TransJamaica Continues to Reap the Benefits of the JIO Acquisition
- TransJamaica Highway Limited recorded a net profit of US$6.03Mn for the quarter of its that ended June 30, 2023, a 343.8% yoy increase in profitability. The first half of the year also witnessed strong financial performance with profits totalling US$11.01Mn, marking a 441.9% increase when compared to the same period of the previous year.
- For the quarter ended June 30, 2023, the Group had revenue of US$18.22Mn, reflecting an 18.2% increase compared to revenue of US$15.41Mn for the same quarter in 2022. Revenue for the six months ended June 30 2023 was US$36.21Mn, compared to US$30.29Mn for the same period in 2022, an increase of 19.6%. This was due to greater levels of traffic over the previous year in addition to movements in the toll tariff which is reviewed annually.
- Operating expenses for Q2 2023 were US$5.47Mn, a notable 42.3% drop from the US$9.48Mn in Q2 2022. The first half of the year also saw decreased operating expenses, dropping from US$19.24Mn to US$10.96Mn, a 43.0% decline. This decrease is mainly due to cost savings from the acquisition, which enabled fee modifications, hence lowering operational costs. This was however offset by higher consultancy fees as the company has undertaken an exercise to restructure its operations, higher amortization cost of intangible assets associated with more traffic, higher marketing cost associated with promoting the usage of my t-Tag App and also to encourage greater usage of the Tags, as well as higher insurance cost and security maintenance costs.
- Administrative expenses, largely consisting of staff costs, plant and equipment depreciation, and regular office expenditures, were US$2.00Mn for Q2 2023. This represents a rise of US$1.68Mn from US$0.32Mn in Q2 2022, primarily because of the subsidiary's staff and related costs. For H1 2023, administrative expenses were US$4.06Mn, up by US$3.40Mn from the US$0.66Mn in H1 2022, influenced by similar factors and higher consultancy fees.
- TJH’s stock price has increased by 80.7% since the start of the calendar year. The stock closed Monday’s trading session at $2.53 and currently trades at a P/E of 13.4x which is below the Main Market Energy, Industrial, and Materials Sector Average of 15.6x.
- While the JIO acquisition led to a one-time settlement loss of US$13.9Mn, TransJamaica is set to benefit in the long run. Anticipated annual cost savings exceeding 50% (approx. US$12Mn) will significantly cut operating expenses and boost profitability. The reopening of schools in September is likely to augment traffic, further enhancing revenue. These combined factors are poised to uplift TransJamaica's financial performance in the upcoming quarters.
(Sources: JSE and NCBCM Research)