August 16, 2021
Sterling Investments Limited (SIL) for the six months ended June 30, 2021 reported interest income of $70.78 million, a 23% increase compared to $57.70 million booked twelve months earlier. Interest income for the quarter closed at $35.64 million compared to $30 million reported for the same quarter of 2020.
Foreign exchange gain amounted to $77.71 million, a significant increase compared to the gain of $64.29 million booked the prior year’s quarter.
Also, the Company booked a ‘Net gain on sale of debt investment securities at FVOCI’ of $13.31 million for the period relative to a gain of $9.32 million recorded for the prior year. Total income for the six months ended June 30, 2021 amounted to $161.80 million relative to $131.32 million for the same period in 2020. However, total income for the quarter closed at $81.36 million versus $81.98 million booked for the same quarter of 2020.
Interest expenses for the six months ended June 30, 2021 experienced an 23% increase closing at $6.66 million versus $5.41 million for the first six months of 2020.
Other expenses for the period totalled $24.61 million, an increase of 38% from $17.90 million reported in the prior comparable period. SIL booked an impairment loss on financial instruments of $11.64 million, 519% greater than $1.88 million posted for the same period in 2020.
Unrealized fair value loss on equity investments securities at FVTPL amounted to $11.73 million in 2020, contrast to a loss of $7.40 million for the period under review. Consequently, total operating expense for the six months rose 36% to close at $50.31 million relative to $36.92 million for the same period in 2020. For the second quarter, there was a total operating expense of $25.03 million relative to the total operating benefit of $7.75 million incurred for the same quarter of 2020.
Operating profit recorded for the six months closed at $111.49 million relative to a profit of $94.40 million booked in the prior year. Operating profit for the quarter closed at $55.78 million, 38% less than the $89.74 million booked for the second quarter of 2020.
The Company booked other income for the period of $89,880, relative to other loss of $2.97 million booked in 2020. Preference dividend expense amounted to $6.37 million in 2021 in contrast to $16.24 million recorded in 2020.
SIL recorded a pre-tax profit for the first six month of 2021 of $105.21 million compared to a profit of $75.19 million in 2020. The Company incurred tax charges of $873,962 (2020: $775,526), resulting in a net profit of $104.33 million relative to a profit of $74.41 million. For the quarter, SIL recorded net profit of $49.10 million (2020: $69.82 million).
Total comprehensive income for the period amounted to $171.97 million compared to the loss of $50.69 million booked for 2020. As for the quarter, total comprehensive income closed at $126.29 million versus an income of $210.88 million a year prior.
Sterling Investments Limited’s earnings peri share for the six months ended June 30, 2021 was $0.25 relative to $0.18 in 2020. EPS for the quarter amounted to $0.12 compared to $0.17 booked for the second quarter of 2020. The twelve months trailing earnings per share amounted to $0.40. The numbers of shares used in the calculations are 414,526,305. SIL stock price closed the trading period on August 16, 2021 at a price of $3.00, while SILUS closed the trading period at US$0.02. The corresponding P/E ratio is 7.58 times.
Management noted, “Throughout 2020, SIL was able to generate significant increases in its income, US$ dividends and capital gains. During the first quarter of 2021, SIL took advantage of brief spikes in volatility and intermittent market declines to acquire attractive assets and lock in good income and yields for the future. However, during the second quarter of 2021 SIL remained patient and prudent in it’s portfolio positioning. The company slowed the pace of asset acquisition and took profits on some positions in the portfolio.”
Balance Sheet Highlights:
As at June 30, 2021, the company’s assets totalled $2.23 billion, 34% more than $1.67 billion a year ago. This resulted mainly from an increase in ‘Investment Securities’ which closed at $2.19 billion, 34% higher than the $1.64 billion booked as at June 30, 2020.
Shareholder’s equity as at June 30, 2021 stood at $1.59 billion compared to $1.17 million in 2020. The book value per share amounted to $3.83 (2020: $2.82).
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.