Date: February 06, 2020

Lasco Manufacturing Limited (LASM) for the nine months ended December 31, 2019, reported total revenue of $5.84 billion compared to $5.61 billion in 2018. Revenue increased $182.40 million or 10% to a total of $2 billion in the third quarter, relative to the $1.81 billion recorded for the comparable quarter in 2018.

Cost of sales amounted to $3.70 billion (2018: $3.68 billion) for the period, an increase of 1% year on year. LASM stated, “The margin improvement is primarily the result of improvements in operational efficiencies.” However, for the third quarter cost of sales was recorded at $1.28 billion in 2019 relative to $1.20 billion in 2018, a 6% increase.

As a result, gross profit of $2.14 billion was recorded for the period, 11% more than the $1.94 billion booked for the corresponding period in 2018. Gross profit for the third quarter increased by 18% to $719.24 million when compared to the $611.24 million booked for the quarter ended December 31, 2018.

LASM posted other loss of $2.21 million relative to other income of $4.61 million for the prior corresponding period. While for the quarter, other loss of $16.13 million was booked versus other income of $9.08 million in the similar period last quarter.

Operating expenses increased 9% to close the period at $1.11 billion versus $1.02 billion booked for the corresponding period last year. Expenses for the quarter also moved up by 7% to close at $392.66 million (2018: $368.31 million).

Consequently, LASM recorded operating profit of $1.02 billion, 11% higher than the $919.19 million booked in 2018.

Finance costs for the period fell 17% to $75.13 million compared to $90.03 million in the prior year’s comparable period.

As such, profit before taxation amounted to $949.36 million, an increase of 14% from the $829.15 million recorded for the previous corresponding period. Taxes recorded for the period amounted to $168.67 million compared to $128.64 million incurred for the corresponding period in 2018. For the third quarter, profit before tax increased $63.64 million or 28% to $289.29 million (2018:$ 225.65 million).

Net profit for the nine months totaled $780.69 million, a 11% uptick when compared to $700.51 million in 2018, while for the quarter net profit totaled $218.13 million (2018: $197.44 million).

Consequently, earnings per share (EPS)  for the period amounted to $0.19 relative to $0.17 in 2018. The EPS for the quarter amounted to $0.05 relative to $0.05 reported for 2018. The twelve months trailing EPS amounts to $0.28. The number of shares used in the calculations amounted to 4,124,913,151 units. LASM closed the trading period on February 05, 2019 at $4.04.

Notably, Management highlighted that, “capital investments were primarily focused on the expansion of the Dry Plant White Marl facility which is expected to be completed by the end of the financial year.”

Balance sheet at a Glance:

Total assets increased 11% year on year, totaling $9.42 billion (2018: $8.50 billion) as at December 31, 2019. The increase in total assets was mainly due to a $525.34 million or 13% increase in ‘Property, Plant & Equipment’ to total of $4.62 billion (2018: $4.10 billion) and a 599% increase in ‘Cash and Bank balances’ to total $718.68 million (2018: $102.80 million).

Total shareholders’ equity amounted to $6.49 billion as at December 31, 2019 (2018: $5.47 billion). Consequently, book value per share amounted to $1.57 relative to $1.33 in 2018.

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.