Wisynco remains a buy

Wisynco Group was on a roll, with revenues up 27.5 percent in the nine months to March this year and 24 percent in the March quarter. Gross profit margin slipped in the March quarter while rising Administration and other expenses squeezed profits even more as the onset of the COVID-19 virus set in during March and upended business operations locally and overseas.

Wisynco headquarters.

Sales dipped slightly in the June and September quarters, but the September 2019 quarter includes sales of $503 million from a discontinued operation, resulting in flat sales from ongoing business. Net Profit Attributable to stockholders from continuing operations slipped 9 percent to end at $851 million for earnings of 23 cents per stock, compared to $932 million or 25 cents for the similar period of the prior year. Revenues for the quarter from continuing operations fell 6 percent from $8.6 billion to $8.1 billion in the 2019 quarter.
Gross Profit for the quarter of $2.9 billion was 5.9 percent less than the $3.1 billion achieved in the same quarter of the previous year, with a strong Gross Margin at 35.9 percent, the same as the prior year.
Selling and Distribution expenses dropped eight percent to $1.56 billion from $1.7 billion in 2019, but Administrative expenses rose 6 percent from $334 million to $354 million for the quarter for the corresponding quarter of the prior year. The charge for corporation taxes also declined 18 percent from $217 million to $177 million.
“We did see some pockets of improvement and were pleased that our exports rose 43 percent or approximately $56 million over the comparative quarter last year. We attribute this increase to higher demand in the US, Canada and other CARICOM countries for our brands and we continue to press the development of our exports as a means of getting exposure to new revenue channels,” William Mahfood, Chairman and Andrew Mahfood, Chief Executive Officer reported to shareholders in their commentary of the results.

Wisynco growing revenues and profit.

They went on further to state, “Management continues to implement measures to reduce expenses and were pleased that our expense to sales ratio held at 23.8 percent of sales even though our revenue base was lower than the prior year’s quarter. We are hopeful that the expense control measures will be more evident in future quarters.” The company expects to have lower energy costs with the successful commissioning of a cogeneration plant in July 2020, reducing energy costs.
Shareholders’ Equity rose to $13.87 billion from $11.91 billion in the 2019 September quarter. The group relied on loans to the tune of $2.66 billion, up from $2.6 billion in 2019. Cash flows from operations before changes in working capital amounts to $1.27 billion and after working capital changes, $1.8 billion compared to $1.74 billion in 2019 and build up cash and deposits to $6.6 billion with investments of $775 million. Current assets stood at $12.8 billion, with current liabilities at $5.2 billion.
ICInsider.com projects earnings per share for the fiscal year ending June 2021 to be $1.25, with a PE ratio of 13 compared to the market average for Main Market stocks of 16.6 based on the closing price on Friday of $16.43. The stock should be acquired as a medium to long-term investment, with the probability for the price to hit $30 by the end of 2021.
The principal activities of the group are the bottling and distribution of water and beverages and the distribution and retailing of food items.

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