Feb 2008 Financial News

DBG Releases Q108 Results

Feb 25, 2008

Results for the First Quarter Ended January 31, 2008

All figures quoted in Jamaican Dollars unless otherwise stated

Earnings Per Share
For the First Quarter Ended January 31, 2008, Dehring, Bunting and Golding Limited (DBG) reported Earnings Per Share (EPS) of $0.72, up 9.09 per cent or 6 cents on the comparable quarter in fiscal 2007. However, while the growth in EPS was reasonable, it is important to note that the Company’s Net Income was up an outstanding 49.2 per cent from $204 million (Q107) to $305 million (Q108) but this significant growth was not passed down to the bottom line due to:

•Q107 benefited from a Tax Credit of $1.5 million; while Q108 incurred a Tax Expense of $82.5 million.
•Other Operating Income was down approximately $20 million due to decreased gains on securities and foreign currency trading.
•Provision for Loan Loss was up 259 per cent or $2 million on the corresponding quarter of fiscal 2007.

Dividends
The Board has approved an interim dividend of 27.5 cents payable on March 28, 2008 to shareholders on record as at March 5, 2008.

CEO Comments
The CEO has commented that “the results reflect the successful completion of the acquisition of Scotia Jamaica Investment Management last year, and the resulting synergies and efficiencies that have accrued from the merged operations.” The performance is expected to continue over the coming quarters.

Recommendation
DBG last closed at a price of TT$2.05 on the local exchange and at a forecasted EPS of TT$0.30, this share is trading at an attractive price to earnings multiple of 6.83 times. Addionally, using a multiple of 8 times and the forecasted EPS of TT$0.30, this share has an expected return of approximately 17 per cent or a target price of TT$2.40 at the current price of TT$2.05. Thus we continue to recommend a BUY on this share.


Gia Singh
WISE Equity Research Team