QWI posts blowout quarter as earnings season begins

AFTER facing the ravages of COVID-19 in its first financial year as a listed company, QWI Investments Limited has delivered a solid turnaround to generate net profit of $91.7 million for the period ending December 31, 2020.

The Jamaican Teas (JAMT) investment company generated investment gains of $132.4 million compared to the $92.6 million loss in the prior quarter.

This was mainly due to the QWI’s Jamaican investment holdings delivering a $64.1-million unrealised gain on a $1.3-billion portfolio while its overseas portfolio in the United States markets and Trinidad and Tobago returned $34.5 million of realised gains and $33.4 million in unrealised gains.

Most of the unrealised local gains came from QWI’s Mailpac Group, GraceKennedy and the parent company’s stock performance, holdings which now rank among the top five in the portfolio.

Even with Access Financial Services (AFS) dragging the portfolio’s performance with a valuation of $201.6 million, which is down nearly 30 per cent from the September 2019 acquisition, QWI’s directors believe AFS’s stock has bottomed out as has the company’s ability to improve its credit business going into 2021.

Despite the company recording relatively higher total expenses over the period, QWI’s dividend income grew by 35 per cent to $10.4 million. Although the company was affected by a taxation charge compared to a credit in the prior period, QWI’s earnings per share came out at $0.07 versus a negative $0.07.

QWI’s total liabilities fell by 20 per cent to $239.4 million, with the total assets down 13 per cent relative to December 2019 but moderately up by 7 per cent with respect to September 2020.

With QWI’s stock price trading more than 30 per cent below its net asset value (NAV) of $1.15, the company has reintroduced a stock buy-back consideration on its annual general meeting agenda which would allow QWI to buy back some of the outstanding shares once it doesn’t exceed 85 per cent of the company’s NAV. Share buy-backs benefit shareholders since there are fewer shares in circulation, which increases the relative ownership of remaining owners.

During the quarter, JAMT increased its direct ownership in QWI by 3 per cent or 42.6 million units, which means JAMT now owns a direct 20.5 per cent stake and 38.4 per cent total ownership through subsidiary KIW International Limited. JAMT also disclosed in its annual report that its manufacturing operation generated a 46 per cent increase in revenue ($422.6 million) during the quarter, mainly due to strong exports to foreign markets amid a sluggish domestic market. This would represent 98 per cent of JAMT’s operating revenue for the December 2019 quarter without its other operating segments.

JAMT plans to expand its factory to the tune of US$1 million ($150 million) during the financial year to add an additional 20,000 square feet of space for raw materials and finished goods in order to meet the growing demand which has led to the company adding an additional production shift.

Bay City Supermarket is currently undergoing a $50-million refurbishing exercise while the JAMT group’s new, 18 one-bedroom Belvedere real estate project is set for completion in October.