August 14, 2020
FosRich Company Limited (FOSRICH) for the six months ended June 30, 2020 booked a 15% increase in revenue to total $857.15 million compared to $746.43 million for the same period in 2019. The Company noted, “These increases were attributed primarily to the greater availability of the products required by the market. The product lines that had significant increases were Industrial and PVC.” Revenue for the quarter closed at $408.33 million compared to $367.85 million for the second quarter ended June 30, 2019.
Cost of sales year to date increased 20%, moving from $431.22 million in 2019 to $518.54 million. As such, gross profit amounted to $338.61 million, an increase of 7% when compared to $315.21 million recorded for the period ended June 30, 2019. Gross profit for the second quarter closed at $168.70 million (2019: $156.13 million).
Other income, year to date totaled $12.38 million a contraction of 49% year over year, when compared to the $24.41 million reported twelve months earlier.
Administrative and other expenses rose by 16%, to total $271.49 million (2019: $233.21 million). “This was driven primarily, in Q1, by a combination of building out of our Human resources expertise as we build capacity for the future. We now have a new Sales Manager. Other cost increases were incurred due to staff benefits; increased legal and professional fees; increased selling and marketing costs; increased computer expenses; increased motor vehicle expenses; increased insurance costs; increased security cost and increased electricity cost,” the Company noted.
The Company recorded finance cost of $57.30 million for the first six months of the year, a 31% increase when compared to $43.81 million documented for the corresponding period in 2019. Fosrich noted, “This increase is being driven primarily by the requirements of IFRS 16, which requires that all long-term leases be brought on the balance sheet as right-of-use assets with the financial obligation being reflected as financing and with the appropriate financing cost calculated.”
Consequently, total expenses to date amounted to $328.80 million compared to $277.02 million for the comparable period in 2019. As a result, operating profit for the period decreased by 65% to close at $22.19 million (2019: $62.60 million).
The Company reported a tax credit of $73,472 compared to a tax expense of $930,365 for the first six months of 2019. Consequently, net profit for the six months ended June 30, 2020 totaled $22.26 million, a 64% decline relative to $61.67 million reported for same period in 2019.
Earnings per share (EPS) for the period totaled $0.04 (2019: $0.12). EPS for the quarter closed at $0.03 versus $0.06 for the second quarter ended June 30, 2019. The trailing twelve months earnings per share amounted to $0.12. The number of shares used in our calculations amounted to 502,275,555 units. FOSRICH’s stock price close the trading period on August 14, 2020 at $3.90.
Balance Sheet at a glance:
As at June 30, 2020, total assets amounted to $2.55 billion, up 22% from the balance of $2.08 billion as at June 30, 2019. The increase in total assets was largely due to ‘Inventories’ and ‘Due from Related Parties’ which totaled $1.25 billion (2019: $1.10 billion) and $282.61 million (2019: $96.59 million), respectively. The company noted, “The company continues to closely manage inventory balances and the supply-chain, with a view to ensuring that inventory balances being carried are optimised, relative to the pace of sales, the time between the orders being made and when goods become available for sale, to avoid both overstocking and stock-outs. Monitoring is done both at the individual product level and by product categories. Sales in most categories were less than anticipated, this due to the uncertainties which resulted from the Covid-19 pandemic, which affected our customers buying patterns.”
Shareholders’ Equity of $819.23 million was reported as at June 30, 2020 (2019: $755.02 million) which resulted in a book value per share of $1.63 (2019: $1.50).
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