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Wisynco Group Stock – Investment Analysis

Common Stock: Wisynco Group

Current Market Price: $15.87 JMD

Market Capitalization: $19 Billion JMD ($123 million USD)

*All values in this article are expressed in Jamaican Dollars (JMD) unless otherwise noted.

**The bulk of this analysis is based on the company’s most recent audited financial report, which can be found by following this link.

Wisynco Group - Stock Chart
Wisynco Group – Stock Chart

Wisynco Group Stock – Summary of the Company

Wisynco Group is a Jamaican manufacturer and distributor of food, beverage, and paper products. They produce their own brands including Bigga, WATA, and BOOM. In addition to their own products, they are also the exclusive bottler and distributor for Coca-Cola and Squeezz products in Jamaica. Wisynco also distributes for international brands such as Kelloggs and Haagen Dazs. In total they distribute 162 brands to over 12,000 direct customers throughout the Caribbean.

Wisynco Group was founded in 1965 and is headquartered in St. Catherine, Jamaica.

Revenue and Cost Analysis

Wisynco has steadily grown is revenue every year since 2016. For the fiscal year end June 2020, the company had total revenues of $32.1 billion, an increase from $26.9 billion in 2019. Their COGS was $21.1 billion, representing a gross margin of 34%, a decrease from 37% the previous year.

The company has been profitable every year since 2016. Net income in 2020 was $2.8 billion, representing a profit margin of 8.7%, a decrease from 10.8% the previous year. This decline in profitability is due mostly to decreased gross margins.

Balance Sheet Analysis

Wisynco has a sound balance sheet. They have a solid base of long term assets, a strong near term liquidity position, and reasonable liability levels.

Debt Analysis

As of the fiscal year end June 2020, the company has $2.2 billion in total debt outstanding, $702 million of which is classified as current. The interest rate on the debt ranges from 5.65% to 6.2%

Wisynco Group Stock – Share Dynamics and Capital Structure

As of the fiscal year end June 2020 the company has 1.2 billion common shares outstanding.

Dividends

The company paid total dividends of $0.43 cents per share in the fiscal year ending June 2020. At the current market price this implies a dividend yield of 2.7%.

Wisynco Group Stock – 3 Metrics to Consider

Debt to Equity Ratio

Total Liabilities/Total Share Holder Equity

$6.3 billion / $13 billion = .49

A debt to equity ratio of .49 indicates that Wisynco uses a mix of debt and equity in its capital structure, but is not leveraged, and relies more heavily on equity financing for funding.

Working Capital Ratio

Current Assets/Current Liabilities

$11.2 billion / $4.4 billion = 2.5

A working capital ratio of 2.5 indicates a strong liquidity position. Wisynco should not have problems meeting its near term obligations.

Price to Book Ratio

Current Share Price/Book Value per Share.

$15.87 / $10.87 = 1.5

Wisynco has a book value per share of $10.87. At the current market price this implies a price to book ratio of 1.5, meaning the company’s stock currently trades at a premium to the book value of the company.

Wisynco Group Stock – Summary and Conclusions

Wisynco Group is a solid company. It seems like all the listed Jamaican manufacturers are food and beverage companies, all of which are decent investment opportunities. Wisynco has an impressive brand portfolio that includes Coca-Cola, Kelloggs, and Haagen Dazs, among others.

The company is sound financially with a clean balance sheet, steadily increasing revenues, and consistent profits. Management returns capital to shareholders via a dividend.

Since there are several Jamaican food and beverage manufacturer that are traded on the Jamaican stock exchange. And since all are solid businesses with healthy financials, I am not sure that one has stood out as more investable than the rest, or if the best strategy for investors looking for exposure is to buy a basket of several.

Other Jamaican food stocks investors can consider are Jamaica Broilers or Seprod.

Disclaimer

This is not investment advice. Nothing in this analysis should be construed as a recommendation to buy, sell, or otherwise take action related to the security discussed. If I own a position in the security discussed, I will clearly state it.

This is not intended to be a comprehensive analysis and you should not make an investment decision based solely on the information in this analysis. I hope this serves as a useful starting point for a more comprehensive analysis, and hopefully draws attention to aspects of the company that were overlooked or merit further investigation. This is by no means intended to be a complete analysis. Again, this is not investment advice, do your own research.

Patrick Flood, CFA

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