The LAB Reports Improved H1 Profits

• The Limners and Bards Limited (LAB) reported an 8.5% year-over-year rise in net profit to J$123.1Mn for its six months ended April 30, 2022. 
• Revenue for the period was $781.7Mn, a 26.3% increase supported by growth in the company’s core business as the effects of the pandemic on the business recede. Revenue from media placement was up $149.6Mn (or 53.4%), while the advertising agency’s was up $16.1Mn (or 71.3%). The overall expansion in revenue was however tempered by a 6.0% decline in funds from production services. Consequently, gross profit and operating profit surged by 35.7% and 26.4%, respectively. 
• Although direct and indirect costs rose by 21.7% and 46.0%, respectively, the gross margin increased by 2.5 percentage point to 35.2%, while the operating profit margin remained stable at 16.5%. 
• It is expected that The LAB will see continued growth and profitability for 2022 as the company repositions to take advantage of opportunities that may arise and to satisfy clients’ digital shift following the pandemic. The company relies heavily on technology and is growing its newest business segment (content) to capitalize further on new opportunities in the marketplace, which should generate revenues. Additionally, management also remains focused on cost containment in light of the high inflationary environment which should support its bottom-line. 
• LAB’s stock price has decreased by 26.6% since the start of the calendar year. The stock closed Friday’s trading session at $2.82 and currently trades at a P/E of 20.1x which is above the Junior Market  Average of 17.4x.

(Sources: JSE and NCBCM Research)