HONBUN reports 75% increase in six months net profit

Date: May 15, 2019

Honey Bun (1982) Limited for the six months period reported revenues of $775.48 million, up from $674.74 million reported a year ago. For the quarter, revenues grew by 16% to $406.47 million (2018: $351.91 million). HONBUN stated that, “Revenues from export sales have increased by 16% over the prior period. The sales growth was attributable to our meeting customer demand having invested in increasing our production capacity over the period.”

The Company further noted that, “the financial performance was driven by improvements in productivity, process efficiencies and other cost savings initiatives in the production cycle.”

The Company had a 9% increase in cost of sales to close at $398.93 million (2018: $366.09 million). As such, gross profits went up 22% or $67.91 million year-to-date to $376.56 million relative to $308.65 million reported in the prior corresponding period. Gross profit for the quarter amounted $201.69 million (2018: $164.69 million).

The Company documented other gains totaling $7.03 million relative to losses of $5.35 million for the similar period in 2018. HONBUN reported other gains of $5.21 million for the quarter relative to losses of $5.02 million for the same quarter of 2018. Finance income totaled $727,042 (2018: $383,545). While for the quarter, finance income closed at $637,887 (2018: $69,253).

Administrative expenses rose 12% to $73.55 million (2018: $65.60 million) for the three months, while selling, distribution and promotional expenses increased by 13% to $59.75 million (2018: $52.75 million). Total expenses for the six months amounted to $268.19 million, 17% above the $229.59 million recorded for the same period of 2018. For the quarter, total expenses increased by 13% to $133.30 million (2018: $118.34 million).

The increased expenses resulted in profit from operations increasing 57% from $74.09 million in 2018 to $116.12 million for the period under review. Finance costs rose by 46% to $3.96 million (2018: $2.71 million). As such, profit before taxation closed the period at $112.16 million versus $71.38 million booked in the same period last year. Pretax profit for the quarter amounted to $72.49 million (2018: $39.87 million).

Taxation for the six months amounted to $3.14 million  (2018: $8.99 million), thus resulting in net profit after taxation of $109.02 million (2018: $62.39 million). For the quarter, net profit increased to $70.92 million compared to $34.80 million reported in the previous comparable quarter.

Consequently, earnings per share (EPS) amounted to $0.23 (2018: $0.13) year to date, while for the quarter the EPS amounted to $0.15 (2018: $0.07). The trailing twelve months EPS is $0.28. The number of shares used in this calculation was 471,266,950 shares. HONBUN last traded on May 15, 2019 at $4.00.

Balance Sheet at a Glance:

As at March 31, 2019, total assets increased by 14% to close at $871.67 million (2018: $762.95 million). The increase was largely due to increases in ‘Cash and Cash Equivalents’ and ‘Intangible Assets’ which closed at $165.62 million (2018: $83.49 million) and $3.17 million (2018: $2.29 million), respectively. ‘Inventories’ also contributed to the increase closing at $60.59 million (2018: $51 million).

Shareholder’s equity totaled $712.75 million compared to the $599.04 million quoted as at March 31, 2018. This resulted in a book value of $1.51 relative to $1.27 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.

2019-05-16T05:22:09+00:00