June 15, 2022
JFP Limited (JFP), for the three months ended March 31, 2022 recorded a 70% or $45.59 million increase in revenue from $64.90 million in 2021 to $110.28 million in Q1 of FY22. Cost of sales however reduced by 8% or $2.85 million to $33.01 million (2021: $35.86 million). Management noted that, “the sound and agile revenue growth strategies employed by the Company enabled it to build its resilience against the changing circumstances of the COVID-19 pandemic. Many of our customers were also getting back on stream to start or continue with their capital projects.”
The 70% growth in revenue led to a significant rise in JFP’s first quarter gross profit, which rose to $77.27 million from $28.83 million in 2021.
Other income closed the three-month period at $3.40 million, 70% down from $11.15 million booked twelve months earlier.
However, total expenses grew by 53% to $44.66 million (2021: $29.28 million). Of total expenses, administrative and selling & distribution expenses grew by 46% and 189% respectively, to $41.01 million (2021: $28.02 million) and $3.65 million (2021: $1.26 million) respectively. JFP mentioned that the increase in administrative expenses was due to, “related transaction costs involved in enabling the company to go public along with the fees associated with the change of name to JFP Limited.” While selling & distribution expenses increase was mainly linked to “building public awareness of the Company becoming a public entity.”
This resulted in an operating profit for the period of $36.01 million, relative to $10.70 million reported in Q1 of 2021.
Net finance Costs reported were $1.10 million (2021: $2.01 million), this decline was as a result of the “repayment of long terms loan from the proceeds of the IPO, thereby eliminating the finance cost associated with these loans.” Of net financial cost, financial cost amounted to $1.11 million (2021: $2.06 million) and financial income $6,912 (2021: $45,292).
JFP’s profit before tax grew by 302% to $34.91 million (2021: $8.69 million), there was no taxation for the period under review (2021: $650,061). As a result, net profit closed the 2022 first quarter at $34.91 million (2021: $8.04 million).
Based on current earnings, JFP reported an earnings per share (EPS) of $0.03 compared to an earnings-per-share (EPS) of $0.01 reported in 2021. On twelve-months trailing basis JFP output an EPS of $0.03. The number of shares used in our calculations is 1,120,000,000 units. JFP stock last traded on June 14, 2022 at $1.39 with a corresponding P/E of 44.23 times.
JFP highlighted, “JFP opened its Initial Public Offering (IPO) on February 21, 2022 and it was successfully closed on February 28, 2022, with the public taking up their full assignment of shares. In fact, the subscription was oversubscribed with participants receiving only 22% of their requested amount. The Company increased its share capital by 140,000,000 after the initial offer of 280,000,000 shares was taken up by the directors, employees, corporate entities and the general public. The costs associated with the IPO such as brokerage, legal and accounting, advertising and other transaction fees were netted off against the IPO proceeds.”
Balance Sheet at a glance:
At the end of Q1, March 31, 2022, JFP had Total Assets of $521.77 million (2021: $376.80 million), reflecting a 38% year over year increase. The primary increase in the asset base is due to ‘Right-of-use assets’ closing the period at $146.66 million (2021: nil) and ‘Cash and cash equivalents’ which amounted to $146.90 million (2021: $6.23 million). The movement was offset by ‘Property, plant and equipment’ which contracted by 63% to $50.06 million (2021: $134.39 million).
Shareholders’ Equity amounted to $212.28 million (2021: $211.01 million). As a result, as at March 31, 2022 the company book value per share remained unchanged year over year at $0.19.
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.