May 20, 2024

Stationery and Office Supplies Limited (SOS)

Unaudited financials for the first quarter ended March 31, 2024:

Stationery and Office Supplies Limited  (SOS) for the first quarter ended March 31, 2024, reported a 1% increase in revenue totaling $524.81 million compared to $519.18 million in the corresponding quarter last year.

SOS has demonstrated its strong cost management capabilities, with the cost of sales amounting to $234.08 million (2023: $248.72 million), representing a decrease of 6% year over year. This has led to a healthy increase in gross profit by 7% to $290.73 million compared to $270.47 million for the first quarter ended March 31, 2023.

Administrative and general expenses increased by 14% to close at $132.01 million, while Selling and promotional costs increased by 16% from $34.43 million in 2023 to $39.81 million for the quarter. These increases are significant. However, management stated “that there was a salary increase given to the staff in February 2024 as a reward for their hard work and outstanding effort seen on a daily basis. In addition, as part of the SOS incentive plan that was established during 2023, the staff was rewarded with additional bonuses based on the audited 2023 results, and this was paid during this quarter.”

Depreciation & amortization for the first quarter amounted to $10.70 million, a 19% increase relative to the $8.98 million reported in 2023. This is rise in depreciation and amortization is a result of the new acquisition of PP&E to expand the company reach and storage capacity.

Operating profit for the quarter amounted to $108.20 million, a 3% decrease compared to the same period in 2023. This decrease is primarily due to an increase in administrative and depreciation expenses.

There was a positive inflow for finance income for this quarter, amounting to $1.70 million, while Finance costs totaled $708,687, a 66% decrease from the corresponding period last year.

Profit before tax for the first quarter ended March 31, 2024, amounted to $109.25 million, a 1% increase relative to $108.12 million reported in 2023.

Gain on foreign exchange for the quarter increased to $57,998 (2023: loss on foreign exchange of $1.22 million).

Income Tax Expenses decreased by 2% to $13.67 million (2023: $14.00 million). Net Profit for the first quarter totaled $95.58 million, relative to the $94.12 million reported over the corresponding period.

Consequently, Earnings Per Share for the quarter remained the same which amounted to $0.04 (2023: EPS: $0.04). The twelve-month trailing EPS was $0.12, and the number of shares used in these calculations was 2,251,084,500.

Notably, SOS’s stock price closed the trading period on May 20, 2024, at a price of $1.70 with a corresponding P/E ratio of 13.70x.

Balance Sheet Highlights

The company’s assets totaled $1.80 billion (2023: $1.52 billion). This 18% YoY growth in the company’s balance sheet is attributed to a 36% YoY growth in Property, Plant and Equipment closing the quarter at $854.24 million (2023: $627.43 million), Right of use assets, which grew 60% YoY, closing at $18.64 million (2023: $11.64 million), Inventories which grew 10%  YoY closing at $339.21 million (2023: $308.89 million) and Trade and Other receivables which had a YoY growth rate of 27% ending the quarter at $222.15 million (2023: $175.46 million)

Shareholder’s equity was $1.43 billion  (2023: $1.20 billion), representing a book value per share of $0.63 (2023: $0.53).

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