Honey is a sweet product savoured by many, but is this Honey likely to attract many to buy into it? Junior Market listed Honey Bun is reporting first quarter results to December, which is not so sweet, but the results to come could get sweeter as the year unfolds based on many factors.
The company enjoyed increased sales of 11.6 percent, hitting $206 million and resulting in gross profit growing by 11.3 percent compared with the corresponding period last year. As gross profit margin fell slightly to 45.4 percent compared with 45.54 in 2013 and administrative and distribution costs rose by 17.4 percent, profit also declined, falling 17 percent for the quarter to $16.5 million or 17 cents per share. “This reduction was mainly due to increased distribution cost resulting from the takeover of a large contract distributor to maintain our customer service and the lease of vehicles due to accidents of two of our main distribution vehicles. Improvements in this area will be seen in the next quarter. Further, one time cost was incurred during this period as the building on the property acquired was demolished,” management reported, in a statement accompanying the financials.
In the last fiscal year to September, profit fell from $35 million in 2013 to only $23 million partly. The decline was due to added costs associated with the distribution of the products that rose by 20 percent when revenues grew by only 5.7 percent, gross profit margin slipped marginally in the last fiscal year, from 42 percent to 41 percent. But Honey Bun is set to benefit from a fall in the price of fuel used in the transport area and reduced energy cost based on a reduction in rates charged by Jamaica Public Service Company.
The bulk of profit is made in the first six months of the year, with the Easter period significant for sales. The September period is usually a period of losses. The company should be looking at earnings in the 50-55 cents region for the current year with reduced cost in some areas and continuation of growth in sales.
“Exports continue to rise and increased year over year corresponding period by over 150 percent. This was mainly due to the export of its Buccaneer Jamaica brand of fruitcakes to the UK market, where Honey Bun displayed their cakes in ASDA for the first time. We have also seen increased demand in the local market.” the company’s management reported.
At the end of the period, equity stood at $325 million in contrast to borrowed funds of only $64 million and cash funds of $33 million. The current asset ratio was 1.64 to 1.
The company’s stock last traded on the junior market of the Jamaica Stock Exchange at $1.91 and should enjoy some gains if the company hits the projected profit or comes close to it. The stock closed on Thursday with a bid to buy 20,994 units at $1.91, followed by a bid for 99,900 units at $1.80 but offers start at $2.90 to sell 11,000 units.
Is this Honey worth buying?
Profit looking up at Broilers
Jamaica Broilers recorded profits of $406 million for the quarter to January 2015, a 115 percent increase against the $188 million in 2014. Results for the third quarter was better than the amount earned in the first two quarters of the fiscal year combined.
Profit of $622 million was earned for the nine months, 21 percent above the $512 million for the 2014 period. Earnings per stock amounted 33.8 cents for the quarter, up from 15.7 cents for the corresponding period in 2014 and 51.86 cents per stock unit versus 42.71 cents, for the nine months period. IC Insider is forecasting $1 per share earnings for the year to April and $1.50 for the next fiscal year. If the forecast is met, the stock would be selling at at PE ratio of only 4.
The group should benefit from lower cost of inputs for feed, energy and fuel cost with the decline in the price of oil. Contributing to the gains so far, is the Group’s revenue increase of 15 percent for the quarter to hit $9 billion from the $7.8 billion in the corresponding period last year. Gross profit jumped 38 percent in the quarter to $2.2 billion, $600 million above the $1.60 billion of the corresponding quarter of 2014. For the nine months, gross profit came in at $5.7 billion versus $4.4 billion, an increase of 29 percent. It was the improvement in Gross profit margin that contributed most to the improvements in profit with $370 million for the quarter coming from the increased margin.
“In this quarter, the segment reporting was changed to reflect the new geographical perspective on the Group’s operations, being Jamaica, US and Other which includes Haiti,” the company’s management informed shareholders.
Management went on to state that “the growth in the US Operations continues. The segment results reflect the improvement in year to date performance; now at $773 million compared to the year to date of $283 million last year-a 173 percent increase. The Operations in Jamaica have performed as anticipated, given the market environment which has resulted in depressed consumer demand and lower disposable incomes. The year to date segment results at $1.297 billion therefore reflects only a 2 percent increase over the $1.270 billion recorded last year. Revenues from the fuel terminal operations at Port Esquivel were booked in this quarter in respect of a short-term contractual arrangement. A long-term agreement is being negotiated and prospects look good due to the current shortage of storage capacity for petroleum products. In this quarter, the segment reporting was changed to reflect the new geographical perspective on the Group’s operations, being Jamaica, US and Other (which includes Haiti). Distribution, selling and administrative costs, quarter -over –quarter, essentially reflect inflation increases along with costs related to organizational strengthening and increased activities in the US Operations.”
Borrowed funds increased to $6.9 billion and cash funds also increased to $1.76 billion, while equity stands at $11.3 billion.
NCB ends at $28 in Trinidad Thursday
NCB closed up by $1.50 at $25 on Wednesday
A total of 60,000 shares were traded in Trinidad on Thursday. At the close the bid on the stock was TT$1.55 for 42,395 shares with no stock on the offer for sale
In Jamaica 184,000 unit of the stock traded between $24.10 and $25 with the majority at $25. There are only three offers on the board for 275 units at $25.50, 103,873 at $30 and 503 shares at $33.
NCB demand flows from good 2014 results with earnings of $4.73 cents per share and a hike in its dividend payments as well as robust first quarter results to December and the high level of undervaluation of the stock.
Loans grew by $8.7 billion, or 6 percent to $157 billion at the end of December last year from the similar period in 2013. Net profit of $2.1 billion, a decrease of 15 percent, or $368 million from the $2.5 billion earned in 2013 but the booking of the tax on assets was done in full in the December 2014 quarter instead of being spread over the entire year. This added $670 million to cost compared to 2013 resulting in the net profit getting a hit of roughly $400 million.
NCB reported that “gain on foreign currency and investment activities, up by $861 million. This was due to higher levels of foreign exchange income and gains from the sale of debt securities in the December 2014 quarter. Net fee and commission income, increased by $465 million or 22 percent, mainly due to Payment Services fees, related to card usage and transaction volumes, credit related fees from the growth in loans and greater corporate finance and unit trust fees, booked in the current period, net interest income, increasing by 2 percent, or $151 million, primarily due to growth in net loans and advances and investment securities portfolios.”
Profit up at Prestige
Prestige Holdings with its KFC, Subway, TGI Fridays and Pizza Hut franchises reported improved results for the first twelve months of the fiscal year ending November 2014, but from revenues that were virtually flat.
Cost containment below that of 2013 also helped with the improvement in the profit out turn. Group revenue increased by 2 percent for the year to TT$922 million but declined 3 percent in the last quarter to $224 million. Profit after tax increased by 39 percent for the year to $50 million but declined by 98 percent to $101,000 in the November quarter. In 2013, the company wrote off its investment in TGI Friday operations in Barbados and was hit with an $8.7 million one off charge to profit, as a result.
The company faces cost and service quality problems in Trinidad where it has its main operation due to labour shortage in that country. Looking ahead the company has 110 restaurants outlets with one in Jamaica, room for expansion may be limited in the medium term thus negating the attractiveness of the stock as an attractive investment at this stage.
At the end of the fiscal year, Prestige had equity of $231 million and borrowing of $123 million and cash funds of $57 million. The stock sells for a PE of 12 times 2014 earnings and is likely to have limited upside potential, especially with interest rates on the rise in Trinidad.
Profit up at Guardian Holdings
Profit climbed for Guardian Holdings for 2014, resulting in a profit after tax attributable to shareholders of $401 million, an increase from only $20 million in 2013.
Based on the improved results the company announced an increase in its dividend. The 2013 profit was negatively affected by a write down of $457 million in the assets of Pointe Simon development. Consequently, earnings per share for 2014 are $1.73 as compared to 20 cents in 2013. Profit before the 2013 write down of Pointe Simon asset, increased by 14 percent to $481 million. Net income before operating expenses was flat at $1.469 billion. Operating cost fell slightly to $905 million and finance cost rose moderately to $130 million. Net Income from Insurance Underwriting Activities fell from $581 million in 2013 to $546 million in 2014.
For the December quarter, profit before tax rose 49 percent from lower underwriting profit, higher investment and other income and a 13 percent reduction in operating cost.
“The drop in net Income from Insurance Underwriting Activities is as a result of adverse claims experience in our health and general insurance business as well as actuarial strengthening of reserves in some lines. It should be noted that neither of these factors is structural and we expect that they would have no material impact on performance going forward as they resulted from normal statistical volatility in our business the group’s” management said in a statement accompanying the results.
Our portfolio of financial service companies diversified across lines of insurance and geographies together with our diversified investment portfolio has withstood operating volatility and provided strong overall performance, generating a Return on Equity of 13.7 percent.
Looking forward, investment income should benefit from interest rates that are on the increase in Trinidad and should be up in the USA before long. Operating cost should decline for the year based on the out turn for the December quarter that should carry over into 2015. The company states that it has moved away from investment type insurance to the traditional type cover and that the shift will generate higher margins for them.
“Confident in the fact that our negative legacy issues which have plagued us over recent years have been resolved, and given our solid business franchises and significant market positions throughout the region, your board of directors, after many years of flat dividend payment, has decided to increase the total dividend per share by 9.6 percent to fifty-seven (57) cents. Consequently, further to the interim dividend of seventeen (17) cents, the final dividend will be forty (40) cents and will be paid to shareholders on record on March 25, 2015” Management concluded.
The stock at $13.50 on the Trinidad Stock exchange is undervalued and ought to be priced higher. IC Insider’s Buy Rating remains in place with earnings likely to reach $2.50 per share in 2015.
Witco 2014 profit up 19%
West Indian Tobacco reported profit before taxation of TT$655 million, after earning TT$219 million in the final quarter ending December, last year, and an increase of 18 percent over the 2013.
Profit after taxation for the year amounted to TT$489 million, 19 percent increase over 2013. Revenues increased from $1.185 billion to $1.25 billion.
Cost of sales improved in the 2014 quarter raising gross profit to $784 million versus $701 million. Other costs of operation declined for the year with distribution cost declining from $18 million to $13 million and administrative expenses reaching $89 million in 2014 compared with $95 million in 2013. Other operating expenses fell to $27 million from $33 million.
The company earned $5.81 per share for the year to December and paid out $5.51 in dividend. A price adjustment, made in the latter part of 2014 is set to help push dollar sales and move profits up for 2015. IC Insider is projecting earnings of $6.50 per share for 2015. The stock trades at $125.03 on the Trinidad and Tobago Stock Exchange.
FCIB profit up but
First Caribbean International Bank’s profit rose in the first quarter ending in February, but this was mainly due to reduction in loans loss provisioning than an improvement in revenues. Loans declined and so did interest earned on loans.
Loans fell to US$5.996 billion down from $6.28 billion in January 2014 and $6.14 billion at the end of October last year. The bank, operating across the Caribbean region, reported interest income of US$108.7 million for the latest quarter. In 2014, interest income was $116.6 million. Other operating income of $41.8 million was earned in 2015 versus $42.5 million in 2014. The bank enjoyed a better loan loss experience with a charge of $15.7 million, in the latest quarter compared to $30.6 million in 2014. Operating expenses declined to $85 million from $89 in 2014. The bank profit after tax amounted to $26.6 million versus $15.4 million for 2014.
The bank needs to increase quality loans if it is to have enjoy sustainable growth going forward, this is a difficult challenge for a bank operating across an economically distressed region. At a price of TT$5.03 the stocks trades around 10 times current year’s earnings and that is lower than the other banking stocks on the Trinidad Stock Exchange.
Margins squeezed Grace’s profit
Grace Kennedy reported flat profits for the 2014 year although revenues grew 20 percent for the year to reach $83.5 billion. Grace ended with net profits of $3.29 billion compared with $3.22 billion due to shareholders of the group.
Not even lower taxes that delivered savings of $200 million could push the performance that saw lower pretax profit of $4.85 billion versus $5 billion in 2013.
Gross profit climbed from $64 billion to $74.9 billion but profit margin declined to 4.13 percent from 5.23 percent in 2013. Frank James Group Chief Financial Officer attributed some of the decline to one off cost associated with the acquisition of the Le Fe subsidiary during the year and tightness in the local economy that placed pressure on the margin as the devaluation to the local currency pushed up cost which they were not able to pass on in full. But there is more to it than that. Grace’s segment results showed no growth in segment profits between the September and December quarters, in food trading and insurance, two important profit areas of the group. Profit in the last quarter was make primarily by Hardware and Lumber and money transfer.
Results for segments were mixed with money transfer ending with $2.39 billion up from $1.9 billion, Insurance rose from $122 million to $454 million. Food retailing ended at $875 million from $1.145 billion in 2013 and hardware & Lumber reported $284 million versus $343 million in 2013.
The group reported earnings of $9.90 per share and announced an interim dividend of 75 cents per share payable on May 18, 2015 to shareholders on record as at April 28 with the ex-dividend date being April 24. Return on equity for the group is only 9.5 percent a relatively low rate in a country where Treasury bill rates were close to that level during the year.
Profit up 92% spawns $817m SVL dividends
Supreme Ventures (SVL) will be making a surprise dividend payment to its shareholders in March and May. The company just announced a final ordinary dividend for the year ended December 2014 of 8 cents per share payable on March 21, 2015 to shareholders on record as at March 6. SVL also declared a special dividend of 23 cents per share to shareholders on record as at March 6, with 19 cents per share to be paid on March 21 and 4 cents per share payable on May 27, 2015. The stock will traded ex-dividend on March 4. The ex-dividend date for both dividends is March 4.
SVL paid dividends of 3 cents per share on January 8, last year as well as 3 cents in March, 9 cents in May, another 3 in September and 5 cents per stock on December 9, last year. The final regular dividend for 2014 brings the total relating to the 2014 profit to 19 cents per share or 54 percent of profits for the year. The total dividend payment just approved by the company totals 31 cents per share and is just short of the total profit for 2014 of 35.2 cents per share.
The company just reported full year results showing profit after tax rising by 93 percent to $930 million from revenues that climbed by 21 percent to $41.3 billion. The profit provided a decent return on equity of 24.2 percent. Earnings per share ended at 35 cents. The December quarter was a very good one for the company with revenues of $11.3 billion and profit after tax of $313 million more than half of the $617 million generated to September.
The company enjoyed cost reduction in several line items with professional fees being slashed the most falling $81 million to $239 million. Overall operating cost fell from $2.77 billion to $2.65 billion in 2014.
Credible as the gains in profit is for 2014, Management has lots more work ahead in cutting losses in sports betting amounting $194 million up from $130 million in 2013 and Gaming lounges losses of $461 million versus $556 million in 2013. For the December quarter gaming losses amounted to $85 million compared to an average of $126 million in the previous three quarters and sports betting contributed $46 million in losses for the final 2014 quarter. Without the losses in these two areas profit would have been much larger. IC Insider is forecasting profits for 2015 to be in the order of 45 cents per share.
At the end of the year the company had cash funds of $2.22 billion and the dividends amounts to $817 million will consume some of the cash on hand by time the payments are made later this month and in May.
Access joins tax line
Access Financial will pay only $4.7 million in taxes for 2014, having enjoyed tax free profit for most of the year. The tax charge left $306.7 million in net profits or $1.12 per shares up from $270 million in 2013. But Access suffered a big increase in bad loans amounting to $229 million, more than doubling the $95.7 million in 2013. Not reflected in the bad debt figure is $14.4 million listed in the financial as recoverable, in 2013 the amount was $12.78 million. Gross interest revenues were up by 29.5 percent to $938 million and net income of lending moved to 990 million an increase of 29.7 percent. Other expenses rose by 18.3 percent.
For 2015 and the following 4 years, less a quarter, the company will be subject to tax on profit at 12.5 percent or 50 percent of the regular tax rate.
The stock sells at a high premium to net asset value of $2.96 per share compared to the stock price of $9.60 but that is partially explained by the rich 43 percent return on equity. At the end of the year loans advanced fell to $1.085 billion from $1.12 billion in at the end of 2013 while loans received fell from $543 million to $317.7 million and cash funds increased to $127.9 million from $49 million.
IC insider forecast earnings of $1.60 for the current year after tax at 12.5 percent. The stock remains Buy Rated for long term growth.
