Stronger Tourist Arrivals Boost Dolphin Cove Profits, While Spur Tree Continues To Grow Through Export Markets

•  Dolphin Cove and Spur tree have reported favourable Q1 performances, evidenced by year over year growth in their respective bottom-lines. 
• Dolphin Cove saw its earnings recover from the net loss of US$154.83k in Q1 2021 to a net profit of US$759.55K. Growth was supported by an increase in visitor arrivals, though arrivals were 58% of the pre-pandemic levels. The company's revenues grew by 246.7% in Q1. 
• Spur Tree’s net profit grew by 193.7% despite the significant cost pressures being faced due to the ongoing supply chain challenges. The company’s revenues grew by 40.7% as it continues to push to expand its reach in export markets and strengthen its brand among its loyal customers. Owing to the higher revenues and some cost efficiencies, the company was able to increase its gross margin by 7.5p.p to 37.5%. 
• Going forward, we expect that both companies will experience continued growth in earnings. Dolphin Cove’s top-line will continue to benefit from increased visitor arrivals in 2022. Additionally, Spur tree through its new product offerings and further expansion in both domestic and overseas markets is expected to see earnings growth in the coming months. Further growth in efficiencies through capitalization on economies of scale will also be important to support profitability as Spur Tree contends with commodity price shocks and elevated supply chain costs. 
• Dolphin Cove and Spur Tree’s prices have increased by 45.7% and 405.0% since the start of the calendar year, and since listing, respectively. While Spur Tree currently trades above the Junior Market Distribution sector (20.1x) and Junior market (23.5x) P/E averages at 65.8x, DCOVE is just below Junior market average, at 23.0x.

(Source: Company Financials and NCBCM)