HIGHLIGHTS
AMCL HY2024
- Earnings: Diluted Earnings Per Share 13.3% higher, from TT$1.13 to TT$1.28
- Performance Drivers:
- Revenue Growth
- Improving Margins
- Outlook:
- Growth Opportunities
- Rating: Maintained at MARKETWEIGHT
MASSY 9M2024
- Earnings: Earnings Per Share 10.7% lower, from TT$0.24 to TT$0.22
- Performance Drivers:
- Increased Revenues
- Ongoing Acquisition Activity
- Outlook:
- Geographical Diversification
- Rating: Maintained at OVERWEIGHT
This week, we at Bourse review the performance of two key members of the Conglomerate sector on the Trinidad & Tobago Stock Exchange (TTSE), Massy Holdings Limited (MASSY) and Ansa McAL Limited (AMCL) for their respective nine-month (9M2024) and six-month (HY2024) reporting periods ended June 30th, 2024. AMCL reported increased revenue growth and improved operating margins, while MASSY’s performance was constrained by higher expenses despite revenue growth. How will both companies fare in the upcoming months? We discuss below.
Ansa McAL Limited (AMCL)
Ansa McAL Limited (AMCL) reported a Diluted Earnings per Share (EPS) of $1.28 for the six months ended June 30, 2024 (HY2024), up 13.3% relative to $1.13 reported in the prior comparable period (HY2023).
Total Revenue amounted to $3.43B in HY2024, up 5.5% from a prior $3.25B. Operating Profit advanced 12.8% to $364.5M in comparison to $323.1M in HY2023. Operating Margin increased from 10% to 11% Year-on-Year (YoY). Profit Before Tax (PBT) grew 16.6% for the period, from $311.0M to $362.6M in HY2024. Finance Costs fell by 23% to $20M. Share of Result of Associates and Joint Venture Interests rose 30% from $13.9M to $18.1M in HY2024. The Group recorded taxation expenditure of $103.8M, with the Effective Tax Rate maintained at 29% year on year. Consequently, Profit for the Period expanded 17.2% from $220.7M reported in HY2023 to settled at $258.8M in HY2024.
PBT Improves
For the review period, AMCL’s PBT continued its positive momentum up 17% to $362.6M from a prior $311.0M in HY2023. The Construction, Manufacturing, Packaging & Brewing sector, the largest contributor to PBT (58.8%) grew from $160M in HY2023 to $213M in HY2024 (+33.1%). The second largest contributor to PBT, Banking and Insurance services (28.9%) expanded by $19M (22%) to $105M from a prior $86M. Automotive, Trading & Distribution (20.5% of PBT) fell to $74M relative to $89M a year earlier, a 16.9% decline. The Media, Services, Retail and Parent Company segment recorded a loss of $30M, a differential of $6M from a prior loss of $24M.
AMCL posted an EPS of $1.28 in HY2024, up 13.3% from a previous $1.13 in HY2023. Its trailing 12-month EPS rose to $3.15 in HY2024 from a prior $2.12. Consequently, the Group’s Trailing Price-to-Earnings (P/E) multiple contracted from 24.1 times to 20.0 times in the current period and trending towards valuations it would have traded at in 2020-2021.
The Bourse View
At a current price of $63.00, AMCL trades at a trailing P/E of 20.0 times, above the Conglomerate sector average of 13.2 times. The stock offers investors a trailing dividend yield of 2.9%, below the sector average of 3.4%. The Group announced an interim dividend of $0.30, payable on September 9th, 2024, to registered shareholders by August 26th, 2024.
AMCL remains focused on its long-term growth strategy and its ambitious “2X” target for 2027, seeking organic and inorganic growth possibilities. On the basis of increased earnings growth, continued acquisition activity but tempered by elevated valuations, Bourse maintains a MARKETWEIGHT rating on AMCL.
Massy Holding Limited (MASSY)
Massy Holdings Limited (MASSY) reported Earnings Per Share (EPS) of $0.22 for the nine-month period ended 30th June 2024 (9M2024), 10.7% lower than an EPS of $0.24 reported in 9M2023.
Notably, Revenue from Continuing Operations grew 13.0% YoY, from $10.3B in 9M2023 to $11.7B in 9M2024. Operating Profit After Finance Costs declined 18.3% to $619.2M from the previous comparable period. Share of Results of Associates and Joint Ventures advanced to $112.3M (9M2023: $2.2M). Resultantly, Profit Before Tax (PBT) decreased 3.7% to $731.5M. Income Tax Expense rose to $266.5M (9M2023: $242.1M, or 10.1% higher). Profit for the period from continuing operations dipped 11.8% to $424.4M compared to $481.3M in 9M2023. With profit from discontinued operations improving to $8.2M from a prior $3.5M, overall, Profit Attributable to Owners of the Parent stood at $432.6M, a 10.8% drop compared to $484.8M reported in the previous period.
PBT Lower
MASSY’s PBT fell 3.7% for the fiscal period 9M2024. Segment PBT increased 6.1% from $864M in 9M2023 to $916M in 9M2024, supported by growth from two out of four major operating segments. Integrated Retail, the leading contributor of PBT (50.6%) advanced 7.1% from $433M in 9M2023 to $463M in 9M2024, supported by both organic growth and acquisition activity. Gas Products, the second largest contributor to PBT (26.9%) expanded 10.4% from $223M to $246M, influenced by the Group’s recent Jamaican acquisition and improved operations in Guyana and Trinidad. Motor & Machines (15.4% of PBT) had a marginal decrease of 0.7% to $141M from $142M YoY, confronting various headwinds in Colombia and Guyana. Financial Services (7.2% of PBT) reported a 5.5% decline in the current period (HY2024) to $66M from a prior $69M in HY2023.
Geographic Diversification Expands
MASSY’s geographic PBT contribution is a reflection of its continued international and regional diversification efforts, which have included acquisitions in the US, Latin America, and the Caribbean. Trinidad & Tobago, while remaining as the largest geographic contributor to PBT (32.5%), fell 8.0% YoY from $323.8M to $297.9M. Guyana’s share of PBT (25.6%) grew from $222.0M in 9M2023 to $234.5M in the current reporting period, becoming an increasingly important geographical PBT contributor to the Group. Barbados (12.5% of PBT) advanced 11.1% to $115.0M, relative to $103.5M reported in the previous comparable period. Jamaica’s contribution to PBT grew to 11.2% buoyed recent acquisitions, from $64.7M to $102.9M in the current reporting period. Notably, the Eastern Caribbean operations (11.3% of PBT) amounted to $103.9M. PBT from U.S.A. (3.3%) operations climbed 9.2% from $27.5M to $30.0M. Colombia’s operations contributed the least to PBT (3.5%) and recorded an increase in performance by 18.8%.
Lower Margins
MASSY’s profit margins were adversely affected in 9M2024, due to higher finance expenses and a one-off accounts receivable adjustment. Operating Profit Margin dropped from 7.3% in 9M2023 to 5.3% in 9M2023. Similarly, Profit Before Tax Margin decreased from 7.4% (9M2023) to 6.3% in the current period. Overall, this filtered into Profit After Tax Margin, which fell from 5.0% in 9M2023 to 4.0% in 9M2024.
The Bourse View
MASSY currently trades at a price of $3.55, down 18.9% year-to-date. The stock trades at a market to book ratio of 0.9 times, compared to the Conglomerate sector average of 1.1 times and a trailing 12-month P/E of 9.9 times, below the Conglomerate Sector average of 13.2 times. MASSY offers investors a trailing dividend yield of 4.5%, above the sector average of 3.4%.
On the basis of improved revenue growth, ongoing acquisition activity, and relatively attractive dividend yields when compared to the sector, Bourse maintains an OVERWEIGHT rating on MASSY.
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