Profit bolts 27% at Honey Bun but watch 2022

Profit before tax jumped 47 percent at Honey Bun, for the year to September, this year to $289  million from $196 million in 2020 and rose 27 percent to $218 from $172 in 2020 after providing 194 percent more for taxation in the year amounting to $71 million.
For the three months to September, profit before tax rose 30 percent to $81 million from $62 million in 2020 and after an increased charge of 488 percent in profit tax, profit ended 23 percent lower than in 2020, at $43 million.
Sale revenues rose 37 percent for the final quarter, to $590 million from $431 million in 2020 and a healthy 28 percent for the year, to $2.145 billion from $1.675 billion in 2020, bettering the increase of just 8 percent in 2020 over 2019.
The company suffered a decline in the 2017 profit to $95 million after a solid rise to $140 million from $68 million in 2016, but profit dropped again in 2018 by 8 percent to $86 million. Profit bounced in 2019 by 81 percent to $156 million but only grew 10 percent in 2020, but 2022 could turn out to be a bumper year for the company that has been adding to its product line for the local and export markets if the current growth in revenues continues.
Gross profit margin has been pretty steady in recent years and remained constant at 49 percent in the year, compared to 2020 and was up to 51 percent in the September quarter from 50 percent 2020. The effect, gross operating profit rose 28 percent for the year to $1 billion and 34 percent in the quarter to $ million.
Excluding depreciation, administrative expenses rose 23 percent to $352 million, with wage-related costs increasing by 20 percent, which is a major part of the increase. The administrative wage bill jumped to $207 million from $172 million in 2020. The overall wages bill moved from $428 million to $499 million for the year. Contributing to the wage increase is an increase in the number of persons employed to 219 from 207 in 2020.  In the quarter, administrative expenses, net of depreciation, increased 14 percent to $52 million. Selling and distribution costs increased by 19 percent to $348 million for the year and 39 percent for the final quarter to $140 million. Finance costs for the year and last quarter were negligible, but the company generated investment and other income of $19 million for the year, down from $25 million in 2020. Depreciation charge for the year was $71 million, up from $68 million in 2020.
Gross cash flow brought in $356 million, but growth in working capital, purchase of fixed assets of $101 million, increased investments of $34 million and paying $59.4 million dividends reduced to gross intake to $104 million. At the end of September, shareholders’ equity stood at $1 billion, with long term borrowings at a mere $16 million and short term at $6 million. Current assets ended the period at $637 million, including trade and other receivables of $108 million, up from $723 million in 2020, with cash and bank balances of $404 million. Investments in stocks amount to $96 million, up from $61 million in 2020. Current liabilities ended the period at S230 million. Net current assets ended the period at $407 billion, but the company could draw down on the investment in shares that would swell net current assets.
Earnings per share came out at 46 cents for the year and 13 cents for the final quarter. forecasts $1 per share for the fiscal year ending September 2022 and $1.40 for 2023, with a PE of 10 times 2022 earnings based on the price of $9.98 the stock last traded at on the Jamaica Stock Exchange Junior Market that is trading with an average PE of 14. The stock should double in price over the next twelve months based on the above forecast and gets the coveted Buy Rated seal of approval.

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