HONBUN reports 74% increase in nine months net profit

Date: August 12, 2019

Honey Bun (1982) Limited (HONBUN), for the nine months ended June 30, 2019, revenue grew by 16% amounting to $1.17 billion, up from $1.01 billion reported a year ago. For the quarter, revenue climbed by 19% to total $394.49 million relative to the $331.73 reported the prior year’s corresponding quarter. The Company had a 10% increase in cost of sales to $604.43 million (2018: $551.66 million). Consequently, gross profit increased by 24% or $52.77 million year-to-date to $565.54 million (2018: $454.81 million). While, for the quarter, gross profit closed at $188.98 million (2018: $146.16 million). Management noted that the increase was, “due to increased capacity from our plant and machinery upgrades.”

The Company reported other gains totaling $5.17 million relative to losses of $4.43 million for the similar period in 2018. HONBUN however reported other losses of $1.86 million for the third quarter relative ended June 2019 to other gains of $915,952 for the same quarter of 2018. Finance income totaled $1.04 million, a 66% increase compared to $625,481 reported twelve months earlier.

Administrative expenses has rose 15% to $231.56 million (2018: $202.08 million), while Selling, distribution & promotion expenses increased by 16% to $190.32 million (2018: $164.13 million). Total Expenses for the nine months amounted to $421.88 million, 15% above the $366.21 million recorded for the same period of 2018. For the quarter, total expenses increased by 12% to $153.69 million (2018: $136.62 million). HONBUN stated that the growth was, “due mainly to increased sales and marketing spend as well as staff training and development costs.”

Profit from operations went up by 77% from $84.79 million in 2018 to $149.87 million for the period in review. Finance costs rose by 23% to $5.38 million (2018: $4.39 million). As such, Profit before taxation closed at $144.49 million compared to $80.40 million booked in 2018. Profit before taxation for the third quarter amounted to $32.33 million (2018: $9.02 million).

Taxation for the nine months amounted to $18.78 million (2018: $8.29 million). Thus, net profit after taxation amounted to $125.70 million, a 74% increase relative to the $72.10 million reported for the prior year’s corresponding period. For the quarter, net profit after taxation increased by 72% to $16.69 million compared to $9.71 million in 2018.

Consequently, earnings per share (EPS) amounted to $0.27 (2018: $0.15) year to date, while for the quarter the EPS amounted to $0.04 (2018: $0.02). 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 August 09, 2019 at $6.00.

HONBUN highlighted that, “In June, we introduced a new line of burger buns, the Shorty burger bun, packaged for the retail sales market. The product is doing well and we look forward to further build out of this line. We also launched new packaging on our primary products to give them a new look and feel, but the same deliciousness our customers have come to know and enjoy. We are very optimistic about the future, and continue to build on our capacity and business intelligence to meet the opportunities ahead.”

Balance Sheet at a Glance:

Total Assets increased by $139.41 million or 19% to close at $870.94 million as at June 30, 2019 (2018: $731.52 million). The increase in total assets was largely due to a 14% increase in property, plant and equipment which closed the period at $501.80 million (2018: $441.20 million). Investments and Cash and cash equivalents also contributed to this growth closing the period at $84.72 million( 2018: $76.11 million) and $147.52 million (2018: $84.16 million), respectively.

Shareholder’s equity totaled $729.68 million compared to the $599.56 million quoted as at June 30, 2018. This resulted in a book value of $1.55 relative to $1.27 the prior year.

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