Aug 2006 Financial News

BS&T Releases Nine Months Results

Aug 03, 2006

All figures quoted in BDS$ unless otherwise stated
Exchange Rate: 1BDS$: 3.1129TT$

Barbados Shipping and Trading Company Limited (BS&T) for the nine months ended June 30, 2006 has reported an EPS of 22.9 cents. Although this represents a fall in the comparable EPS in 2005 of 57.75% or 31.3 cents, it is not purely reflective of core operations. In fact, the Operating Profit of the Group actually increased by 39.90% to $35.71 million.

The fall in Earnings is attributable to an unrealized loss of $8.31 million in the current period, due to the decline in Neal & Massy's share price. Where as, in the same period last year, the Group benefited from an unrealized gain of $17.78 million on the same share. Moreover, the nine month period ended June 30, 2005 also included a one off item, whereby 5 million shares of Neal & Massy were sold at a gain of $20.95 million.

There were no Other Expenses for the nine months ended June 30, 2006, however in the corresponding period in 2005 this figure amounted to $12.1 million. Overall, Profit before gains/losses on Investments and Amortization which amounted to $26.81 million for the current period, increased by 495.34% or $22.31 million on the comparable period in 2005.

The Chairman is not deterred by the effect of the unfavorable swing in Investment Earnings this year; instead he is encouraged by the improved earnings derived from core operations and believes that this holds well for the future performance of the Group.

The EPS for the third quarter was significantly less than previous quarters: 12.1 cents (Q1); 8.7 cents (Q2); and 2.1 cents (Q3). In light of this, we have revised our forecasted EPS down to TT$1.00, with a projection of flat earnings year on year in the fourth quarter. At the current price of TT$17.95 and the revised forecasted EPS of TT$1.00, the shares are trading at a P/E multiple of 17.95 times. This multiple is not only high for the sector but also high for the band in which this share usually trades: 8 to 12 times. Based on this fundamental analysis, we maintain our recommendation of a SELL on this share.


Gia Singh
WISE Research Team