Sleepy Lasco stock surges on strong half-year results
Published:Friday | November 11, 2011 | 12:00 AM
Steven Jackson, Business Reporter
Lasco Financial Services Limited (LASF), formerly a sleepy junior stock, has gained nearly 100 per cent in price over two weeks to match its 100 per cent jump in profits.
Investors who bought the stock at J$3 in late October saw their investment jump to J$5.94 on Monday, before easing back to J$5.80 Wednesday.
It was the first major jump for the stock since its listing last year. The performance surprised some investors who looked for the other two sister company's - Lasco Manufacturing and Lasco Distribution - for hefty gains.
LASF released particularly "strong" results for its fiscal six-month period, according to Kimberly Thelwell, manager of investment banking and research at Stocks and Securities Limited. The company's half-year profit after tax surged to J$22.2 million, compared with J$10.6 million a year earlier.
Even discounting the tax holiday granted to Lasco for listing on the junior stock exchange, the company still increased pre-tax profit by 39.6 per cent year on year.
Thelwell said this quarter represented LASF's best to date. It made J$11 million in the September quarter, compared to J$4.7 million in the comparative 2010 period.
New loans division
"Prior quarter results were not as robust, especially when compared to Lasco Manufacturing and Lasco Distributors. LASF's diversification has also aided growth; of note, the addition of a loans division contributed significantly to income during the period, and also LASF's property rental segment produced solid results," the analyst said.
These results, coupled with the bull run on the local market and for the other two Lasco stocks - LASM and LASD - have helped to drive LASF's stock price over the past few weeks, she added.
Another trader, who spoke to The Gleaner on condition of anonymity, said he expects the stock to remain within the J$5 band.
The three Lasco companies listed October last year at J$2.50 each. On Wednesday, LASD and LASM closed at J$15.83 and J$14.97, respectively, reflecting an approximate 500 per cent increase in each stock price.
Jacinth Hall-Tracey, the managing director at LASF, stated in the latest financial report released to the market on October 24 that the results were bouyed by a J$7-million increase in total income due to a "significant decrease in finance costs". Contributions to growth in income came from all business divisions but the largest increase was generated by the non-core sectors, loans and property rental, she said.
"The loans division has posted increased revenues of over 500 per cent and rental income contributed an increase of 160 per cent. Revenues from remittances rose moderately by two per cent and cambio remained square," Hall-Tracey said.
LASF expects the second half of the financial year to offer favourable results based on the addition of another cambio branch in Ocho Rios and the launch of the drive-through service at the Red Hills Road, Kingston branch. However, remittance transactions are expected to be moderate due to the tempered US economy.
Lasco debuted on the JSE Junior Exchange to strong interest from the market.
In June, Lascelles Chin, chairman and founder of Lasco, announced a US$11-million factory investment in sister company Lasco Manufacturing. The amount was later upgraded to US$16 million (J$1.4b). The investment will increase capacity at its White Marl, St Catherine factory by 70 per cent enabling it to launch new product lines and come close to doubling sales by 2014.