shift towards solar energy for manufacturing plants would be shared across, Datuk Au pointed out that both corporates will operate independently, in terms of operations and financials. 

“As an example, the solar initiatives for YB Ventures’ plant in Kulai, Johor, can save at least 20% of electricity per month and could also help to escalate the shift towards renewable energy sources for Prolexus. These initiatives align with both companies’ ESG agenda,” he added. 

Datuk Au views the completion of the investment is timely as Prolexus’ apparel business is expected to see a recovery in tandem with the global economic recovery as international borders reopen. 

One of the positive aspects to take note of is that Prolexus has managed to maintain its profitability over the last two years despite the impact of COVID-19 pandemic and the disruption to its business operations. In its financial year ended July 31, 2021, the Company registered a net profit of RM16.7 million, on the back of RM227.5 million revenue.

The recovery of demand for apparel and foreign workers' return will accelerate YB Ventures’ initiatives to realise synergies from its investment. 

On top of that, Prolexus has a strong economic moat to withstand the global economic uncertainty with its large pile of cash. As of 31 January 2022, Prolexus has RM104.6  million of cash and cash equivalents.

YB Ventures had also on 11 April 2022 obtained the approval from Bursa Malaysia Securities Berhad for the bonus issue of up to 749,319,778 free warrants in YBVB (“Maximum Scenario”), on the basis of one (1) Warrant for every two (2) existing ordinary shares held on an entitlement date to be determined later (“Proposed Bonus Issue of Warrants”).

“This is as an attractive corporate exercise to reward our loyal shareholders, enabling them to have greater participation in a derivative of YB Ventures without incurring any cost,” Datuk Au added.

“On the other hand, the 5-year convertible warrants, when being exercised, will provide us with additional working capital and allow the Group to obtain proceeds without incurring interest expenses as compared to bank borrowings,” Datuk Au said.

This content is provided by Aegis Communication Sdn Bhd.

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