Apr 2007 Financial News

PHL Releases First Quarter Results

Apr 05, 2007

Results for the First Quarter Ended February 28, 2007

For the First Quarter Ended February 28, 2007 Prestige Holdings Limited (PHL) reported Earnings Per Share (EPS) of 9.7 cents. This EPS was up by a considerable 36.62 per cent or 3 cents on the comparable EPS in Q1’06. However, it is important to note that the Group had suffered significantly in the first quarter of 2006 due to media coverage of the Aspergillosis fungus at a small poultry farm in Cumuto which negatively impacted sales in KFC Trinidad and Tobago. Thus, this should be taken into consideration when comparing figures quarter on quarter.

Sales for the period amounted to $158.48 million, an increase of 13.51 per cent or $18.87 million on the comparable Sales figure in FY’06. Cost of Sales increased by 13.07 per cent to $107.44 million resulting in a Gross Profit of $51.04 for Q1’07 compared to $44.59 million for Q1’06- an increase of 14.47 per cent.

Operating Restaurant Expenses stood at $40.07 million compared to $35.14 million in the corresponding quarter in the last financial year. Thus, Operating Restaurant Profit stood at $10.97 million, up by $1.52 million or 16.04 per cent on the corresponding period in FY’06.

For the period under review Finance Costs totaled $3.07 million, an increase of $0.69 million or a considerable 29.05 per cent on the Finance Costs for the corresponding quarter in FY’06. Thus, Profit Before Taxation amounted to $7.89 million up by 35.76 per cent or $2.08 million on the comparable figure in the last financial year.

The Effective Tax Rate for Q1’07 was 30.65 per cent compared to a Tax Rate of 36.35 per cent for Q1’06. The Profit After Taxation ended the period at $5.47 million up by a significant 47.92 per cent on the comparable quarter in FY2006.

In his report to shareholders, the Chairman stated that- barring any unforeseen adverse events, it is expected that the positive trend of the first quarter will continue for the rest of 2007.

PHL is currently trading at a price of $5.75. In light of the current results and the forward looking statements of the Chairman we are revising our forecasted EPS to 45 cents. At the current price and revised forecasted EPS, this share is trading at a price to earnings multiple of 12.78 times which is attractive for this share. Additionally, using a multiple of 15 times and the forecasted EPS of 45 cents, we estimate a target price of $6.75 or a return of approximately 17 per cent based on the current price. Thus, using this analysis we recommend a BUY on this share.

Gia Singh
WISE Research Team