LASM Bottom Line Improves in Q1 2021 on Higher Revenues

• Owing to a 25.5% increase in revenues, for the first quarter ending June 2021, Lasco Manufacturers reported a net profit of $401.76Mn (EPS: $0.10), a 17.5% increase over Q1 2020.  
• However, despite the higher revenues, gross margin declined to 36.0% from 39.0% in the prior year due to higher raw materials and shipping costs, which were not immediately recovered through selling price increases. Nevertheless, admin expenses were well contained, falling by 2.1%, which along with an increase in “other income” helped to augment the bottom-line. 
• Higher material and shipping costs due to rising demand relative to supply stemming from the reopening of economies across the world could keep input costs elevated over the near term. Nevertheless, this could be offset by higher revenues influenced by the reopening of schools in September. The government has committed to reopen schools, once it is able to contain the number of new COVID-19 cases and vaccinate a sufficient portion of the population. It is planning to distribute up to 1.4Mn doses of the COVID-19 vaccine by September 30. 
• Lasco Manufacturing stock price has appreciated by 35.1% since the start of the year and closed Wednesday’s trading session at a price of $5.20 per share. At this price, the stock trades at a P/E ratio of 14.7x earnings, which is below the junior market manufacturing sector average of 16.5x earnings.

(Source: Company Financials & NCBCM Research)