Sangster International Airport

One of Knutsford Express buses.

Profit after tax grew 40 percent at Knutsford Express for the year to May 2017 to $170.3 million but pretax profit was up a lower 28 percent to end at $164.4 million from revenues that rose 28.7 percent to $752.4 million.
Operating and administrative cost was up 29.6 percent to $580.6 million over the year ago period.
During the year, $107.6 million was expended on new fixed assets which pushed depreciation up sharply from $37 million in 2016, to $56 million in 2017. The financial statements reflect $49 million deposited to purchase vehicles, Managing Director, Oliver Townsend confirmed that they are adding “ a couple of buses to expand the fleet, some have already arrived with additional ones to come”.
Big expense items that grew sharply during the year are, Salaries up from $168 million to $194 million up 15.7 percent, toll charges rose from $11.4 million to $29 million, Fuel climbed from $64.7 million to $91 million and would be from a combination of higher prices and more bus trips. Parts cost $43 million fro0m $26 in 2016 while Insurance rose from $18.5 million to $27.2 million. Unfortunately, the company continues to present the financial information without breaking separation direct from indirect cost so that investors can determine more accurately the potential profitability.
Knutsford’s balance sheet presents a picture of strength with current assets of $231 million including cash funds of $156 million, up from $88 million in 2016. Shareholders’ equity stands at $483 million. Liabilities stand at $105 million including deferred tax of $12 million.
We will definitely open the transport centre at the Sangster International Airport later this month Townsend informed IC Insider.com. The centre is expected to capture a bigger slice of passengers disembarking from aircrafts as it become more convenient for them.
Subsequent to the year-end an interim dividend of 6.8 cents per share was declared as the final dividend for the year ended May 2017. The payment will be will be on September 15. The payment amounts to $34 million and is up 41.7 percent over the $24 million paid in 2016. The stock last traded on the Junior Market of the Jamaican Stock Exchange at $14.95. IC Insider.com is forecasting earning per share for 2018 at 53 cents, putting the PE for the stock at rich 30 times earnings, at this level the stock is likely to underperform the Junior Market movement for the next twelve months.

Knutsford Express riding high

Knutsford Express last traded at $68.

Knutsford Express last traded in 2016 at $20, today its up 240 percent to $68, thanks to a combination of factors, chief amongst them is a scarcity of supply and a proposed 5 for 1 stock split.
A 33 percent rise in revenues to $203 million in the February quarter and a 63 percent rise in operating profit show the company in a pretty strong growth path.
Earnings per share closed the nine months period at $1.20 after the third quarter delivered 54 cents.
“We had a strong third quarter”, Oliver Townsend told IC Insider.com, in response to the question, “can this growth continue,” Townsend answered in the affirmative. With our Montego Bay transport hub coming on stream by June this year, we should see continued growth as the company expect increased business as a result of having the hub located at the Sangster International Airport. The convenience of persons flying in and out of the airport being able to have easy and ready access to the Knutsford facility will see more persons patronizing the service, Townsend advised this publication. Ocho Rios is to have a new hub in which meals and drinks will be sold and thus enhance customers’ experience.
“We are also going directly from Kingston to Port Antonio using smaller buses via the Junction Road, the company’s Chief Executive said.
New buses added to replace older ones will reduce operating cost. The February results got a boost of $8.5 million realized from sales of buses, helping to push net profit up 94 percent to $53.7 million. For the nine months, revenues climbed 28.5 percent to $429.7 million while net profit moved higher by 35 percent to $120 million.
Knutsford does not break out its cost into direct operating expenses, marketing and administrative and other expenses so that readers can fully glean how the company is really doing, from an operational standpoint. Data compiled by IC Insider.com show an improving level of efficiency as business expands. Net profit as a percentage of revenues climbed to 24.7 percent and is up from 20 percent in the third quarter of 2016 and ended at 22.34 percent for the nine months compared to 23.2 percent in 2016.
Depreciation charges rose 54 percent to $39 million well ahead of the growth in revenues, but the newer buses should reduce repairs and maintenance as well as the possibility that there could be fuel savings.
Knutsford generated gross cash flows of $159 million To February, up from $114 million in 2016, dividends of $24 million paid and $87 million spent of acquiring fixed assets left the company with $103 million in funds at bank or in cash. Shareholders’ Equity stands at $432 million with borrowings of just $68 million and cash and short term investments of $123 million. Current assets amounted to $180 million and current liabilities at a low $35 million.
The Company is listed on the Jamaica Stock Exchange and last traded at $68 for a PE of 25 based on estimated earnings for 2018 fiscal year’s estimated earnings of $2.75. The stock could be considered a bit pricey, with the market average at 13 times this year earning. With a 5 to 1 stock split days away, who knows what investors may do in light of the limited supply of the stock. At least profit seems to be on the rise at an attractive pace, as such investors with a long term time horizon may well enjoy gains sometime in the future, based on the growth path that the company is enjoying.