QWI reports 97% decline in nine months net profit

July 26, 2022

QWI Investments Limited (QWI), for the nine months ended June 30, 2022, reported total income of $93.88 million relative to total income of $500.56 million booked in the corresponding period last year. Total loss for the quarter amounted to $132.27 million relative to income of $235.23 million a year prior.

QWI recorded gains from investment activities of $31.43 million for the period ended June 2022 relative to gains from investment activities of $476.98 million for the comparable period in 2021. While for the quarter, losses from investment activities amounted to $152.57 million versus gains of $217.70 million in the prior comparable quarter. Management noted, “QWI’s Jamaican investments, which now represent 83 percent of the Company’s portfolio, produced $38 million in unrealized losses and $6 million in realized losses in the quarter. The latter resulted from the realignment of some of the stocks in the portfolio. The Net Asset Value (NAV) of the Company’s shares declined 5.7 percent from $1.39 in March 2022 to $1.31 at the end of June 2022. The relative underperformance against the Jamaican indices reflects QWI’s exposure to the US market, which experienced a sharp decline in the June quarter. The Company recorded $93.6 million in unrealized losses in its overseas portfolio and an additional $13.8 million in realized losses. Unrealized exchange gains totalled $10 million versus $11 million a year ago.”

In addition, dividend and interest income amounted to $28.14 million as at June 2022 (2021: $23.97 million). However, for the quarter, this amounted to $10.01 million (2021: $6.43 million), up 56% year over year. 

Unrealized currency gain amounted to $34.31 million compared to a loss of $388,333 last year.

Administrative expenses for the period amounted to $63.89 million (2021: $36.94 million), while interest expense amounted to $23.07 million (2021: $20.98 million).

As such, QWI ended the period with a profit before taxation of $6.93 million, this represented a 98% decline relative to the $442.65 million booked for the nine months ended June 30, 2021.

Consequently, following a tax credit of $4.20 million (2021 tax expense: $108.22 million), net profit for the period amounted to $11.12 million relative to net profit of $334.43 million booked for the nine months ended June 30, 2021. The third quarter booked net loss of $110.60 million relative to a net profit of $163.71 million documented in the same period last quarter.

Earnings per share for the period amounted to $0.01 for the nine months ended June 30, 2022 relative to an earnings per share of $0.25 for the comparable period in 2021. While the LPS for the third quarter was $0.08 (2021 EPS: $0.12). The trailing EPS amounted to $0.03. The total shares outstanding used for this calculation was 1,365,000,015. Additionally, QWI closed the trading the period July 22, 2022 at a price of $0.87 with a corresponding P/E of 31.73 times.

Notably, Management stated that, “The Net Asset Value (NAV) of the Company’s shares fell 2 percent from $1.34 at the end of September 2021 to $1.31 at the end of June 2022. The NAV was reduced by the dividend of 3.5 cents per share declared in March and paid in April 2022. After adjusting for the dividend payment, the NAV actually increased 0.5 cents or 0.3 percent in the year to date. This performance compares favourably with the 7 percent decline in the main JSE index and the 12 percent drop in the S&P 500. QWI’s Jamaican portfolio produced $118 million in unrealized gains in the year to date. Unrealized losses of $104 million in the overseas portfolio offset much of the gain in Jamaican portfolio. Net total investment gain (realized and unrealized) for the year to date was $31 million versus $477 million in the prior year. Unrealized exchange gains amounted to $34 million versus a $0.4 million loss a year ago. Administration costs were $64 million compared with $37 million in 2021, due in the main to accruals for higher investment management expenses this year. The Company benefitted from a tax credit of $4 million, arising from the write-back of provisions for deferred tax made in prior periods versus a tax charge of $108 million a year ago.”

Balance Sheet at a Glance:

As at June 30, 2022, total assets closed at $2.23 billion (2021: $2.28 billion), a 2% decrease. This was mainly attributable to ‘Quoted investments-overseas’ which contracted by 40% closing at $361.13 million (2021: $602.70 million). This was however tempered by ‘Due from brokers and receivables’ which had an increase of $125.20 million to $131.51 million (2021: $6.30 million). Additionally, ‘Quoted investments (local)’ grew by 3% closing at $1.71 billion (2021: $1.66 billion).

The total equity as at June 30, 2022 amounted to $1.79 billion (2021: $1.81 billion). This resulted in a net asset value per share of $1.31 (2021: $1.33).




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.