February 15, 2021
Honey Bun (1982) Limited (HONBUN) for the three months ended December 31, 2020 booked a 9% increase in revenue to $461.32 million, up from $422.47 million reported twelve months earlier.
The Company’s cost of sales increased by 15% to $243.26 million (2019: $210.85 million), “due to a price increase for key raw materials,” as noted by the Company. This consequently led to a 3% increase in gross profit to close at $218.06 million (2019: $211.62 million).
HONBUN reported other loss of $1.01 million compared to other income of $186,604 posted in the prior year. As a result, profit before expenses closed at $217.04 million (2019: $211.81 million).
Administrative expenses rose by 21% to $107.26 million (2019: $88.83 million), while Selling, Distribution & Promotion expenses increased by 4% to $68.78 million (2019: $66.22 million). Total expenses for the period under review amounted to $176.04 million, 14% above the $155.05 million recorded for the prior year.
Profit from operations declined 28% moving from $56.76 million in 2019 to $41 million for 2020. Finance costs increased by 25% to close at $1.79 million (2019: $1.43 million). Appreciation in value of investments classified as fair value through profit or loss of $498,797 was recorded, resulting in a profit before taxation of $39.74 million compared to $56.05 million booked in 2019.
The company incurred taxes of $4.99 million (2019: $6.93 million), thus resulting in net profit after taxation of $34.75 million, a 29% decrease relative to $49.12 million reported for the prior year’s corresponding period.
Consequently, Earnings per share (EPS) amounted to $0.07 (2019: $0.10) for the period. The trailing twelve-month EPS amounted to $0.32. The number of shares used in this calculation was 471,266,950 shares. HONBUN last traded on February 12, 2021 at $5.50 with a corresponding P/E of 17.01 times.
HonBun stated, “In October 2020, the company introduced the Hot Dog Rolls under Honey Bun’s Shorty brand, joining the Shorty Loaf Bread (Bran and White) and the Shorty Burger Bread. The Hot Dog Roll was launched to satisfy consumers baking needs especially during the COVID-19 pandemic, as it was an easy snack to make at home. The product is tastefully covered in sesame seeds, and available in packets of eight.” Also, “In November, the company launched a staff wellness program to help team members cope with the psychosocial effects of the pandemic. The response has been positive and encouraging.”
Balance Sheet at a Glance:
Total Assets increased by 3% to close at $1.10 billion as at December 31, 2020 (2019: $1.07 billion). The increase in total assets was mainly due to a 11% increase in ‘Property, Plant and Equipment’ which closed the period at $576.40 million (2019: $518.21 million), “due to HONBUN constant focus to improve manufacturing technologies and efficiencies,” the Company noted. ‘Cash and Cash Equivalents’ also contributed to the overall growth which closed the period at $292.01 million (2019: $245.74 million). The overall movement in the asset base was tempered by a 42% decline in ‘Receivables’ to $74.70 million (2019: $128.42 million).
Shareholder’s Equity totaled $904.31 million (2019: $780.70 million) posted as at December 31, 2020. This translated in a book value of $1.92 relative to $1.66 in the prior year.
Disclaimer:
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.