Sangster Airport

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 Insider.com 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.

Express Catering stock a fair buy

Ian Dear, Chief Executive Officer of Express Catering

The 100 percent shareholder of Express Catering, Margaritaville St Lucia, are offering up to 327,500,000 of existing shares for sale at $1.50 each, to raise approximately J$490 million from the public. Most of the shares are reserved for special interest groups.
The issue opens at 9 am on Wednesday 12 July and is scheduled to close at 4 pm, Wednesday 19 July 2017.
Up to 16,500,000 shares are Company Reserved Shares, 32,750,000 are Mayberry Reserved Shares, 245,625,000 shares are Key Partner Reserved Shares with 32,625,000 slated for the General Public Shares. The company has 1,637,500,000 issued and this will not change with the issue. The stock will be listed on the Junior Market of the Jamaica Stock Exchange. Mayberry Investments are the broker to the offer.
The stock appears to be a fair buy with growth to come from expansion into the Starbucks franchise to be located at the Sangster Airport and continued growth in visitor arrivals through that airport going forward as the sector expands.
The selling shareholder will use the funds raised in the Invitation for the purposes of the Group’s liquidity inclusive of the continued improvement and expansion of the Company’s operations, working capital and general corporate purposes. The proceeds of sale will also be used to pay the expenses of the Invitation out of the fundraising, which the Directors expect will not exceed J$27.5 million.
Franchises operated include; Quiznos Subs and Salads, Dairy Queen, Nathans Famous Hot Dogs, Domino’s Pizza, Auntie Anne’s Pretzels, Wendy’s, Cinnabon, Moe’s South Western Grill, Island Deli, Viva Fresh Market Grab & Go, Cricket Sports Bar, Connections Bar, Air Margaritaville Arrivals Bar, Jamaican Bobsled Cafe and The Groovy Grouper The Bar.
The Company achieved revenue of US$14.1 million in the financial year ended May 2016, an increase of US$460,000 or 3.4 percent over the previous financial year’s Revenue of US$13.6 million. Revenue for financial years 2013 and 2014 was US$10 million and US$12.2 million respectively. While the financial show gross margins stable around 73 percent of revenue, while administrative and other costs as reported accounts for 58 percent of revenue for 2016 and slightly more for the comparative period in 201. Administrative costs include some items that should be included in cost of sales as they are not administrative expenses. Included here for the 2017 figures in US dollars are; Franchise fee $1,264,282 fuel $39,098, bar and restaurant supplies $373,127, staff cost of $1.39 million and rent of $2.8 million as well as electricity.
Net Profit of US$1.1 million was realized in 2016 up from US$590,000 in 2015. For 10 months of financial year to March 2017 revenue grew to US$11.54 million with net profit before tax of US$1.15 million from revenues of US$11.52 million in the 10 months of the prior year and profit of US$904,144 in the same period the prior year. Profit before tax should end the 2017 fiscal year around $1.25 million for earnings per share of .076 US cents or 9.7 cents Jamaican.
In the period to March 2017 launched a 7 year preference share to raise US$3.5 million. Proceeds from this issue was earmarked for the construction of the Starbucks Coffee outlets at Sangster International Airport, and to settle certain Group obligations.
The board of directors comprises, Winston Dear, Ian Dear, Roland Clarke, John Byles, Tania Waldron-Gooden.
The stock is being sold at a big premium to net asset value of $0.36 with equity valued at US$4.6 million, but at a PE of 15 based on 2017 earnings. Earnings for the May 2018 period could rise to $1.65 million or earnings per share of US 1 cents per share or J$0.13, excluding the new franchise operation. The average of the Junior Market of approximately 12.5.