Record Carib Cement profit up 70%

Caribbean Cement reported record profit for the year ending December 2020 from sales that rose 13 percent to $20 billion and up 17.8 percent in the final quarter to $5 billion from $4.3 billion in 2019.
For the year, profit after tax surged 70 percent to $3.2 billion after tax provision of $1.2 billion. The tax charge includes deferred tax amounting to $414 million, down from $664 million in 2019. The results would have been far better but for a billion loss in foreign exchange movement, but interest cost fell from $939 million to $812 million, partially cushioning some exchange losses. Interest cost will fall further in 2021 as the debt load recedes with the strong cash flows allowing for the rapid repayment of the $4.4 billion of long term loans.
Gross profit improved rapidly, surging faster than the increase in revenues with a 26.45 percent increase from $7.2 billion to $9.1 billion. The company also benefited from reducing administrative and other expenses that fell from 2.5 billion to $2.35 billion. The company has contracts that hedge diesel fuel to protect it from major increases in one of the largest cost in its operations.
Earnings per share came in at $3.76 for the year, just ahead of’s forecast of $3.76. projects earnings of $5.7 billion with EPS of $6.70 in 2021.
Cement generated positive cash flow of $6.5 billion, repaid $4.7 billion in loans and paid $1.5 billion to redeem preference shares due to the Trinidad Cement, its immediate majority shareholder. The amount owing for the TCL preference shares is now down to $2.3 billion with loans outstanding at 4.4 billion, of which $3.1 billion is in Jamaican dollars owing to National Commercial Bank and $1.34 billion due to Cemex Espana in US dollars. The reduction in overseas debt has significantly reduced the foreign exchange exposure, with 2021 set to benefit from a sharp reduction in exchange losses.
At the end of the year, shareholders’ equity moved to $11.5 billion from $8.3 billion at the end of 2019. The stock is one of the original IC TOP 15 stocks for 2021 in the main market of the Jamaica Stock Exchange and remains in the list but now at 13th position with a target price of $135 in the next twelve months. The company is set to benefit from an improving economy, with low interest rates encouraging real estate development and ownership as well as expansion and rehabilitation of the country’s infrastructure that will consume an increasing amount of cement.
The stock closed at $65 on Friday with eth PE ratio at 17 times 2020 earnings and just 10 times 2021 projected earnings. The company has a strong balance sheet that is getting stronger each year and is moving into a phase where the payment of a dividend cannot be far away. Based on the above, Caribbean Cement enjoys coveted BUY RATED investment approval.

2020 a great year for Grace Kennedy

The year just past may have been a terrible one for many, for at Grace Kennedy, they have much to be thankful for and management wish must be for another repeat performance like 2020.
Grace reports record profit of $6.2 billion attributable to shareholders for 2020, jumping 39 percent from $4.49 billion in 2019 after taxation more than doubled to hit $2.85 billion for an increase of 178 percent.
Profit before tax rose a strong 58 percent compared to 2019 to end at $9.7 billion. Importantly profit before other income jumped a stunning 82 percent to $6.8 billion while other income rose 20 percent to $3 billion. In what was a spectacular year for the 100 years old company, revenues grew 12 percent to $115 billion, surpassing the $99 billion generated in 2019. Direct and operating expenses rose 9 percent to $109 billion. Other comprehensive income brought total profits to $9.2 billion versus $9.26 billion in 2019.
The groups’ segments had a mixed performance, with Food trading profit almost doubling from 11 percent rise in sales while Insurance and Money transfer contributed 21 percent and 26 percent in profit but banking and Investments fell.
GK’s Food Trading segment saw improved revenue and profitability primarily due to the outstanding performance of its international food businesses. GraceKennedy Foods (USA) LLC showed triple digit increase in gross profit and marked growth in revenue, with the Grace and La Fe brands recording growth and improved margins; and GK’s Jamaican food distribution business recorded strong growth in both revenue and pre-tax profit, coupled with improved operating margins,” a release from the company stated.
The group earned 6.26 per share for the year versus $4.51 in 2019 and the stock price closed on Friday with a last traded price of $84.50 for a PE ratio of 13, well below the market average of 20. projects 2021 earnings of $11 per share and see the stock heading close to $200 for the year and receives the coveted IC BUY RATED stamp of approval.
Total shareholders’ equity stood at $29 billion at the end of December, up from $27 billion in 2019. the group paid $1.59 billion in dividend during the year, up slightly from $1.54 billion in 2019.

Barita acquires 20% of Derrimon Trading

Barita Investments now owns 20% of the issued shares of Derrimon Trading Company following the closing of the Derrimon additional public offer of shares, Barita disclosed in a release to the Jamaica Stock Exchange.

Barita headquarters.

Commenting on the investment, Jason Chambers, Director of Barita and Chief Investment Officer of Barita’s parent company, Cornerstone, said: “The Board of Directors of Barita and the leadership team of Cornerstone are very satisfied with this investment as Derrimon embodies several of the characteristics we typically look for in assessing investment opportunities. DTL has built up an enviable track record of growth and value creation, and the management has demonstrated their ability to achieve scale both organically and through the successful integration of several accretive acquisitions. Barita has, over the course of the last two-plus years, established significant capacity to expand its portfolio of investments into sectors that are viable alternatives to traditional ones that are now fully priced in our view and therefore not likely to generate alpha for our shareholders in the medium to long term. This minority acquisition should be seen as a by-product of our increased investing capacity as we prudently seek to unearth both value and growth-oriented investment opportunities within the context of the current global investment landscape.”
Chambers continued, “We also note the diversification factor that this investment adds to our portfolio as it provides exposure to the real sector via a company which has recently begun an international expansion.

Mayberry tried trading 420m Derrimon Trading shares but the transaction was disqualified.

At Cornerstone and Barita, our goal is to positively impact the lives of our stakeholders through the tireless pursuit of opportunities that provide solid risk-adjusted returns throughout their investment horizons. We believe this investment is aligned with that ethos and we look forward to collaborating with the team at DTL to the mutual benefit of our collective stakeholder groups.”
Paula Barclay, General Manager of Barita, in commenting on the Company’s investment in Derrimon, stated: “At Barita, we continuously seek out unique strategic opportunities to build shareholder value while balancing the interests of our clients, team members, and other key stakeholders. We are confident that our association with a company like Derrimon will only contribute positively to our overall future performance. Consummating this investment took significant effort from the team at Barita and I would like to take this opportunity to extend my gratitude to them for their hard work.”
Barita Investments is a publicly-traded Securities Dealer listed on the Jamaica Stock Exchange and majority-owned by Cornerstone Financial Holdings.
Derrimon Trading is listed on the Junior Market of the Jamaica Stock Exchange and distributes dry and frozen bulk commodities. It also operates retail outlets and Supermarkets.
The shares of Barita are trading at $81.14 and Derimon at $2.56 on early Friday morning after the release.

Cost cuts drive Lasco Manufacturing profit

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Sharp cost-cutting and moderate growth in revenues drove profit at Lasco Manufacturing up 29 percent for the December quarter and 30 percent for the nine-month period.
The performance was even more stunning, with pretax profit jumping a very strong 43.4 percent for the quarter and 36.7 percent for the nine months to $1.3 billion as the company profit became subject to full taxation as of October 12 in 2020.
The company maintained a gross profit margin at 36 percent in the quarter, compared to 2019 but enjoyed an increase to 38 percent for the nine months from 37 percent in 2019. It ended the 2020 fiscal year at 37 percent suggesting the 2021 full-year results will most likely end at 38 percent, in line with the nine months’ margin.
The company reported revenues rising 6 percent for nine months to $6.2 billion but up just 3.5 percent to $2.07 billion for the December quarter. Administrative and other costs fell 20 percent for the quarter to $315 million and for the nine months to December by 12 percent to $982 million.
The principal activities of the company are the manufacturing of soy-based products, juice drinks, water and packaging of milk-based products.

Lasco Manufacturing products

Shareholder’s equity stood at $7.5 billion at the end of December 2020 and borrowed funds dipped to $949 million of which $453 million is due for payment within a year. Cash funds and investments amount to $1.7 billion after the company generated funds before working capital and capital financing needs of $1.5 billion. A dividend of $251 million was paid during the nine months.
Lasco generated earnings per share of 25 cents for the nine months up from 19 cents in 2019, while the quarterly 2020 earnings came in at 7 cents. projects earnings per share at 35 cents for the year to March and 40 cents for the 2021 fiscal year.
The stock last traded at $4.32, with a PE ratio of 12.3. The stock is undervalued based on the earnings and an average market PE of 15 and a target PE ratio of 20 that many stocks are currently trading around. The target price of $7.

Jamaican Teas profit jumps sharply

The Jamaican Teas Group enjoyed an outstanding first quarter with rising sales and profits fueled mainly by strong growth in exports that rose 88 percent over the prior year and accounted for 64 percent of total sales in the quarter and positive contribution from the investment division.

Jamaican Teas traded the most volume on Monday.

Sales rose 41 percent to $611 million and profit attributable to shareholders jumped 321 percent to $117 million from just $28 million in 2019. The improved profit result occurred with profit fully taxed compared to the 2019 quarter that was taxed at 50 percent of the normal rate for Jamaican Teas’ profits.
The real estate division also contributed to improved profits following completion of an apartment complex. The subsidiary QWI Investments, contributed positively to the profit performance following improved investment performance, resulting in the equity portfolio delivering a $143 million increase from dividends and capital appreciation of stocks in the quarter.
The supermarket contributed reduced sales and profit due to continued curfew restrictions on its hours of operation and the closure of schools. Manufacturing sales climbed 48 percent to $428 million for the quarter, with domestic sales increasing just 7 percent compared with a year ago.
First quarter revenues at the Supermarket amounted to $135 million slightly below the $142 million generated a year ago. There was a progressive fall in the rate of decline as the quarter elapsed.
The gross profit margin was a consistent year over year with a 27.5 percent margin for the latest quarter versus 27.4 percent for the 2019 first quarter for the group.
Marketing expenses fell for the quarter by $5 million to $8.7 million resulting mainly from the cost of new products launched in 2019, and not repeated in the latest quarter.
Administrative costs rose moderately by 11 percent to $63 million and Interest expense declined during the quarter resulting from lower interest rates on some borrowed funds. According to the directors in their quarterly commentary, referring to the sale of apartment units they developed, “we have signed contracts and expect to record sales for the last 4 apartments in our second quarter. Manufacturing sales after the end of the quarter are 15% higher in the first 28 days of January compared with a year ago and our quoted investments continued to improve.”
Earnings per share came in at 5.5 cents, 323 percent above the 2019 – earnings of 1.3 cents. earnings forecast is for 30 cents per share, gains in the investment division could impact it positively or negatively. Based on the forecast the PE ratio at the last traded stock price of $2.75 is 9.2, suggesting a strong upside for the stock assuming a target PE of 20.
Jamaican Teas produces black and green and many herbal teas, soaps and some other consumer product and owns a supermarket and has a subsidiary that invests in local and overseas stocks. The chairman of the group is John Jackson.

Persons who compiled this report may have an interest in securities commented on in this report.

Some sunshine for NCB

NCB Financial had some good news to report to investors, but story it is not all sunshine. Net operating income reached $33.78 billion slightly up from $33.3 billion generated for the 2020 fiscal year first quarter, but nearly 25 percent above the September 2020 quarter.
The group could not translate the relatively good news on the revenue front into a positive development in net profit. The group saw a drop in profit attributable to shareholders falling 34 percent to $3.9 billion from $5.9 billion in December 2019 quarter and down from $4.3 billion in September quarter. The fall in profits is directly related to a jump in staff cost of $1.7 billion to $12.3 billion and increased tax on profit.
Loans net of provision for losses crawled by 5 percent to $461 billion from $438 billion at the end of December, in both years and from $453 billion at the end of September 2020. The growth is well down on the double-digit increase that was taking place in prior years, with the March 2020 report showing a 12 percent increase over the previous year. Investment securities rose from $784 billion at the end of 2019 to $855 billion.
Total comprehensive income rose by $7.3 billion to end at $13 billion, up from $6.8 billion in the December 2019 quarter.
The group’s various segment had mixed results. Consumer Banking segment recorded flat operating revenues of $6 billion but suffered a greater loss than in 2019 of $629 million versus $329 million. Payment Services delivered segment profit of $660 million down from $1,096 billion in 2019, from operating revenues that slipped from $2.9 billion to $2.6 billion. Corporate and Commercial banking operating revenues rose to $2.45 billion from $2.26 billion with profit declining modestly from $1.3 billion to $1.23 billion while Treasury and Correspondent Banking suffered a reduction in operating revenues to $2.55 billion from $2.67 billion but enjoyed a bounce in profit from $1.66 billion to $1.77 billion.

NCB Financial Montego Bay branch

Wealth, Asset Management and Investment Banking delivered a 21 percent rise in operating revenues to $5.14 billion from $4.23 billion and contributed a 36 percent jump in profit to $3.6 billion from $2.67 billion. Life and Health Insurance and Pension Fund Management had operating revenues of $11.97 billion down from $12.27 billion but enjoyed a slight pickup in profit from $5.9 billion to $6.3 billion. Operating revenues jumped 26.6 percent in the General Insurance segment to $5.35 billion with profit rising 45 percent to $2.2 billion.
Earnings per share amounted $1.66 down from $2.46 at the end of the December 2019 quarter and $1.82 for the September quarter. The latest quarter contains the full cost of asset tax. At the same time, September does not, in addition there was a tax credit of $1.1 billion for the September quarter and a tax charge of $2.3 billion for the 2020 December quarter and June 2020 coming in at $6.7 billion.
For profit to grow meaningfully, the group needs to be generating double-digit increases in the loan portfolio while maintaining loan losses to acceptable levels. In the 2020 fiscal year, the group incurred a major increase in provision for loan losses. The latest results show this line item to have returned to more normal levels with a provision of $1.17 billion versus $1.57 billion in December 2019 and $4.6 in the September quarter. Other operating cost which came in at $10.5 billion appears to reflect a much higher cost than for the other quarters. In March 2020 the cost was $5.6 billion compared to $$10.6 in December 2019.
The stock is listed on the Jamaica Stock Exchange, with the price now trading around $136.

Q3 profit rose 18% pretax for the Lab

Profit jumped 43 percent before tax at Limners and Bard, with revenues surging 41 percent for the third quarter to July this year. The robust third quarter profit did not hold for the final quarter despite a 55 percent jump in fourth quarter revenues to $226 million from $146 million in 2019, with profit inching just a two percent higher for the final quarter from $18.9 million in 2019 to $19.24 million this year.
Full year profit rose 18 percent from before tax in 2019 from $108 million to $127 million and just 41 percent from $90 million after profit tax. There was no tax payable for 2020, following the tax relief benefit now enjoyed from listing on the Junior Market of the Jamaica Stock Exchange.
Revenues increased 44 percent, moving from $632 million in 2019 to $912 in 2020. Cost in generating revenues grew much faster than income, with an increase of 51 percent for the year to $613 million and 68 percent for the final quarter to $154 million.
Administration expenses and other costs rose 55 percent to $241 million for the year and by 54 percent for the October quarter to $54 million as salary related cost jumped 43 percent for the year and directors’ remuneration more than doubled with a rise of 110 percent to $24.6 million. The company’s CEO and the Chairman indicated the sharp increase was due to one executive director serving as a director for a part of the previous year, resulting in the numbers looking distorted. In the July quarterly report accompanying the results, the Chairman, Steven Gooden and Kimala Bennett, Chief Executive Officer commented on increased cost, stated, “these included a systemization initiative and training to assist in efficiencies linked to our growth drivers and a pay-out of 50 percent of our 2019 employee profit share.

Kimala Bennett, Chief Executive Officer of The Lab.

The audited financial statements did not include the comparative 2019 segment results, as is the norm, to allow investors to compare the current year’s figures with those of 2019. In an interview with the Chairman and the CEO, they pointed out that salaries were cut during the uncertainty to business earlier this year. At the same time, the profit share payment was suspended. As the year unfolded, with results looking positive, the board decided to reinstate the full salaries and pay out the profit share for 2019 that was approved earlier in the year, the full cost of which is included in the second half of the fiscal year, the directors indicated. The services of five new employees were engaged in the final quarter, to meet increasing demand in the future, adding to the increase in cost. The directors stated that no decision has yet been made about profit share for 2020 and no provisions are included in the 2020 audited accounts.
The company separates the business in three segments. Revenues for the Media Segment moved from 46 percent of total revenues in 2019 to 53.96 percent in 2020, Production Segment revenues fell as a percentage of overall revenues from 35.77 percent in 2019 to 25.67 percent, while the Agency segment rose from a contribution of 18 percent to 20.4 percent.
Revenue for the Production segment for the year was $234 million just up from $226 million in 2019, with Gross segment profit rising marginally from $100 million to $102 million for a Gross profit margin of 43.6 percent. The Media segment pulled in 68 percent more revenues than in 2019, to reach $492 million, resulting in an increase in Gross profit of 77 percent to $71.5 million and a Gross profit margin of just 14.5 percent. The Agency segment climbed a robust 65 percent to $186 million from $113 million in 2019 and enjoyed a 45 percent rise in Gross profit to $124.7 million from $86 million, with a Gross profit margin of 67.2 percent. Up to the third quarter, the media segment delivered a 60.5 percent growth in revenue amounting to $136 million putting revenue in this area at $362 million and resulting in revenues of $130 million in the fourth quarter.
The Company generated cash flows from operations of $140 million up from $121 million in 2019. After increased working capital needs, repayment of loans, payment of $19 million in dividends and net inflows from movements in fixed assets, the company held on to $89 million of the funds generated and ended with cash and equivalent at $380 million at the end of the year.
Current assets jumped sharply to $560 million from $387 million in 2019, receivables leaped from $84 million to $158 million. The level of receivables amounts to the total revenues generated in the final quarter and that was the case in 2019. Current liabilities amounted to $149 million, up from $83 million in 2019. Borrowings stood at just $65 million. Shareholders’ equity climbed to $464 million from $356 million in 2019.
The strong growth in revenues is positive for the company, however, the production segment, with a high profit margin, was flat during the year, while Media placements, a low contributor to profits grew strongly, with much higher risk associated with it, due to the high level of liabilities it incurs. Strong growth in the Agency segment is excellent as it contributes the most to gross profit and is an area to watch for continued robust growth.
The financial reports indicate some weakness in management, particularly the financing area, but the company is addressing this with the planned employment of appropriate personnel. As indicated above, there is no comparison for the segment accounts and no information on segment assets and liabilities, which is the standard requirement. Past quarterly reports do not contain segment results, which is the norm. These are all areas that point to weakness in critical areas.
The final quarter numbers are of major concern with increased cost wiping out the benefit of a big surge in revenues. The directors’ commentary for the third quarter results speaks to cost rising, but there is no commentary explaining what happened in the final quarter.
The company has been reporting big increases in staff cost for some time, the level of increase suggests that some of these costs relate to direct operating expenses rather than administration and therefore distorts the contents of the data presented to shareholders and withholds pertinent information for better understanding of the contents of the profit out turn.
With nearly two months of the current quarter having elapsed, the directors revealed that the company is on target to meet their forecast so far. After the year end, the company declared a regular dividend of 3.4 cents per share and a special dividend of 4 cents payable on January 22.
In going public, one objective for the use of the proceeds was in funding acquisitions. The directors indicate that they reviewed some potential candidates, but so far, none have met their objectives.
The company reported earnings of just 2 cents per share in the October quarter and 13 cents for the year. IC projects 22 cents earnings per share for fiscal 2021, with the stock last trading at $3.05 on the Junior Market of the Jamaica Stock Exchange on Thursday for a PE ratio of 14 and based on 2021 projected earnings.

RJR Group chops staff

“Companies in the RJRGLEANER Communications Group on Friday, December 11, completed a reorganisation exercise primarily driven by the negative impact of the Coronavirus 2019 Disease (COVID-19) and the need for continued changes as the global media and communications industry continues its transformation,” a release from the group states.
“The exercise which was done over several months saw some positions being made redundant, impacting 107 workers, five of them being managers, the release stated.” In May, the Group reported, “due to a significant downturn in revenues in some areas of its business, it had been forced to lay off almost 100 workers for 120 days. While there has been some improvement in the last few months, revenues have still not returned to pre-COVID levels.”
“During the period, the company also reorganised and reoriented several of its business units and approaches, to be more agile, more competitive and more efficient. They complimented changes which see the Radio and Television areas of the Group being managed as a broadcast division, with the print and online units now managed as an integrated print and online division.”
“The Group’s technology activities have also been brought together in a technology division focused on the full digitalization of the Group’s operations and the enabling of a higher level of digital output.”
“This focus has seen investments in new management, customer relationship and production systems that will improve customer tracking and servicing, provide data analytics to aid management decisions, as well as delivering data analytics to clients to assist in decision making.”
“There has also been investment in new data management and publication systems to improve the consumer experience with our electronic publications, whilst increasing revenue-generating opportunities.”
“Tighter planning and elements of publication rationalization along the lines driven by closer data analytics have improved aspects of print and online operations. A new digital marketing and sales unit is developed to accelerate business growth in the Gleaner’s print and online business.”
“The Overseas publications have been revamped with a discontinuation of the weekly printing of newspapers in the United States and Canada, in favor of electronic publications, with special printed and online publications being done around special diaspora events.”

RJR shareholders at the 2019 AGM at the Jamaica Pegasus

“In broadcast, the local programming content strategy which has served Television Jamaica well, prior to and through the pandemic will continue to be built upon as TVJ is poised and ready to take advantage of the imminent announcement of the change from analogue television broadcasting to digital terrestrial television broadcasting in Jamaica.” The switch to digital broadcasts will provide consumers with multiple high quality television services from TVJ and further reduce operating cost.
“The group continued its focus on the diversification pillar of its strategy which has seen a minority stake of 10% taken up in digital marketing player ePost Caribbean Limited at the end of November, and an increase in the group’s equity position in Jamaica Holdings LLC, operator of e-commerce business, Gustazos to 50%, to be effective this month.”
“The Group is confident that with this reorganization and other activities, it is poised for growth and strengthening in 2021 and beyond,” the release from the group concludes.
Bad news oftentimes results in big investment gains down the road. In fact, investors must be seeing this when they drove the stock up from $1.12 at the end of the prior week to $1.28 on Friday, as the week close with limited selling of the stock. estimates that the redundancy exercise will save the group between $100-250 million in a full year. In the meantime, revenue in the print division is down sharply from 2019, but the electronic segments are holding their own.
The group reported a profit of $2 million in the June quarter but a loss before tax of $96 million for the halfyear to September. Depreciation in the first quarter of $67 million surged to $210 million in the second quarter, with the charge in the print division jumping from $11 million to $104 million for an increase of $93 million, due no doubt to an acceleration in write off of fixed assets at the newsprint division.
The print division generated revenues of $437 million in the June quarter, down from $722 million in 2019 and incurred a loss of $55 million for the 2020 period. Revenues increased $123 million in the September quarter over the June quarter to reach $560 million, yet was still lower than the $722 million garnered in 2019 September quarter, resulting in a loss of $154 million in the 2020 quarter, due mainly to redundancy and the increase depreciation charges.
To September 2020, the Audio-Visual division saw profit almost doubling from $84 million to $160 million, with revenues up marginally from $1.041 billion to $1.046 billion, while the Audio segment experienced a drop in revenues from $362 million to $325 million resulting in a loss of $11 million in 2019 rising to a $12 million loss.
The group generated positive cash flows from operations even after receivables rose by $116 million and cash on hand ended at $398 million, up from $253 million at the end of September 2019.
While results to march 2021 may well show a loss resulting more from one-off charges than from continuing operating performance.

Indies Q4 profit jumps sharply

Net profit increased 46 percent to $199 million at Indies Pharma, for the year to October, over the 2019 period and jumped 78.5 percent for the October quarter to $40 million.
Revenues increased 5 percent for the year to $766 million and a much stronger 33 percent for the final quarter, to $200 million over the same period in 2019 with $150 million.
There “would have seen a significant growth in its revenues if it were not for the pandemic,” Vishnu V. Muppuri, Executive Director & COO, stated in the report to shareholders. Revenues for the company’s first quarter to January increased 15 percent and 7.3 percent for the second quarter. The June quarter was out of line with a fall of 23 percent. Growth in revenues since 2017 has reached 15 cents in just 2018.
Gross profit for the twelve-month period was $525 million representing a 14 percent increase over the similar period in 2019. The company enjoys a high gross profit margin, which is a great asset. The margin rose to 69 percent for the year from 63 percent in 2019 and from 62 percent in 2018.
Administrative and other expenses decreased by $18.4 million to $320 million for the year from 2019, mainly due to the decline in rent, vehicle expenses, IT, security and one-off expenses incurred in the prior year. In the final quarter, Administrative and other expenses also dropped from $96 million to $74 million. Finance cost rose from just $197,000 in 2019 to $13.8 million in 2020, with the increased borrowing, taken on the finance the building of a corporate office, increased warehousing capacities and fund the development and approval of two new drugs in the United States.

Vishnu Muppuri – Executive director of Indies.

Earnings per share for the twelve-month period rose to 15 cents per share compared to 10 cents in the prior 2019 period.
Shareholders’ equity increased from $695 million at the end of the previous year to $779 million resulting from a revaluation gain of $71 million on the company’s property and an increase in retained earnings. Long-term Liabilities increased to $882 million from just $8 in 2019.
The Company generated positive cash inflows of $247 million; working capital and related party advances reduced the amount to $191 million. Loans net of repayment, purchase of property and $187 million dividend payment left the cash and equivalent at $44 million.
Current assets rose from $624 million in 2019 to $975 million at the end of 2020, with a rise in cash funds accounting for $330 million of the increase. Inventories slipped to $147 million from $157 and receivables moved up slightly from $293 million to $314 million, representing more than four months of sales. Current liabilities stood at just $44 million. The company reports rising amounts due to related company and director and sends a highly negative message about the financing of the business and those closely connected to it.
The company’s stock that is listed on the Junior Market of the Jamaica Stock Exchange seems fully valued at $2.70, with a PE of 18 times 2020 earnings and 13.5 times’s forecast of 20 cents per share for 2021.

Wisynco remains a buy

Wisynco Group was on a roll, with revenues up 27.5 percent in the nine months to March this year and 24 percent in the March quarter. Gross profit margin slipped in the March quarter while rising Administration and other expenses squeezed profits even more as the onset of the COVID-19 virus set in during March and upended business operations locally and overseas.

Wisynco headquarters.

Sales dipped slightly in the June and September quarters, but the September 2019 quarter includes sales of $503 million from a discontinued operation, resulting in flat sales from ongoing business. Net Profit Attributable to stockholders from continuing operations slipped 9 percent to end at $851 million for earnings of 23 cents per stock, compared to $932 million or 25 cents for the similar period of the prior year. Revenues for the quarter from continuing operations fell 6 percent from $8.6 billion to $8.1 billion in the 2019 quarter.
Gross Profit for the quarter of $2.9 billion was 5.9 percent less than the $3.1 billion achieved in the same quarter of the previous year, with a strong Gross Margin at 35.9 percent, the same as the prior year.
Selling and Distribution expenses dropped eight percent to $1.56 billion from $1.7 billion in 2019, but Administrative expenses rose 6 percent from $334 million to $354 million for the quarter for the corresponding quarter of the prior year. The charge for corporation taxes also declined 18 percent from $217 million to $177 million.
“We did see some pockets of improvement and were pleased that our exports rose 43 percent or approximately $56 million over the comparative quarter last year. We attribute this increase to higher demand in the US, Canada and other CARICOM countries for our brands and we continue to press the development of our exports as a means of getting exposure to new revenue channels,” William Mahfood, Chairman and Andrew Mahfood, Chief Executive Officer reported to shareholders in their commentary of the results.

Wisynco growing revenues and profit.

They went on further to state, “Management continues to implement measures to reduce expenses and were pleased that our expense to sales ratio held at 23.8 percent of sales even though our revenue base was lower than the prior year’s quarter. We are hopeful that the expense control measures will be more evident in future quarters.” The company expects to have lower energy costs with the successful commissioning of a cogeneration plant in July 2020, reducing energy costs.
Shareholders’ Equity rose to $13.87 billion from $11.91 billion in the 2019 September quarter. The group relied on loans to the tune of $2.66 billion, up from $2.6 billion in 2019. Cash flows from operations before changes in working capital amounts to $1.27 billion and after working capital changes, $1.8 billion compared to $1.74 billion in 2019 and build up cash and deposits to $6.6 billion with investments of $775 million. Current assets stood at $12.8 billion, with current liabilities at $5.2 billion. projects earnings per share for the fiscal year ending June 2021 to be $1.25, with a PE ratio of 13 compared to the market average for Main Market stocks of 16.6 based on the closing price on Friday of $16.43. The stock should be acquired as a medium to long-term investment, with the probability for the price to hit $30 by the end of 2021.
The principal activities of the group are the bottling and distribution of water and beverages and the distribution and retailing of food items.