Lasco Financial setting for profit explosion
Revenues at Lasco Financial Services jumped 22.4 percent for first quarter over the similar 2016 period to reach $319 million for an increase of $58.5 million, but importantly trading income climbed 31 percent to $303 million.
According to Managing Director, Jacinth Hall-Tracey “this result represents year over year growth of and is being driven by our strategy of expansion which began in the previous financial year”.
Profit before taxation, moved from $69.7 million in 2016 to $81 million, a 16.5 percent increase with profit after tax increasing 15.8 percent to $66.9 million, compared with the corresponding financial period and resulting in earnings per share of 5.4 cents.
Total Expenses grew 24.6 percent over the 2016 quarter to $238 million with Selling and Promotion cost rising by 31 percent. The increase was “largely driven by increases in Selling and Promotion as we continue to push the LASCO Money consumer facing brand name. This brand has resonated well with our customers and has enabled us to fully explain all our services. Previously, most customers were only aware of our Cambio and MoneyGram services. This brand awareness has been paying off in the increased transactions in all our locations as our customers embrace our more friendly community brand,” Hall-Tracey advised shareholders in a release accompanying the financials.
In the previous financial year, Lasco began the implementation of a strategy to expand the Loans Division by adding a Business Loans Unit. This expansion gave rise to several new loan offices as well as an increase in administrative and sales staff. Increased focus on lending, resulted in 70 percent growth in the loan portfolio that should move the portfolio in the region of $340 million. At the end of March loans amounted to $282 million up 43 percent over the $197 million due at the end of March 2016, no figures for loan is disclosed in the quarterly.
The balance sheet shows assets of $1.54 billion, cash funds of $574 million and stockholder’s equity of $1.22 billion.
IC insider.com is forecasting earnings per share of 30 cents for 2018 and should go on to about double in 2019. Lasco Financial last traded on the Junior Market of the Jamaica Stock Exchange at $3.55.
Is Broilers’ inside trade a buy signal?
Insider trading in the stock of the company they are connected to can be a big indicators of future prospects, but it is not always the case.
In the past big purchasing of Jamaica Broilers Group shares by insiders have signaled improved profits down the road.
Could the latest big trade be such a signal? The latest ones are a bit confusing with bought buying and selling although there is a bias towards buying. The company recently reported that three Directors and three Senior Managers purchased a total of 5,735,448 of the company’s shares and that a Director and a Senior Manager sold a total of 5,214,772 of the shares, during the period July 11 to 14.
The company reported earnings of $1.85 per share for the just concluded 2017 fiscal year and IC Insider.com forecast is for $2.60 for the 2018 fiscal year to April as revenues continues to grow and debt is paid down with increasing profits. The stock which traded on the Jamaica Stock Exchange on Friday at $18, is one of IC Insider.com’s TOP 10 main market stocks to own.
Radio Jamaica looks promising
Radio Jamaica generated revenues of $1.2 billion in the March 2017 quarter, $156 million less than the December quarter but had $49 million more in direct expenses in the March quarter when it was expected that direct expenses would have fallen in keeping with the reduced income.
The group also reported lower profits in the March quarter compared with the December quarter and suffered a loss before taxation of $30 million and $65 million after an increased taxation charge of $35 million, bringing the full year taxation provision to $75 million. RJR ended the fiscal year with profit after tax of $145 million or just 6 cents per share. Results for 2018 should be much better as staff cost will fall with reduction in staffing while some one off cost that affected profit, should not recur.
In the March quarter, general expenses fell by $110 million from the December quarter to reach $562 million. The sharp change could result from reclassification of some expenses to direct cost, resulting in the jump in this area in the last quarter of the fiscal year. In the December quarterly report, the company stated that “increased cost of $64 million was incurred largely from further operational investments and one- off costs”. The areas that incurred the cost are continued rollout of 1 Spot Media, legal expenses incurred in protecting copy rights and defending legal action and repairs to broadcast transmitters. This was reconfirmed by Managing Director, Gary Allen in response to questions posed by IC Insider.com as the reason why profit in the Television segment had fallen even as revenues rose.
“The figures have seven months of the old structure. Only five months of HR synergies were realised in the financial year under review, as redundancies took place in September/November” Gary Allen, Managing Director advised IC Insider.com, in response to our question of how much staff cost is in the 2107 figures for person who were made redundant?
Prior to the merger investors were advised of major cost reduction and improved revenues that will flow from the merged entity. Allen stated ‘they have started with the HR synergies. Others are being realised as we integrate systems in the operations. Most elements will be implemented by the end of 2018/2019.”
Cash flow from operating activities was $363 million but $248 million was spent on acquiring fixed assets with the group ending with cash and equivalent of $291 million at the end of the year. RJR also has investments in bonds and Government of Jamaica securities amounting to $487 million.
The RJR Group underwent major changes with the acquisition of the Gleaner media business. Comparing the 2017 fiscal year’s results with that of 2016 makes little sense with the latter having very little financial data of the acquired business.
Data contained in the segment results, provide some indication as to the performance of various parts of the group. The performance of the segments in 2017 over 2016 show, Audio Visual generating just $65 million more in revenues in 2017 to end with $1.868 billion and contributed $72 million to profits compared to $157 million in 2016, Audio comprising radio operations had revenues of $711 million compared to $567 million and contributed profit of $238 million versus $112 million, Independent Radio coming on stream and growth in Outside Broadcasts contributed to the increase. The print division showed revenues of only $78 million in 2016 and a loss of $190 million saw a major about turn, with revenues of $2.8 billion and profit of $173 million for 2017.
Allen went on to state that “the market will remain competitive and the economic conditions of Jamaica will continue to impact media spend. Improvements will come from those able to leverage market leadership positions, product diversification, overseas earnings and new marketing strategies. RJR has all the necessary ingredients to meet these challenges and the opportunities on the horizon.”
The stock traded at $1.60 on the Jamaica Stock Exchange on Friday and with IC Insider.com projecting earnings of 25 cents per share for 2018 fiscal year ending in March, the stock seems attractive coming against a back ground of continued growth in the Jamaican economy.
Jamaica Broilers’ profit jumps 28%
The financial year to April 2017 was a good one for Jamaica Broilers Group, with attractive revenue and profit growth. For the full year, profit after tax attributed to the company’s shareholders rose 28 percent to $2.23 billion from $1.74 billion in 2016.
Sales revenues grew 15.3 percent to $44.44 billion for the year from $38.52 billion in 2016. The group enjoyed a 17% increase in revenues in the fourth quarter to $12.32 billion up from $10.52 in 2016 but profit but rose from $900 million to $1 billion at a slower pace than the growth in revenue.
A fall in the pace of growth in gross profit was a major factor in the slower growth in the last quarter as direct cost rose limiting gross profit to a rise of 13 percent to $3.57 billion in the quarter from $3.16 billion in 2016.
Segment results showed the Jamaican segment generating revenues of $31.96 billion up from $28.4 billion but segment results fell from $3.6 billion to $2.87 billion. Revenues for the US based operations grew to $10.86 billion from 8.8 billion and generated segment profit of $1.3 billion compared to $1 billion in 2016. Other Caribbean Countries generated revenues from third parties of $1.6 billion up from $1.3 billion in 2016 and contributed $944 million to profit up from $254 million in 2016.
While some Jamaican companies are by passing cheap borrowed funds for expansion purposes, Jamaica Broilers with equity capital of $14.4 billion has $7.7 billion in debt. The group holds $2.76 billion in cash with loan receivable of $2.55 billion of which $500 million is due within 12 months. Cash flow from operations is attractive at approximately $3 billion for 2017. During the past year $749 million was expended on the acquisition of fixed assets compared to $800 million in 2016 and the group paid dividends of $420 million for the 2017 fiscal year, up from $311 million in the prior period.
Forecast for 2018 is for EPS of $2.60, up from $1.85 for 2017. The stock closed on the Jamaica Stock Exchange on Friday at $18 at 10 times 2017 earnings but 7 times 2018 earnings compared to an average of the main market of 13.7. IC Insider.com rates the stock a buy for growth and income.