Jetcon profit doubles on hike in revenues
In its first quarterly earnings report since listing on the junior stock market last month, car dealer Jetcon Corporation Limited reported a doubling of net profit to $14.5 million for the period due to an increase in cars available for sale.
Jetcon expects to drive earnings further and aims to bid for possible government contracts.
"Sales based on the early days of April continue to be ahead of 2015 and augurs well for the results for the June quarter, barring any unfavourable developments," said director and siblings Managing Director Andrew Jackson and Chairman John Jackson in a statement to shareholders.
"The capital raised in the IPO places us in a position to add and widen our inventories of motor vehicles, amongst other strategies planned for expansion. We note Government's announced decision to use pre-owned vehicles in the security service and we look forward to the opportunity of bidding for the contract," the directors said.
Jetcon recorded growth in revenues of 55 per cent to $147.67 million in the first quarter ending March, compared with the 2015 March quarter. The growth for the quarter is above the 50 per cent increase achieved during all of 2015, stated the financials. Annual revenue topped $523 million last year.
As a new listing on the JSE junior market, Jetcon qualifies for at least five years of full income tax relief - it expands to 10 years, five of which is at 50 per cent waiver were the new Holness administration to follow through on its promise to reinstitute the incentives that were being phased out by the previous administration.
However, with the incentive being applicable at listing, Jetcon's first quarter largely escaped the tax benefit.
"With most of the quarter's profit subject to tax, the net profit ended at $14.45 million, compared with $6 million in the same period in 2015," the company said. Earnings per share, based on the average number of units in issue for the quarter, was 9.2 cents.
The company's inventory of motor vehicles and parts increased moderately since March 2015 and 46.7 per cent since December 2015, to reach $123.9 million.
"[it's] a deliberate strategy to increase sales, which has been working so far with the strong increased sales being enjoyed," Jetcon directors stated, explaining that due to the cash nature of sales, the dealership operates with "very low levels of receivables".
Total receivables have increased sharply but that, the directors explained, was due to amounts deposited with suppliers for goods.
All loans that were outstanding at the end of December last year have now been repaid in full, and cash on hand increased to $60.5 million due partly to the funds from the initial public offer.
The Jetcon stock is trading at around $2.69, down from its $2.90 peak in early April but still ahead of its $2.25 listing price.