Sygnus Credit a stock to watch

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Sygnus Credit Investment a relatively new player in the financial market saw a 171 percent jump in interest income from US$1 million in 2018 to US$3 million for the financial year to June 2019.
Established in 2017, Sygnus is a credit investment company that provides credit financing to medium size business in the Caribbean
The impact on profit was not as dramatic as the gains in revenues, with profit rising 44 percent to US$2 million from US$1.4 million in 2018. The major reason for profit lagging revenue is three major items.  Fair value gains on investment fell from $644,000 in 2018 to just $135,000 in 2019 while the Management fee rose 288  percent from US$182,368 in 2018 to US$707,175 and net foreign exchange loss moved from US$50,000 in 2018 to US$219,000. Management fees were lower in the preceding financial year as the investment management waived them manager in the first half of that year.
The near-full deployment of US$20 million of funds on hand at the start of the year, into higher-yielding investments in the form of loans, was the major contributing factor to the growth in interest income.
Other operating and administrative expenses rose 214 percent to US$1.3 million in the year from US$415,000. Accounting expenses increased by 79 percent to US$37,323. The results for the final quarter were affected negatively by major turn about-turn in foreign exchange movements with a gain of $856,000 in the third quarter moving to a loss of $219,000 in the fourth quarter. Additionally, while interest income for the third quarter was $979,000 it slipped to just $728,000 in the final quarter, most likely due to change in the value of the Jamaican dollar. The effect of those changes is that a $1 million profit for the third quarter was not reproduced in the final quarter, even with more funds deployed in higher income-generating assets than the securities they were in before. The profit for the final quarter came out at just $124,000, well off from the fourth-quarter profit.  Going forward, the company will be using borrowed funds to supplement its resources that will help in boosting revenues, profit and allowed for growth in its business.
Sygnus paid US$954,000 in dividends leaving shareholders’ equity at US$37.6 million, $34 million was lent to customers and $3 million was held in liquid assets that were available for lending. Earnings per share came out at 0.59 US cents for the financial year-end compared to 0.85 US cents for the 2018 financial year.
IC forecasts earnings of 15 US cents or J$2 per share. The stock traded at $23.70 on the main market of the Jamaica Stock Exchange with a PE ratio of 12 times 2020 earnings making it a good buy.

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