Indies Pharma Q3 sales jump 45%

The financial news out of Indies Pharma for its third quarter to July were mixed at best as sale revenues jumped a strong 45 percent to $215 million from $148 million in the 2018 period but profit inched just 9 percent higher to $34 million from $31 million in 2018.
Sale revenues for the nine months to July increased 28 percent to $576 million from $449 million in 2018 but profit soared 41 percent to $113 million from $80 million after-tax liability of $24 million in the similar 2018 period but profit before tax, rose just 8 percent. While many investors are guided by the bottom-line growth, others see great virtue in the growth of the business hence the strong sales increase is viewed as a positive indicator for future hikes in profit.
The less than spectacular growth in profits started in the second quarter ending April when the company posted $33 million before tax after tax compared to $38 million in the same quarter of 2018.
Gross profit margin in the third quarter declined to 63 percent from 68 percent in the 2018 period, but for the year to date, gross profit margin improved to 67 percent from 64 percent in the nine-month period in 2018. Cost of sales rose 68 percent to $79 million from $47 million for the quarter and increased by 18 percent to $189 million from $161 million in 2018 for the year to date. The effect, operating profit fell just 3 percent in the quarter from $35 million from $34 million but increased 4 percent year to date to $113 million from $109 million in 2018.
Administrative expenses rose stunning 51 percent to $104 million in the quarter from $69 million in 2018 and increased 52 percent in the nine months period to $276 million compared to $181 million in 2018.

Vishnu Muppuri – Executive director of Indies.

The spike in administrative expenses resulted from “significant increases incurred for rent, lease and set-up costs for the new facility in Montego Bay Freeport”, Vishnu Muppuri the company’s Executive director, reported. Finance cost declined in the quarter to $85,000 from $3 million in 2018 and from $4 million in 2018 to $281,000 for the nine-month period.
Gross cash flow from operating activities brought in $126 million but changes in working capital including increases to directors and related companies reduced the net inflows to $98 million, after paying dividends of $107 million in February, cash funds ended up at $71 million, down from $101 million at the start of the financial year. Net current assets ended the period at $660 million inclusive of receivables of $197 million, related parties and directors’ receivables of $201 million. Current liabilities stood at just $62 million. The company has no debt as all loans were retired in the 2018 fiscal year. At the end of July, shareholders’ equity stood at $680 million.
The stock traded at $3.25 on the Junior Market of the Jamaica Stock Exchange. Earnings per share came out at 3 cents for the quarter and 9 cents for the nine months and should end around 12 cents for the full year for PE of 27 times earnings. While the stock appears over-priced, the strong growth in revenues for 2019, if it continues, should see 2020 earnings hitting 25 cents per share that would reduce the PE to 13 times in the new fiscal year that starts in November.

Q1 profit falls 13% at JBG

Profit at Jamaica Broilers Group fell 13 percent in the July quarter to $361 million from $413 million in 2018 but IC computations point to strong gains in profit for the year that ends in April 2020 as revenues rise and costs are contained below inflation.
At the same time, profit attributable to shareholders dropped 8 percent to $368 million from $399 million in 2018 even as gross profit increased slightly over 2018 from $3.18 billion to $3.32 billion as sale revenues rose 9 percent to $13 billion, from $12 billion in the corresponding quarter in 2018.
Cost of sales increased 11 percent for the quarter, to $10 billion from $9 billion in 2018 resulting in gross profit margin in the quarter declining to 25 percent from 26 percent in 2018. Distribution cost rose just 2 percent to $445 million from $436 million in the corresponding quarter in 2018. Operating profit increased by 2 percent to $679 million from $665 million in 2018. Finance income fell sharply by 88 percent to $36 million from $300 million in the corresponding period in 2018.

Jamaica Broilers chicken

Administrative expenses remained flat at $2.3 billion, but Finance cost, declined by 7 percent to $299 million from $324 million in 2018 and corporate taxes fell a sharp 76 percent to $55 million.
The group’s segment results were mixed, with foreign exchange losses and political and economic volatility in Haiti negatively impacting the results. The Jamaica segment produced $8.4 billion in revenues, but just slightly above the $8.24 billion generated in 2018 profit resulting in a 9 percent fall in segment profit of $764 million. Operations in Haiti produced $19 million in profit compared to $60 million in the previous year from a fall in revenues from $595 million down to $530 million. Profit from the US operations climbed by 11 percent to $333 million from $ 300 million in 2018 as revenues climbed to $4.34 billion from $3.3 billion in 2018.
Gross cash flows from brought in $650 million but after a dividend payment in the quarter amounted to $212 million and other long term liabilities of $720 million, cash inflows ended at $316 million and that pushed cash and equivalent to $3.65 billion. At the end of July, shareholders’ equity stood at $15 billion with borrowings at just $7 billion. Current assets ended the period at $22 billion inclusive of receivables of $4 billion and inventories of $7 billion, cash and bank balances of $4 billion and current liabilities of $13 billion.
Earnings per share came out at 35.81 cents for the quarter. IC is forecasting $3.50 per share for PE of 10 times the current year’s earnings and earnings of $5 for the 2021 fiscal year.

QWI Investments list on Monday

The latest initial public offering of shares QWI Investments was approved for listing on the main market the Jamaica Stock Exchange on Friday and will be listed on Monday.
The offer of shares was initially for 600 million units but was upsized to 900 million after the issue was oversubscribed. The issue saw more than 4,000 applicants applying for more than 1.6 million shares and pulled in just over $2 billion with more investors who never caught the IPO wanting shares.
As a result of the oversubscription, applicants from the General Public received the first 100,000 units plus 31.2188 percent of the excess applied for. NCB Capital Markets and Directors of QWI Investments get the full allotments. All other applicants got a portion of what they applied for with a minimum of 76,000 units for applicants in the Jamaican Teas and KIW International pool.

QWI IPO opens next week Monday

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QWI Investments, a recent start-up investment company’s initial public offer of shares opens on Monday, September 16, with the sale of 600 million units.
The company has the option subject to the Financial Services Commission, to upsize the amount to 900 million shares if demands warrant it. Shares are being offered to the general public, at $1.35 each.
The amount expected to be raised is $787 million from the 600 million shares but could rise to just under $1.2 billion if the company upsize the issue to the maximum permissible.
The investment objectives of the Company is to invest primarily in securities of companies listed on the Jamaica Stock Exchange and on other recognised overseas stock exchanges with a medium to long term investment horizon to provide attractive risk-adjusted returns, with diversification across industries and regions. The portfolio will be actively managed on an ongoing basis guided by the investments team.
The company, currently a subsidiary of Jamaican Teas, really started operations towards the end of March when it acquired the quoted shares, from KIW international and Jamaican Teas amounting to $465 million. Since then it has grown the net assets by 52 percent to $705 million after accounting for operating expenses, well ahead of growth in the JSE composite Index over the same period. The performance equates to earnings per share in the period of 51 cents. At the end of July unaudited placed the net asset value at $1.52 per share.
Of the 600 million shares on offer, 270 million units are set aside for the general public. 115 million shares each are earmarked for NCB Insurance Company and NCB Capital Markets. Shareholders of Jamaican Teas and KIW International on record on 16 September 2019 can buy up 45 million shares at $1.25 each per share. Directors of the group and customers have 55 million units set aside at varying prices.
QWI had quoted shares amounting to $899 million at the end of July and current liabilities of $188 million. The closing date for the issue is set for 30 September but could be extended if market conditions demand it.
The QWI board is chaired John Jackson, John Mahfood, Cameron Burnet, all Chartered Accountants, Carl Carby, Management Accountant, David Stephens, Investor and business owner and Malcolm McDonald, Attorney at Law.
The shares are to be listed on the main market of the Jamaica Stock Exchange. NCB Capital Markets are the brokers to the issue and will be using their electronic portal to process all applications, which should allow for speedy processing of applications.
Persons involved in preparing this story, are connected to QWI investments.

New IPO coming in days

The Jamaica Stock Exchange should be welcoming another new main market listing, before too long as the latest new entrant to come with an initial public offer, is expected to present their case to the investment public in the coming week.
The issue hopes to raise just over $1 billion that would see shareholders’ equity moving from $700 million to nearly $2 billion if the maximum target is reached. The pricing of the issue is expected to be less than $1.40 per share.

Jamaica Producers’ 3 years profit surge

Jamaica Producers profit up 52% in June 2019 quarter.

Jamaica Producers (JP) increased second-quarter revenues by 12 percent to $5.4 billion over the 2018 period and net profit attributable to shareholders by 52 percent to $399 million from $263 million.
For the half-year, JP posted a 52 percent rise in profit due to the group’s shareholders of $629 million compared to $415 million with revenues that rose 9 percent from $9.3 billion to $10.16 billion.  Profit was boosted by other income of $191 million in the quarter, up from $100 million in 2018 and $163 for the half-year versus $153 million in the 2018 half-year. The current year is not the only one that profit jumped sharply for the group, in 2018, profit attributable to the Group’s shareholders rose 66.5 percent for the June quarter over that of 2017 and 65 percent for the half-year from revenues that grew 20 percent and 25 percent respectively. The group saw a major improvement in profit from ongoing operations in 2017 over 2016 when profit from operation was negligible.
Gross profit rose 22 percent to $1.85 billion and 23 percent for the half-year to $3.5 billion. Selling, administration and other operating expenses rose 16 percent to $954.4 million in the June quarter from $823.3 million in the similar period in 2018 while the half-year recorded an increase of 12 percent to $1.83 billion from $1.64 billion in 2018.

Jamaica Producers snacks

The group recorded a gain of $575 million on disposal of 30 percent of its interest in JP Snacks but is shown directly in the group’s shareholders’ equity and not a part of the regular profit statement. Producers, as the company is fondly called. reported earnings per share of 36 cents for the quarter and 56 cents for the half-year.
Segment results show the food and drink business with sales of $5.95 billion compared to $5.46 billion in 2018 and contributed profit of $438 million for the group. The Logistics & Infrastructure segment generated revenues of $4.2 billion versus $3.83 billion in 2018 and recorded a profit of $1.56 billion from $1.26 billion in 2018.
The Group closed the half-year with shareholders’ equity of $13.5 billion, loans borrowed amounted to $6 billion, cash funds of $792 million, securities amounting to $5.7 billion, current assets of $10.3 billion and current liabilities of $4.5 billion.
The group’s stock is listed on the main market of the Jamaica Stock Exchange and last traded at $27.50 and a PE of 18 times 2019 earnings.

Profit jumps sharply at Elite

Drax Hall branch of Elite now completed

Elite Diagnostic last traded on the Junior Market a $6.40 to be up 117 percent for 2019 and is one of three stocks on that market to more than double, this year.
Investors feel there is more to gain from investing in the stock of this technological business as they continue to buy into the stock and pushed the price as high as $7.50 after the company posted full-year results in August.
Elite reported net profit for the June quarter at $24.6 million compared to $3 million for the similar period a year ago. A strong increase in revenues and a fall in repairs of equipment and administrative expenses compared to the year-ago period helped with the strong growth in profit. Profit before tax for the 12 months grew 32 percent to $47.4 million compared to $35.8 million for the similar period a year ago. Gross cash inflows amounted to $103 million but the company had net borrowing of $8 million and purchase of property, plant and equipment amounting to $135 million, down from $295 million purchased in the prior year.
Revenues were $115 million for the 4th quarter, an increase of 46 percent over the $79 million for the same period last year. Revenues for the 12 months to June 2019 jumped 35 percent to $404 million compared to $298 million for the similar period a year ago. The directors in their report to shareholders accompanying the financials, stated, “the increase in revenue was due to greater utilization of the Liguanea branch which also extended their hours of operation”.
Importantly, revenues not only grew year over year but for each of the last 7 quarters it increased quarter to quarter. For the 2020 fiscal year, revenues should hit $500 million from the two Kingston locations. Cost of sales remains static in dollars, in spite of the sharp rise in revenues.
Direct cost rose from $28 million in the June 2018 fourth quarter, to $30 million in 2019 and from $117 in the year to June 2018 versus just $119 million in 2019 and $96 million in 2017. Increased growth from the two existing locations should have a powerful impact on profits, resulting from the near static direct cost.
Administrative cost fell from $36 million to $33 million in the June quarter of 2019 but rose sharply by 52 percent for the year to $152 million. Depreciation charge climbed from $$7.5 million for the quarter to $14 million in 2019 and moved from $28 million to $56 million for the year.

Elite enjoying a long period of increased quarterly growth in revenues since December 2017.

A loss of  $8 million on exchange in the June 2019 quarter and reduced profit by $10 million for the full twelve months. Excluding this loss, earnings per share for the quarter would have been 9.5 cents instead of the 7 cents reported and the full year 16.7 cents versus 13 cents reported. Finance cost climbed from $16 million in the 2018 fiscal year to $20 million for 2019.
The company closed the fiscal year with shareholders’ equity of $447 million, loans borrowed amounting to $196 million, cash funds of $94 million, current assets of $119 million and current liabilities of $50 million.
“Demand for imaging services remains strong and the company continues to execute its plan providing exceptional patient care, excellent service, expanding its services and gaining market share.
The construction of the new St Ann (Drax Hall) location is completed and the company expects to open its doors in September 2019. This new location will have full imaging services and doctors’ offices,” the directors reported.
IC forecast earnings for the full year ending 2020 at 55 cents, on this basis the stock is priced at a PE ratio of 12, but the next two years is when the full pay off will take place when the expansions should be maturing.

Lasco Manufacturing Q1 profit up 19%

Revenues at Lasco Manufacturing rose just 3 percent in the June quarter to $1.79 billion but improved profit margin lifted profit after tax by 19 percent to $282 million.
The slow growth in the quarter contrast to a 6 percent rise in revenues in the fiscal year to March 2019 when the company posted revenues of $7.6 billion. The June quarter’s revenues are lower than the $2 billion achieved in the March quarter but are consistent with September and December quarters last year with $1.7 billion and $1.8 billion respectively.
Operating cost rose 7 percent to $330 million but cost of sales declined to $1.19 billion from $1,125 billion in 2018 with the change resulting in gross profit margin rising to 37 percent from 35 percent in 2018. Finance cost was virtually flat at $32 million but taxation rose from $34 million to $40 million. Lasco generated other income of $17 million in the quarter versus just $3 million in 2018. Earnings per share rose to 6 cents from 5 cents in 2018 and are expected to exceed the 26 cents per share realised in the fiscal year to March, with IC forecasting 38 cents per share.
According to the managing director’s report, “the positive outturn reflects gains from ongoing improvements in operational efficiencies, reduction in structural costs and streamlining of the operations. Capital improvements for the period totaled $60 million with the main focus during the period being the completion of the powder plant expansion.”
Lasco generated gross cash flow of $348 million for the quarter but paid $250 million in dividends and repaid loans amounting to $106 million. At the end of the period, cash and bank balance stood at $995 million. Long-term loans outstanding amounts to $876 million.

Lasco Manufacturing products.

Loans amounting to $464 million is due to be repaid in the next twelve months. The company seems to be heading into a period of greater maturity, when loans will be repaid from the strong annual cash flows that the company is slated to generate, going forward.
Shareholders equity stands at $5.9 billion and net current assets $2.2 billion, which exceed current liabilities of $1.5 billion.
There has been increased interest in the stock with the recent announcement that the United Cannabis Corporation, the American company that is partnering with Lasco Manufacturing for the production of cannabis-infused water among other cannabis medicinals, has been issued a license to cultivate cannabis through a company called Cannabinoid Research and Development.
The stock traded on the Junior Market of the Jamaica Stock Exchange on Friday at $5.50.

Sales up 24% in 2019 at Knutsford

One of Knutsford Express buses.

Jamaica’s cross-country luxury bus operators, Knutsford Express, saw strong growth in revenues for the year to May of 24 percent but net profits rose just 6 percent as the company’s new Florida operations took a bite out of local profits.
For the nine months to February, revenues were up 24 percent, with the February quarter showing a healthy increase of 22 percent. Revenues rose 22 percent from $249 million in the 2018 May quarter to end at $304 million, while revenues for the February quarter rose from $232 million to $286 million and for the full year, it rose from $926 million to $1.15 billion.
Profit rose just 6 percent from $178 million for the full year to $188 million for earnings per share of 38 cents. Resulting from the losses in the foreign operations, profit in the final quarter fell from $50 million in the 2018 May quarter, to $30 million in the same period this year. The company generated income of J$21 million and incurred a loss of J$25 million in the Florida operation that commenced in the February quarter. According to Managing director Oliver Townsend, “the Florida operation is a long term investment which we believe will come into its own in the second year of operations.” Townsend was responding to a query by IC as to when this operation would break even.
Knutsford does not break out direct operational expenses, making it difficult to determine the gross profit generated by the company.

Knutsford’s New Kingston depot

In addition, the absence of that critical data makes it impossible for investors to measure the efficiency of the operations. Data extracted suggest it could be in the region of 40 percent. Overall expenses rose 28 percent to $963 million for the year with fuel rising 28 percent and labour cost 30 percent.
The company benefitted from the hub at Sangster Airport resulting in more foreign arrivals utilising the services, especially those journeying to and from Negril, the company reported.
Fixed assets grew to $733 million with additions of $406 million during the year, cash and short-term investments ended at $355 million with borrowings at $215 million and shareholders’ equity of $780 million.
Knutsford trades on the Junior Market and closed at $11.10 on Tuesday, with a PE of 29 based on historical earnings. IC Insider is forecasting profits in the current year to be in the region of 75 cents per share that would result in a PE of 15 and slightly above the Junior Market’s average of 13.

Pressure on Jetcon’s sales easing

Jetcon sales are bouncing back since June after a sharp fall between January and May.

The current year that ends December, is proving to be a tough one for used car dealer Jetcon Corporation with falling revenues and profit for the first half of the year.
In its recent report on second-quarter results, management reported another challenging period following a sharp fall in sales and profit for the first quarter. Revenues fell 26 percent and profits by 75 percent and for the half-year, revenues declined by 23 percent and profit by 70 percent.
The first half performance reverses three years of solid growth for the company. “We are pleased to report that we are now seeing positive developments since June, with sales up 10 percent ahead of 2018, in both June and July. Orders for August, suggest that we will enjoy a much better sales than in 2018. Sales in August last year were below the historical pattern. Our projection calls for higher sales than 2018 in the second half of the financial year,” the company’s management stated in the report accompanying the results.
Revenues fell to $221 million from $300 million in the June 2018 quarter with a fall in gross margin, from 18 percent to 16.5 percent and a decline in pretax profit, to $9 million versus $35 million in 2018. Earnings per share ended at 1.5 cents versus 6 cents in 2018.

Attentive shareholders at Jetcon’s AGM

Year to date, revenues declined to $467 million from $607 million in the similar period in 2018. Gross profit margin declined from 20 percent to 17 percent. Pretax profit decreased from $81 million to $24 million. Earnings per share ended the period at 4 cents versus 14 cents in 2018.
“We reduced prices in some areas to move inventories in the first half of the year and this negatively affected our gross margin. We expect that the discounting will ease as the year progresses,” the management report stated.
Jetcon shares traded on the Junior Market of the Stock Exchange at a 52 weeks’ low of $1.58 on Friday but bounced to $1.70 on Monday.
Persons connected with are also connected with the company.