Lasco Financial’s Q1 Profit up 14%

Lasco FinLasco Financial Services (LFSL) reported profit of $10 million for the March 2015 quarter, down from $41 million made in 2014 but revved things up to a 14 increase in June quarter to $54 million as revenues climbed 8 percent to $192 million and well over the $148 million generated in the March quarter.
For the March quarter revenue that compared with the 2014 quarter expenses grew by $28 million due mainly to increase spend on marketing and selling expenses. Jacinth Hall-Tracey, Managing director indicated that the period suffered from squeezed margins in March quarter on foreign exchange trading and foreign exchange losses in the quarter, resulting from the revaluation of the Jamaican dollar and greater stability of the exchange rate. Loan disbursements slowed as credit rating data used in assessing potential clients resulted in lower loan approvals.
Total expenses for the first quarter increased by 5.5 percent to $137 million compared to the corresponding period. This is primarily due to a 36 percent increase in administrative expenses and 16 percent decrease in selling and promotion expenses. “The net increase is reflecting the expansion of our network, staff cost and software support to manage operational efficiencies and to build customer relationships. LFSL continues to review its marketing tactics which gave rise to a reduction in selling and promotion expenses”, Hall-Tracey said. She went on to say “During the quarter, our growth initiatives included the launch of our motorcycle loan product and the opening of our new cambio branch in Port Antonio”. The opening of the new branch would have added to administrative cost against which revenues would not cover.
Lasco cambioThe company has cash of $563 million and is generating over $200 million per year. If the company can find the formula to ramp up good quality lending successfully, the profit outlook can be transformed considerably with high profit margins for lending. “We are working on a number of initiatives that will help in the transition from lower income in foreign exchange activity” Hall-Tracey said in response to questions posed after the company released the Full year results to March. The area of credit approval is one that they is being revisited as the use of credit rating information is stymying lending. But Hall-Tracey expects profit for this year that ends March 2016 to be higher than for the year just ended, subject to taxes on profit which the company will start bearing at fifty percent of the official tax rate of 25 percent.
The equity capital of Lasco is $868 million and is well below that of its two siblings who have equity in equity of more than $2.4 billion each, as such the possibility for strong growth is probably more present here than with the bigger entities over time.
The company has done well from the money remittance and cambio operations but it is in the lending that the future growth prospects seems to rest. Hence the connection between Mayberry Investments with the know-how having been exposed at Access Financial. The company has adequate free capital to increase lending with only $147 million in loans at March. Earnings per share of 0.45 cents for the quarter should end around 20 cents for the year to March 2016. The stock last traded at $1.80, investors need to keep an eye for the possibility that Mayberry Investments could increase their holdings in the company.

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  2. […] Lasco Financial Services reported lower profits for the quarter and nine months to December. Net profit fell to $43.88 million in the quarter and is down from $69 million in 2014 and for the nine months $158 million versus $181 million in 2014. The company profit is now to taxes at 50 percent of the normal company’s tax rate. Notwithstanding the fall in profits third quarter revenues increased by $39 million or 19 percent over the corresponding 2014 period to $239 million and for the nine months to $649 million, up 9.3 percent from $566 million in 2014. Income from the company’s original source of business increased by $31 million in the quarter. “All business lines grew the contribution to revenues; Remittance transactions and revenues continue to grow ahead of the industry and the Cambio and Loans divisions increased its transactions and revenues, following the expansion of the branch network. The increase in revenues from our new business lines and value added services resulted in Other Operating Income for the period growing by 100 percent to close the quarter at $14.4M” Managing Director Jacinth Hall-Tracey told shareholders in a report accompanying the results. For the nine months period the income was up by $79 million to $626 million, while other operating income grew to $33 million for the nine months from $18.5 million and in the quarter it rose from $7 million in 2014 to $14.4 million. Nine months’ expenses increased 28 percent or $110M resulting in a year to date operational profit of $164M, 9 percent below the previous year’s $181M. “We launched in September our first business loans branch and closed the quarter with three locations, two in Kingston and one in St. Catherine; two more will be opened in the first week of February. We also launched our Telecoms Division with the distribution deal for Huawei Smart Phones and wearable devices, rolling out eleven locations islandwide through our agent network. This investment impacted our expenses mainly due to a more than 50 percent increase in staff complement and the aggressive marketing support to launch the telecoms business launch the telecoms business,” Hall-Tracey advised shareholders. Expenses for the quarter grew by 44 percent over the corresponding quarter to $189 million and from $385 million in the 2014 nine months period to $495 million for an increase of 29 percent much greater than the income in revenues. Earnings per share is 13 cents for the nine months and should end around 18 cents for the year, but 2017 fiscal year should see a jump as the expansion now underway starts to flow into profits. The company’s stock closed trading on Friday at $4.25 at a PE of 23 times estimated March 2016 earnings. […]

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  14. […] and analysis in financial matters. In this regard, kindly advise if possible as to your views on Lasco Financial, Distributors and Manufacture. Do you believe that these stocks are likely to perform well in the […]

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