Express Business Filler #1

This week, we at Bourse review the performance of two companies within the Manufacturing Sector – West Indian Tobacco Company Ltd (WCO) and Angostura Holdings Ltd (AHL) – for the nine-month( 9m) period ended September 30, 2019. Both WCO and AHL’s performances benefited from modest revenue growth, combined with measurable cost management. We discuss the performance of both companies and provide an outlook.

West Indian Tobacco

Company (WCO)

The West Indian Tobacco Company Ltd (WCO) reported earnings per share (EPS) of $3.74 at the end of third quarter 2019, a 3.9 per cent increase compared to the $3.60 EPS reported a year earlier.

WCO generated revenue of $702.56m in 9m, a 2.1 per cent or $14.34m increase over 9m 2018. Gross Profit grew 2.2 per cent to $544.98m from $533.24m in 9m 2018. Operating expenses fell from $96.12m in 9m 2018 to $93.81m in 9m 2019, a 2.4 per cent year-on-year (YoY) decrease. Profit Before Tax (PBT) climbed 3.3 per cent or $14.46m YoY to $453.13M. Overall, WCO’s Profit for the Period closed at $315.21m, a $11.3m or 3.9 per cent improvement YoY.


At the end of 9m 2019 WCO was able to report top line growth of 2.1 per cent, despite facing conditions which see an increasing number of substitute products coming into the tobacco market. In addition to the growing trend of “vaping”, which has been touted as a “healthy” substitute to smoking cigarettes, WCO has also faced challenges from illicit cigarette trade activities. Nevertheless, the company has been able to report two consecutive periods of revenue growth driven by WCO’s brand relevance, which has been maintained through consistent quality.

WCO has maintained its operational efficiency through cost management, delivering fairly stable Gross Profit, Operating and Profit After Tax margins from 2017 to 2019. Gross Profit Margin has hovered between 75.8 per cent (9m 2017) and 77.6 per cent (9m 2019), while Operating Profit Margin has been similarly consistent between 63.3 per cent to 65.2 per cent. Net Profit Margins have inched up, from 43.9 per cent (9M 2017) to 44.9 per cent in the 9m 2019 period. WCO’s pending 3-for-1 stock split, approved in October 2018, remains delayed by Licensing issues for current Foreign Investors to hold additional shares in the company. The split is intended to reduce the price and improve liquidity of the stock, increasing WCO’s outstanding shares to 252.72m from 84.24m.

The Bourse View

Witco trades at a current price of $102.29 with a trailing P/E of 20.66 times, lower than the Manufacturing 1 Sector average of 23.71 times (excluding GML) and in line with its five-year average P/E of 20.55. The dividend yield is 4.54 per cent, above the sector average of 4.18 per cent. Based on an attractive dividend yield but tempered by challenging operating conditions, Bourse maintains a NEUTRAL rating on WITCO.

Angostura Holdings Ltd (AHL)

AHL reported Earnings per Share (EPS) of $0.39 for the nine-month (9M) period ended 30th September 2019, a 11.4 per cent improvement over 9M 2018. Revenue rose 3.7 per cent to $536.2m from $516.9m in 9M 2018. Gross Profits advanced 4.4 per cent, moving from $259.9m in 9m 2018 to $271.3m in 9m 2019. Operating Expenses were contained to $162.1m or a 1 per cent increase YoY. Profit before Tax climbed 13.5 per cent YoY to $116.8m, with Profit for the Period improving 11.9 per cent YoY ($8.6m), moving to $81.0m from $72.4m.


AHL experienced a 13.5 per cent YoY increase ($13.9m) in Profit Before Taxes, primarily driven by revenue growth. AHL reported improvements to the export of ‘Bitters’ as well as regional growth through the brand’s involvement with the Caribbean Premier League T20 league tournament. With the Christmas and Carnival Seasons fast approaching AHL may stand to benefits from increased seasonal demand of its products.

In 9m 2019 AHL generated a Net Profit Margin of 15.1 per cent, exceeding the 14.0 per cent achieved in 9m 2018. The strengthening Net Profit Margin reflects improved cost management by the company.

The Gross Profit Margin recorded at end of 9m 2019 of 50.59 per cent was fairly stable relative to 2018 levels, while Operating Profit Margin increased from 19.23 per cent in 9m 2018 to 20.35 per cent in 9M 2019. The growth in Operational Profit Margin and Profit After Tax Margin, demonstrates cost containment by AHL, as the company has been able to cut Selling and Distribution Costs to offset increases Administrative Expenses.

The Bourse View

At a current price of $16.02, AHL trades at a trailing P/E of 24.27 times, above the Manufacturing Sector average of 23.71 times (excluding Guardian Media Limited). The stock offers a trailing dividend yield of 1.50 per cent, below the sector average of 4.18 per cent (excluding GML). On the basis of improving earnings, but tempered relatively high valuations and low dividend yield, Bourse maintains a NEUTRAL rating on AHL.

For more information on these and other investment themes, please contact Bourse Securities Ltd, at 226-8773 or e-mail us at


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