HONBUN reports 15% decline in six months net profit

May 14, 2020

Honey Bun (1982) Limited for the six months ended March 31, 2020 period reported revenues of $875.98 million, 13% up from $775.48 million reported a year ago. HONBUN stated that, “This was a result of increased capacity from production equipment upgrades.” For the quarter, revenues grew by 12% to $453.50 million (2019: $406.47 million).

The Company had a 13% increase in cost of sales to close at $449.98 million (2019: $​398.93 million). As such, gross profit went up 13% or $49.44 million year-to-date to $425.99 million relative to $376.56 million reported in the prior corresponding period. Gross profit for the quarter amounted $214.37 million (2019: $201.69 million).

The Company documented other loss for the six months ended March 31, 2020 totaling $1.75 million relative to gains of $7.03 million for the similar period in 2019. HONBUN reported other loss of $1.94 million for the quarter relative to gains of $5.21 million for the same quarter of 2019. Profit before operating expenses for the six months amounted $424.24 million (2019: ​$383.58 million) an 11% increase when compared to the same period in previous year.

Administrative expenses rose 26% to $183.70 million (2019: $145.54 million) for the six months, while selling, distribution and promotional expenses increased by 5% to $129.21 million (2019: $122.65 million). Total expenses for the six months amounted to $312.91 million, 17% above the $268.19 million recorded for the same period of 2019. For the quarter, total expenses increased by 18% to $157.86 million (2019: $133.30 million).

The increased expenses resulted in a 4% decline in profit from operations from $115.39 million in 2019 to $111.34 million for the period under review.

Finance income totalled $792,799 (2019: $727,042), while for the quarter, finance income closed at $67,540 (2019: $637,887). The six months finance costs rose by 15% to $4.57 million (2019: $3.96 million). As for the quarter, the finance cost increased 80% to close at $3.14 million (2019: $1.75 million).

As such, profit before taxation closed the period at $107.56 million versus $112.16 million booked in the same period last year. Pretax profit for the quarter amounted to $51.50 million (2019: $72.49 million).

Taxation for the six months amounted to $15.13 million (2019: $3.14 million), thus resulting in net profit after taxation of $92.42 million (2019: $109.02 million). For the quarter, net profit increased to $43.30 million compared to $70.92 million reported in the previous comparable quarter.

Consequently, earnings per share (EPS) amounted to $0.20 (2019: $0.23) year to date, while for the quarter the EPS amounted to $0.09 (2019: $0.15). The trailing twelve months EPS is $0.30. The number of shares used in this calculation was 471,266,950 shares. HONBUN last traded on May 14, 2020 at $5.05.

Balance Sheet at a Glance:

As at March 31, 2020, total assets increased by 22% to close at $1.07 billion (2019: $871.67 million). The increase was largely due to increases in ‘Cash and Cash Equivalents’ and ‘Receivables’ which closed at $258.05 million (2019: $165.62 million) and $119.14 million (2019: $62 million), respectively. ‘Inventories’ and ‘Property, Plant and Equipment’ also contributed to the increase closing at $94.05 million (2019: $60.59 million) and $529.12 million (2019: $494.99 million), respectively.

Shareholders’ equity totalled $809.37 million compared to the $712.75 million quoted as at March 31, 2019. This resulted in a book value of $1.72 relative to $1.51 the prior year.



Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer(s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst in this research report.

Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.