Strong rise in Wisynco profit

Wisynco Group sent a strong message to investors, why the company’s stock is a must have by posting a strong 38 percent rise in profit for the 2019 March quarter, from revenues that grew 18.7 percent to $6.9 billion.
For the nine months to March, profits grew slower than for the quarter at 32 percent after tax, from revenues that are up 15 percent to $20.8 billion. The second quarter benefitted from the addition of rum and sugar distributions as well as improved efficiency flowing from the new bottling lines installed late in 2018 but suffered from foreign exchange losses of $69 million. Without the currency loss, profit in the quarter would be closer to an increase of 50 percent.
Asked how long the strong growth can continue, Managing director, William Mahfood informed IC, “I think it will be for the next couple years, based on the economy as well as our improved efficiencies.”
Profit before Taxation for the quarter increased to $791 million or 35.4 percent compared to $585 million in 2018 for the same quarter. For the quarter ended March 31, 2019, Profits Attributable to shareholders of $694 million or 19 cents per share compared to $504.3 million or 14 cents per share, an improvement of 37.6 percent over the corresponding period of the prior year.

Worthy Park sugar distributed by Wisynco & also Worthy Park Rum.

Gross Profit increased to $2.6 billion or 24.9 percent over the $2.1 billion achieved in the same in 2018 resulting in Gross Margin of 37.8 percent, greater than the 35.9 percent for the corresponding quarter of the previous year. For the half year Gross Profit also increased to $8 billion or 19 percent over the $6.7 billion achieved in the same quarter of the previous year resulting in Gross profit margin of 38.5 percent.
Selling, Distribution & Administrative Expenses for the quarter totaled $1.7 billion or 14.2 percent, more than the $1.5 billion for the corresponding quarter of the prior year. For the half year, cost incurred increased 16 percent to $5.2 billion. The six months increase is just ahead of revenue growth. Finance expenses included a loss of $69 million due to the revaluation of the Jamaican Dollar and pushed the cost in the quarter by 183 percent and 70 percent for the half year to $302 million. The company should benefit from the decline in the value of the local dollar subsequent to the close of the quarter as well as the distribution of JP Snacks’ products.
The group is in a healthy financial position. Current assets stood at $9.2 billion of which cash equivalent stood at $3.3 billion while current liabilities amounts to just $3.9 billion with shareholders’ equity $10.39 billion and borrowings amount to $1.25 billion.
IC is forecasting earnings of $1 per share for the year ending June and $1.50 for the 2020 fiscal year that starts in July. The stock trades at $14.90 on Friday and is up 36 percent for the year to date and trades at 15 times 2019 earnings and just 10 times 2020.

Wisynco adds $2.5B in sugar & rum sales

Wisynco brand Wata to benefit from 3 new production that is now in operation.

Wisynco Group, is set to lose revenues and profit with the ban on single use plastic straws and Styrofoam but the contract to distribute sugar and rum manufactured by Worthy Park should add $2.5 billion to revenues.
The sugar and rum revenues will more than make up for the cut in revenues of approximately $1 billion per year and profits by an insignificant $70 million information released by the company to Jamaica Stock Exchange suggests.
Investors in the company’s stock could not get enough after it listed in December last year, driving it to a high of $13.81 for a then rich PE of more than 20. With the PE below 10 times the current year’s earnings and set to go to 20 by 2019, investors are dumping the stock at a PE of 8. But now they should be holding and buying more, as the stock has few that are likely to deliver better returns in the next twelve months.
According to the company, plastic straws represent less than 0.1 percent of the Company’s revenue and Styrofoam represents 4 percent of the company’s revenue and approximately 3 percent of the company’s net income. Investors seem to be concerned about the impact of the ban on the company’s operations and profit. With earnings of 62 cents for the 2018 fiscal year and 15 cents in the June quarter, investors may not be seeing a boost in profit to come to warrant holding the stock.

Wisynco Group

IC spoke with the company’s CEO William Mahfood, advises of a number of positive developments that bode well for the future fortunes of the group. The company on Friday released information on a new distribution agreement with Worthy Park Estate (WPEL) for the distribution of WPEL’s spirits and sugar. Wisynco advised that the distribution of WPEL’s spirits will commence on November 1 and will include the ‘Rum-Bar’ and Worthy Park Estate brands of spirits. The distribution of WPEL’s sugar will commence on January 1, 2019, the start of the new sugar crop.

The new products could add around $750 million to gross profit. According to Mahfood the company has just added three new production lines to alleviate production capacity constraint and is expected to help increase sales around 20 percent. The expanded capacity will facilitate expanded production of Wata, carbonated products and juices. “New process has cut the production cost of plastics by more than 50 percent and this will result in significant cost savings,” Mahfood said. Importantly, Mahfood expects revenues from existing product lines to be up 20 percent for the fiscal year. Add to that, revenues from the new contract resulting in revenues probably increasing 30 percent in the period ahead.
IC projects profit of approximately $4 billion or earnings per share of $1.10 and that should push the stock to $20 in 2019. IC is placing the BUY RATED stamp on the stock.