Knutsford Express riding high

Knutsford Express last traded at $68.

Knutsford Express last traded in 2016 at $20, today its up 240 percent to $68, thanks to a combination of factors, chief amongst them is a scarcity of supply and a proposed 5 for 1 stock split.
A 33 percent rise in revenues to $203 million in the February quarter and a 63 percent rise in operating profit show the company in a pretty strong growth path.
Earnings per share closed the nine months period at $1.20 after the third quarter delivered 54 cents.
“We had a strong third quarter”, Oliver Townsend told IC, in response to the question, “can this growth continue,” Townsend answered in the affirmative. With our Montego Bay transport hub coming on stream by June this year, we should see continued growth as the company expect increased business as a result of having the hub located at the Sangster International Airport. The convenience of persons flying in and out of the airport being able to have easy and ready access to the Knutsford facility will see more persons patronizing the service, Townsend advised this publication. Ocho Rios is to have a new hub in which meals and drinks will be sold and thus enhance customers’ experience.
“We are also going directly from Kingston to Port Antonio using smaller buses via the Junction Road, the company’s Chief Executive said.
New buses added to replace older ones will reduce operating cost. The February results got a boost of $8.5 million realized from sales of buses, helping to push net profit up 94 percent to $53.7 million. For the nine months, revenues climbed 28.5 percent to $429.7 million while net profit moved higher by 35 percent to $120 million.
Knutsford does not break out its cost into direct operating expenses, marketing and administrative and other expenses so that readers can fully glean how the company is really doing, from an operational standpoint. Data compiled by IC show an improving level of efficiency as business expands. Net profit as a percentage of revenues climbed to 24.7 percent and is up from 20 percent in the third quarter of 2016 and ended at 22.34 percent for the nine months compared to 23.2 percent in 2016.
Depreciation charges rose 54 percent to $39 million well ahead of the growth in revenues, but the newer buses should reduce repairs and maintenance as well as the possibility that there could be fuel savings.
Knutsford generated gross cash flows of $159 million To February, up from $114 million in 2016, dividends of $24 million paid and $87 million spent of acquiring fixed assets left the company with $103 million in funds at bank or in cash. Shareholders’ Equity stands at $432 million with borrowings of just $68 million and cash and short term investments of $123 million. Current assets amounted to $180 million and current liabilities at a low $35 million.
The Company is listed on the Jamaica Stock Exchange and last traded at $68 for a PE of 25 based on estimated earnings for 2018 fiscal year’s estimated earnings of $2.75. The stock could be considered a bit pricey, with the market average at 13 times this year earning. With a 5 to 1 stock split days away, who knows what investors may do in light of the limited supply of the stock. At least profit seems to be on the rise at an attractive pace, as such investors with a long term time horizon may well enjoy gains sometime in the future, based on the growth path that the company is enjoying.

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