Salada Foods and Edufocal Report Higher YTD Profits

  • The most recent round of earnings releases reflected mixed results for both Edufocal and Salada Foods. Salada Food reported a 21.5% drop in Q2 net profit; however, owing to the strong growth in Q1 (+219.9%), it reported an overall increase of 27.6% in net profit for the first half of its current financial year. Edufocal turned around its net loss into a net profit of $2.04Mn for its Q1 ended March 31, 2022, year over year. 
  • Salada's H1 growth reflects a 9.7% growth in revenues as the company increased its promotional efforts to adapt to the opportunities in the fast-changing market environment brought on by the relaxation of COVID-19 restrictions.  The Company also launched a line of flavoured coffees in March, under its flagship brand, Jamaica Mountain Peak, which should help with future revenue growth. 
  • Similarly, Edufocal saw an increase in earnings due to a 81.3% increase in its revenues as the company saw increased demand for its services. 
  • Implementation of cost containment measures also allowed both companies to mitigate some of the effects of higher costs, which facilitated an improvement in their gross margins (+2.3 pp- Salada; +16.7pp- Edufocal).  
  • Going forward, we expect future growth in net earnings for Edufocal which should benefit from the additional revenue stream from its recent acquisition of Clever School Teacher, which allowed it to expand its operations to the US, as well as from improved brand visibility after its recent IPO. For Salada, improved profitability above current levels will depend on the company’s ability to penetrate markets with existing and new products, while simultaneously sustaining efforts to contain costs. 
  • Edufocal has witnessed a 354.0% appreciation in its stock price year to date; however, Salada’s price has seen a 9.5% decline.  At its present price Edufocal trades at a P/E of 141.6x which is above the Junior Market Sector average of 23.4x. Salada trades at a P/E of 35.2x, which is above the Main Market Distribution & Manufacturing Average of 22.3x.

(Source: Company Financials and NCBCM Research)