HONBUN reports 8% decline in year end net profit

Date: November 30, 2018

Honey Bun (1982) Limited (HONBUN), booked a 5% increase in revenue to $1.32 billion, up from $1.25 billion reported a year ago. For the fourth quarter, revenue climbed by 10% totaling $310.71 million (2017: $281.70 million).

The Company had a marginal increase in cost of sales to $715.89 million (2017: $706.92 million) which consequently led to a 10% increase in gross profit to close at $601.29 million (544.20 million). For the quarter, gross profit recorded a 17% rise amounting to $146.48 million compared to $124.94 million in the prior corresponding period.

HONBUN reported other income of $1.59 million, a 50% decline on the $3.14 million posted in the prior year. Finance income totaled $1.83 million, up by 13% compared to $1.62 million reported twelve months earlier.

Administrative expenses rose slightly by 2% to $268.95 million (2017: $264.35 million), while Selling, Distribution & Promotion expenses increased by 34% to $232.67 million (2017: $173.46 million). Total expenses for the year end amounted to $501.61 million, 15% above the $437.81 million recorded for the prior year. For the fourth quarter, total expenses increased by 15% to $135.40 million (2017: $117.81 million).

As a result of increased expenses, profit from operations contracted 7% from 111.14 million in 2017 to $103.09 million for the period in review. Finance costs declined by 15% to close at $5 million (2017: $5.88 million). Profit before taxation declined by 7% to $98.10 million compared to $105.27 million booked in 2017. Profit before taxation for the fourth quarter amounted to $17.70 million (2017: $8.51 million).

The Company incurred taxes of $11.67 million (2017: $11.36 million), thus resulting in Net profit after taxation of $86.42 million, an 8% decline relative to $93.90 million reported for the prior year’s corresponding period. For the quarter, Net profit before taxation increased to $14.32 million compared to $9.25 million recorded for the corresponding quarter of 2017.

Total comprehensive income for the  year amounted to $90.89 million relative to $93.41 million in 2017.

Consequently, Earnings per share (EPS) amounted to $0.18 (2017: $0.20) for the year end, while for the fourth quarter the EPS totaled $0.03 (2017: $0.02). The number of shares used in this calculation was 471,266,950 shares. HONBUN last traded on November 29, 2018 at $4.02.

Balance Sheet at a Glance:

Total Assets increased by 12% to close at $788.43 million as at September 30, 2018 (2017: $704.63 million). The increase in total assets was mainly due to a 27% increase in ‘Property, Plant and Equipment’ which closed the period at $491.54 million (2017: $386.95 million). ‘Intangible Assets’ also increased by 50% from $1.66 million in 2017 to $2.49 million in 2018. The overall movement in the asset base was tempered by a 19% decline in receivables to $66.13 million (2017: $81.70 million).

Shareholder’s Equity totaled $617.87 million (2017: $545.83 million) posted as at September 30, 2018. This translated in a book value of $1.31 relative to $1.16 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.