June 24, 2021
TransJamaican Highway Limited (TJH), for the year ended December 31, 2020, reported a 15% decrease in revenue to US$45.38 million relative to US$53.29 million in the corresponding period last year. Revenue for the fourth quarter amounted to US$12.75 million (2019: US$14.02 million), a 9% decrease. The company reported a net loss of US$1.87 million, relative to a profit of US$8.30 million booked for the corresponding period in 2019. According to TJH’s Chairman of the Board Mr. Charles Paradis, “starting from TJH first full year of operation in 2004, up until 2019 the traffic on our highway has grown by an average of 12% per annum. This track record of growth was temporarily interrupted last year by the pandemic and the list of safety measures associated with it. The necessary measures implemented by the Government to stop the virus have weighed on the movement of people. This has resulted in a drop in the number of transactions on our motorway. At the worst of the pandemic in April 2020, the downturn in traffic was 52%; however, the decrease in traffic moderated over the year, by December 2020 the traffic for the full year was down by only 14.8%.” Mr Paradis added, “As we look into the future, we continue to be focused on the new opportunities which are being presented to us, i.e., owning and operating the future section of highway 2000 East West, the Phase 1C which is currently under construction also the addition of new access onto the highway.”
According to Management, “In a global context where all financial centers were impacted by the COVID-19 crisis, the company’s share price is holding up rather well: The decline of the JSE index is 17% since March 2, 2020 (TJH Closing date). At JMD $1.30 on December 27, 2020, the decline of the TJH share is 7.8% compared to the initial price of JMD $1.41. Furthermore, “In 2020 the board approved the payment of dividend 7.48 cents per stock unit in December 2020. This dividend payment resulted in a dividend yield on the TJH stock in 2020 being the second-highest of all companies traded on the main market of the JSE for 2020.”
According to Non-Executive Director Mr. Ivan Anderson, “The 2019/2020 financial year was a year of change”. The company experienced a total change of ownership and financing took place in a few months following these steps:
- Step 1 (02/2019): Previous shareholders and NROCC achieved an agreement to facilitate their exit from TJH.
- Step 2 (12/2019): NROCC, funded via an Equity Bridge Loan, acquires 100% of TJH. The change of control triggers repayment of existing debtholders. Refinancing Bridge Loan is used to pay debtholders.
- Step 3 (02/2020): Bond issuance is used to repay the Refinancing Bridge Loan.
- Step 4 (03/2020): Funds from the TJH’s IPO are used to repay the Equity Bridge Loan.
TJH’s outlook as highlighted by Management:
- Areas of development under study include the right of TJH to own and/or operate Phase 1C section of Highway 2000 East-West (May Pen to Mandeville). This project would add a further 28km (more than 50%) to the existing Highways being operated. First-year revenues are expected to be approximately US$7M and completion is currently estimated for October 2022. Towards the end of June 2021, TJH anticipates submitting its final proposal to own and operate Phase 1C.
- TJH is now analyzing the use of credit and debit cards to be implemented as part of Phase 1C and a payment mechanism at its “Tag Only” plazas. The use of E-Wallet Digital currency is also being considered, as TJH is a part of the pilot with the Bank of Jamaica to assess the use of digital currency through the Central Bank’s Digital Currency (CBDC).
- Another goal is to increase tag usage so that over 80% of users utilize tags over the next 4 years.
- Construction of a second gas station at the Portmore toll plaza, with Total.
- Another business opportunity is solving the westbound traffic congestion along the Mandela Highway and Old Harbour Road.
- The various restrictions imposed by governments to contain the spread of the virus are still weighing on travel and therefore on the level of traffic observed on most road networks across the globe.
- Despite the lockdowns, TJH continues to see the recovery of the traffic. This last quarter saw a return to profit in the amount of US$0.6M compared to a net loss of US$1.5M in the same period last year.
- At present, the continued postponement of the start of the school year and the use of distance learning continues to weigh on the current level of traffic, as does the maintenance of the curfew and the ban on large gatherings.
- TJH continues to be optimistic with the easing of restrictions announced on June 22, to take effect in July 2021.
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.