May 16,2018

Sterling Investments Limited (SIL) for the three months ended March 31, 2018, reported a 4% decline in total revenue to $31.44 million compared to $32.59 million recorded for the corresponding period in 2017.

Of total revenue:

• Interest income closed the period at $20.97 million, up 15% from the $18.16 million for the comparable period in 2017.
• Gain on disposal of available for sale securities for the period declined to $1.25 million, a 91% or $12.11 million reduction relative to the $13.36 million recorded the prior year. SIL noted, “During the volatility of the first quarter, SIL sought to opportunistically purchase undervalued assets instead of selling assets.”
• Unrealised loss on quoted equities for the period amounted to $333,844.
• Foreign exchange gain amounted to $9.55 million, a gross increase of 792% compared to the gain of $1.07 million booked the prior year’s period. SIL indicated that the decrease was as a result of, “The Jamaican dollar depreciated against the US dollar by J$0.98 or 0.78% for the quarter ended March 2018, relative to the same period in 2017 when it depreciated by J$0.23 or 0.18%.”

The company experienced a 40% decline in total expenses for the period to total $6.34 million (2017: $10.53 million) for the year ended March 31, 2018. This resulted from decreases in two expenses categories.

• Interest expense totaled $2.15 million (2017: $1.14 million).
• Other expenses totaled $6.39 million, an increase of 1% (2017: $6.30 million).
• SIL booked an impairment loss on available for sale securities of $2.19 million relative to the gain of $2.69 million for the corresponding period in 2017.
• The Company booked no unrealised gain on derivative relative to the gain of $392,078 for the corresponding period in 2017.

Operating profit recorded for the period closed at $25.09 million relative to $22.06 million booked for the prior year, a 14% increase year over year.

Other income for the period grossly increased from $463 to $21,672, a 4581% or $21,209 increase.

No preference dividend expense for the period was recorded relative to the $3.50 million recorded in 2017.

Tax charges of $272,753 (2017: $192,886) was booked for the period and as such, net profit amounted to $24.84 million (2017: $18.37 million), a 35% or $6.47 million increase.

Total comprehensive income for the year amounted to $47.81 million compared to $16.16 million booked for 2017.

Earnings per share for the period amounted to $0.42 relative to $0.31 in 2017. The trailing twelve months earnings per share amounted to $0.99.  The total number of shares used in the calculations amounted to 59,370,882 units. Additionally, SIL’s stock price closed at J$12.80 as at the end of trading on May 15, 2018.

Balance Sheet Highlights:

As at March 31, 2018, the company’s assets totaled $1.22 billion, 13% more than $1.08 billion a year ago. This resulted mainly from an increase in ‘Investment Securities’ which closed at $1.18 billion, 14% higher than the $1.03 million booked as at March 31, 2017.  SIL indicated that, “This was funded by a combination of margin, the DRIP and CSPP programmes.”

Shareholder’s equity as at March 31, 2018, stood at $853.30 million compared to $824.53 million in 2017. The book value per share amounted to $14.37 (2017: $13.89).

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.