Dolphin boost Profit 26% – Buy Rated

In a period when many junior market companies reported lower profits, the entertainment company Dolphin Cove enjoyed a robust 26 percent increase in profit in the first quarter of 2014 with profits after tax rising to $148 million an increase of $33 million compared to the 2013 March quarter from an 11 percent increase in revenues to $436 million over the 2013 first quarter amount of $394 million. While overall revenues climbed 11 percent it was the attractions that delivered increases with an 18 percent gain as the other main income source was flat with earnings of $149 million in both the 2013 and 2014 periods. Management indicated that their investment in sales and marketing helped to produce the favourable results. The revenue gains took place in the period that did not include the Easter holiday which fell in April this year compared with March last year.
Operating expenses for the quarter was held to 8 above the prior year although there was increased Expenses in sales and marketing and devaluation of the Jamaican dollar. There was a reduction in the direct cost of dolphin attractions due to savings in the rental costs as a result of the purchase of seven previously rented dolphins, offset by additional depreciation and interest cost.
The company would have benefited from the fall in the value of the local currency as its income is denominated in United States dollars but much of its cost is ion Jamaican dollars. But the end in not yet in sight for the fall of the local currency as the country will enter the low inflows and high demand period starting in September, Dolphin stands to further benefit from this movement with income increasing and local cost kept under control.
The company’s income is substantially reliant on developments in the tourism sector as it get the bulk of its income from overseas visitors.
IC Insider’s forecast for earnings is $1.20 per share for the current year which end in December, last year the company earned 82 cents and paid out almost 50 percent of profit as dividends.
Equity stood at $1.44 billion at the end of March with borrowed funds at only $316 million.
The company owns properties in the Turks & Caicos Island and St Lucia where it intends to operate its attractions when implemented and fully operational these should add to revenues and profit down the road.