TJH Reaping Benefits of JIO Acquisition

• TransJamaica Highway Limited recorded a net profit of US$4.98Mn for the first quarter that ended March 31, 2023. This represents a 639.0% increase in profitability year-over-year.
• Revenue for the quarter was up by 20.9% yoy to U$17.99Mn. This was attributable to the continued improvement in traffic following the lifting of the measures implemented to combat the spread of COVID-19, in addition to the annual increase in Toll Tariff which took effect in July 2022.
• The company incurred operating expenses of US$5.49Mn, reflecting a 43.8% decrease, compared to US$9.75Mn reported for the same period in 2022. This decrease was primarily due to cost savings realized following the acquisition of the toll operator, Jamaica Infrastructure Operator (JIO), and the subsequent reduction in the fixed operation fee. This was however partially offset by higher consultancy fees as the company has undertaken an exercise to restructure its operations, higher marketing costs associated with promoting the usage of ‘my t-Tag’ App, encouraging greater usage of the Tags, as well as higher insurance cost and security maintenance costs.
• TJH’s stock price has increased by 45.7% since the start of the calendar year. The stock closed Tuesday’s trading session at $2.04 and currently trades at a P/E of 19.9x which is above the Main Market Energy, Industrial, and Materials Sector Average of 15.0x.
• TransJamaica will continue to realise cost savings throughout the year as the change in the operating fee structure is expected to significantly reduce operating expenses by more than 50% (approximately US$12 million per annum). Net profit will therefore continue to outperform 2022 for the remainder of the year.

(Sources: JSE and NCBCM Research)