May 16, 2020
Sterling Investments Limited (SIL) for the three months ended March 31, 2020, reported a 2858% increase in total revenue to $49.33 million compared to $1.67 million recorded for the corresponding period in 2019. Of total revenue:
- Interest income closed the period at $27.70 million, up 27% from the $21.83 million for the comparable period in 2019.
- Gain on disposal of available for sale securities for the period increased to $9.32 million, a 2344% or $8.94 million increase relative to the $381,343 recorded the prior year.
- Foreign exchange gains amounted to $12.31 million, relative to a loss of $20.54 million booked the prior year’s period. SIL indicated that, “The Jamaican dollar depreciated against the US dollar by J$2.82 or 2.1% for the three-month period ended March 2020, relative to the same period in 2019 when it appreciated by J$1.25 or 1.0%. This led to unrealized foreign exchange gains for the three months ended March 2020 of J$12.3 million compared to an unrealized loss of J$20.5 million for the corresponding period in 2019.”
The company experienced a 421% increase in total expenses for the period to total $44.67 million (2019: $8.57 million) for the quarter ended March 31, 2019. This was as a result of the following;
- Interest expense totaled $2.81 million (2019: $3.33 million).
- Other operating expenses totaled $8.15 million (2019: $8.20 million), down 1% year over year.
- SIL booked an impairment loss on financial instruments of $860,877 relative to the gain of $2.49 million for the corresponding quarter in 2019.
- The Company booked ‘Unrealised fair value (loss) on equities and structured notes at FVTPL’ of $32.85 million compared to a gain of $465,430 for the first three months of 2019.
Management noted, “due to the acquisition of structured notes within the portfolio, the full impact of price movements on these securities are put through the profit and loss statement. As at March 31, 2020 – market prices on these securities were near their lows. As a result, the unrealized fair value losses on these securities totalled J$17.3 million while unrealized losses on equities amounted to $15.6 million.”
Operating profit recorded for the period closed at $4.66 million relative to a loss of $6.91 million booked for the prior year.
Other income for the quarter increased from $142,859 reported in 2019 to $212,690, a 49% increase year over year.
Tax charges of $286,646 (2019: $447,944) were booked for the first three months and as such, net profit amounted to $4.59 million, relative to 2019’s first quarter net loss of $7.21 million.
Total comprehensive loss for the quarter amounted to $261.57 million compared to an income of $43.65 million booked for the similar quarter of 2019.
Earnings per share for the period amounted to $0.01 relative to LPS of $0.02 in 2019. The trailing twelve months earnings per share amounted to $0.301. The total number of shares used in the calculations amounted to 375,703,483 units. Additionally, SIL’s and SILUS stock price closed at J$2.85 and USD$0.02 as at the end of trading on May 15, 2020.
Balance Sheet Highlights:
As at March 31, 2020, the company’s assets totaled $1.41 billion, 1% less than $1.42 billion a year ago. This resulted mainly from a decrease in ‘Investment Securities’ which closed at $1.36 billion, 1% lesser than the $1.38 billion booked as at March 31, 2019. However, the movement in total assets was tempered by a 13% increase in accounts receivables to $52,99 million (2019: $46.92 million). SIL noted, “As at March 2020, margin loans totalled J$396.9 million and represented 29.2% of the total portfolio of investment securities compared to 23.7% for March 2019. The modest use of leverage increases shareholder returns above the net weighted average yield of the underlying portfolio.”
Shareholder’s equity as at March 31, 2020, stood at $956.58 million compared to $1.07 billion in 2019. The book value per share as at March 31, 2020 amounted to $2.55 (2019: $2.85).
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