Date: June 07, 2019

Seprod Limited (SEP), for the three months ended March 31, 2019, posted revenue totalling $9.04 billion compared to $4.95 billion recorded for the same period of the prior financial year, representing a 83% increase year over year. The Manufacturing Division recorded a marginal increase to close at $4.89 billion (2018: $4.82 billion), while the Distribution Division  increased grossly by 266% closing at $6.07 billion (2018: $1.66 billion).

Cost of sales increased by 93% from $3.47 billion in 2018 to $6.70 billion in 2019, resulting in gross profit increasing by 58% to close at $2.34 billion (2018: $1.48 billion).

Finance and other operating income totalled $295.92 million compared to $126.36 million in 2018.

Selling expenses increased by 152% to close the first quarter of 2019 at $391.14 million (2018: $155.03 million). Additionally, administrative expenses for the period climbed by 70% to total $1.55 billion versus $912.26 million in 2018.

As such, operating profit grew 30%, moving from $537.12 million in 2018 to $696.16 million to close the period in review.

Finance costs amounted to $287.38 million (2018: $139.10 million).

Profit before taxation increased to $427.34 million in 2019, an increase of 7% on $400.95 million reported a year prior.

Seprod reported net profit of $311.96 million, a growth of 7% relative to last year’s corresponding period of $292.90 million, after incurring taxes of $115.38 million (2018: $108.05 million).

Net profits attributable to shareholders amounted to $354.60 million, a year over year improvement from the $337.73 million recorded a year earlier. Total comprehensive income for the quarter amounted to $280.92 million compared to $306.90 million booked for the first quarter of 2018.

Consequently, earnings per share (EPS) for the three months ended March 31, 2019 amounted to $0.48 versus $0.46 booked in the corresponding period of 2018. The twelve months trailing EPS is $1.63. SEP last traded on June 07, 2019 at $49.84.

SEP noted that, “consistent with the Group’s 2018 audited results, the business continues its positive trajectory; as the investments in acquisitions, distribution expansion, product innovations, increased exports and retooling of the manufacturing base continue to yield positive results.”

In addition, management stated that, “unfortunately, the Group suffered a J$150 million loss in the sugar operation for Q1. The decision has been to exit the sugar manufacturing operation at the end of the current crop, likely to be around mid-July 2019. The Group will look to transition the cane lands to other agriculture and Agri-processing ventures, to be announced in short order.”

Balance sheet at a Glance:

As at March 31, 2019, the Company’s Total Assets increased by 85% to $35.69 billion from $19.28 billion a year ago. The increase in assets was largely due to an improvement in ‘Intangible Assets’ and ‘Long-term receivables’ which closed at $9.60 billion (2018: $969.02 million) and $715.78 million (2018: $174.56 million), respectively. Also, ‘Inventories’ also contributed to the growth closing at $5.82 billion (2018: $2.88 billion). Receivables as at March 31, 2019 amounted to $7.46 billion relative to $4.59 billion as at the same period in 2018.

Shareholders’ Equity for the period ended at $15.03 billion relative to $9.32 billion last year, indicating a 58% increase. This translated into a book value per share of $20.48 (2018: $12.70).

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.