Junior Market listed Paramount Trading, enjoyed a big turn-around in profit for the first quarter to August this year, with an increase of 126 percent, to $34 million from a 31 percent increase in revenues to $331 million.
Importantly, Paramount incurred exceptional expenses in the first quarter, last year, as the company celebrated its 25 anniversary, IC Insider.com estimates the cost to be around $20 million, excluding this one off cost, profit would have been flat, in both periods.
Administrative and other expenses jumped from $44 million to $62.7 million, but selling and marketing cost dropped from $24 million to $2.8 million. Direct cost rose 35 percent, reducing gross profit margin with gross profit rising slower than the increase in revenues, at 23 percent to reach $101 million.
Earnings per share amounts to 2.2 cents. IC Insider.com places full year’s earnings at 19 cents and for the 2019 fiscal year to May 30 cents with the coming on stream of the joint venture lubricant plant.
The directors’ report stated that they have “an optimistic outlook for the rest of the year and is very excited by the opportunities that will be realized. The construction of the blending plant and laboratory, in conjunction with Alllegheny Petroleum is slated to be complete during the next quarter.”
The balance sheet shows net current assets of US$463 million, including inventories of $338 million, receivables of $283 million and cash funds and investments at $97 million. Borrowings are at $55 million up from only $16 million in August 2016.
The stock currently trades at a PE ratio of 15 with the price at $2.90 on the Junior Market against the market average of 14 and seems to be line with the market. What is true, is the nimbleness of management to identify new income generated opportunities that makes staying close to the stock potentially profitable.
Big jump in Paramount profit
Profit surges 137% at Express Catering
Recent Junior Market listed Express Catering, enjoyed a big surge in profit of 137 percent to US$834,447 for the quarter to August, this year.
With management fees removed and revenues jumping 9.7 percent, in line with increased visitor arrivals to Jamaica, Express Catering, operators of a series of restaurants within the Montego Bay’s Sangster International Airport good performance, came from revenues of US$3.8 million for the quarter.
The removal of management fees saw administrative and other expenses falling from US$2 million to US$1.7 million, but gross profit rose by US$157,000 as cost of sales grew faster than the top line, at 21 percent thus reducing profit margin. Management in their commentary on the results states that “they have since raised prices to compensate for increased input cost.” Express reported earnings per share of 0.051 US cents. IC Insider.com places full year’s earnings at 26 Jamaican cents and that for 2019 at 40 Jamaican cents.
“The addition of the Starbucks Coffee to the offerings in the airport is expected to be completed during the third quarter. Work as already commenced on this initiative and will see 3 locations within the Airport,” the directors’ report stated.
The balance sheet shows US$4.56 million due from related party an increase from $3.64 million at the end of May and cash funds at $497,000.
The stock currently trades at a PE ratio of 19 with the price at $4.95 against the market average of 13.6.
Profit jumps 69% at Main Event
Revenues at Main Event, rose 14.8 percent in the July quarter, to $290 million, compared to only 10 percent for the year to date to reach $942 million.
The strong growth in revenues coupled with reduction in cost in some areas resulted in a loss of $4.7 million in the 2016 quarter, transformed to a profit of $26 million in this year’s third quarter and $101 million for the nine months, versus $60 million in 2016, for a strong increase of 69 percent.
Revenues in the quarter to April was flat, at $319 million compared to the 2016 period, but contributed $25 million more profit than the July quarter. Direct operating cost as reported were $147 million in both quarters in 2017, as a result, gross profit margin in the July period was less than in April. In the July quarter, administrative cost ended at $92 million, the same as in the April quarter but depreciation rose to $22 million, from $16 million, as the company acquired more equipment for its own use rather than hiring them.
Assuming the growth level in revenues for the third quarter continues, the company seems heading for profit of 50 cents per share for the 2017 fiscal year to October and 70 cents for 2018, providing room for the stock to deliver a good return for investors who get in at the right price.
“We remain very confident in our strategies and the company’s prospects for further growth and new business opportunities,” the company’s Chairman, Ian Blair and CEO, Solomon Sharpe stated in their comments on the nine months results.
The balance sheet shows fixed assets growing to $420 million from $342 million at July 2016 and improved working capital of more than $100 million versus just $12 million in 2016, while borrowings have declined from $156 million to $122 million. With increasing profit, the finances should be looking better by year end and into 2018.
The stock is BUY RATED but closer to the $5 level currently and for a limited time, as it may not trade back down there.
The stock is listed on the Junior Market of the Jamaica Stock exchange and is trading at $5.60, just over a PE of 11 compared to 13.7 for the junior market.