138 Student Living huge gains

Revenue at 138 Student Living, jumped 31 percent for the March quarter, to $289 million from $221 million in 2019. For the six months to March, the revenue jumped 69 percent to $753 million from $445 million in 2019.
138 Student Living boasted an eye-popping turnaround in its profit before interest and taxes of 262 percent for the quarter and 588 percent for the six months to March 2020. The company recorded a profit before tax and finance cost of $137 million for the March quarter and $396 million for the six months. Profit after tax ended at $87 million for the March 2020 quarter versus a loss of $45 million in the prior year’s second quarter, for the half-year, profit after tax climbed to $270 million compared to a loss of $44 million in the 2019 period.
Since reporting profit before tax for the 2017 fiscal year, the current period is the first that the company is reporting profit that suggests a full-year profit. The company noted four consecutive quarters of recording an operating profit, peaking in December 2019. Contributing factors included the decrease in operations costs, particularly utilities, increased occupancies, and variation claims relating to Irvine Hall.
There is much more than meets the eyes of the glowing 2020 performance. “Three main items positively impacted this result: (i) effective management of operating costs (primarily utilities) (ii) increased occupancies for long-term and short-term rentals and (iii) variation claims relating to Irvine Hall. The last item includes a variation claim for the full 2019 year as well as a first and second quarter claim for the year 2020. Adjusting for the variation claims, the group recorded year-to-date profit amounting to $71 million,” Chairman Ian Parsard informed shareholders by way of directors’ report accompanying the quarterly.
138SL is yet another company that fails to provide shareholders with relevant information by bundling direct and administrative expenses into just one line item on the financial report. Administrative costs fell by 17 percent for the quarter and 8 percent for the six months to March, posting figures of $153 million and $358 million, respectively. Finance cost amounted to $67 million for the quarter down slightly from the 2019 period, with $68 million and for the half-year $134 million down from $138 million.
Earnings per share came out at 21 cents for the quarter and 65 cents for the six months and should end the fiscal year higher, but profits from the continuing business will be far less than the half-year numbers indicate.
At the end of the 2020 first quarter, 138SL generated gross cash inflows of $267 million but saw receivables rising by $181 million and had a net repayment of loans amounting to $106 million leaving cash equivalents at $270 million. Current assets stood at $712 million, with receivables of $418 million. Current liabilities were $1.15 billion, including payables of $602 million. Shareholders’ equity stood at $5.8 billion, with borrowings of $4.6 billion.
138SL adjusted its operations as a result of COVID-19, which has resulted in an occupancy reduction of 25 percent in April. The Chairman noted that while they expect to see the continued impact on their revenue, the company has made necessary changes and the Concession Agreement of a 90 percent occupancy guarantee provides a meaningful buffer.
The stock traded at $6.69 on the Main Market of the Jamaica Stock Exchange, with a PE ratio of 13.5 times 2020 earnings from ongoing revenues.