Honey Bun’s Revenues and Profits Up YTD 

• Buoyed by solid revenue growth, Honey Bun reported net profit of $ 240.99Mn for its 9 months ending June 30, 2024, a 19.3% increase year on year.
• Revenue grew 12.9% (or $331.03Mn) YTD to $2.89Bn due to stronger sales. There was also a 7.6% rise in direct costs; however, with revenue growth outpacing direct costs gross margin expanded by 2.7 percentage points to 46.4%.
• Operating Expenses grew by 20.5% (or $175.65Mn) to $1.03Bn. Despite cost pressures, Honey Bun’s operating profit increased by 15.7%, as the rise in revenues outweighed the administrative (+19.7% or $94.87Mn) and selling and distribution (21.5% or $80.79Mn) expenses, supporting growth in its bottom-line.
• Honey Bun has embarked into a new market segment, with the purchase of the retail pastry shop “Swirls” on June 1, 2024. With this acquisition, the Company plans to enhance its product portfolio, offering a wider variety of baked goods and meals to meet the growing consumer demand.
• The company is continuing its growth and expansion strategy with the development of its new production facility in Angels, St. Catherine, which is expected to more than double its manufacturing capacity. The new facility will be between two major highways, giving Honey Bun greater access to markets outside the Kinston and St. Andrew metropolitan area. Overall, as the company continues to expand, it is expected to generate additional revenue, which should aid in sustaining long-term growth and may lead to enhanced earnings performance.
• Reflecting its strong financial performance and investors’ expectations for continued growth in earnings given the recent acquisition and its other expansion plans, Honey Bun’s stock price has increased by 27.5% since the start of the calendar year. The stock closed Thursday’s trading session at $8.16 and currently trades at a P/E of 15.7x earnings, which is below the Junior Market Manufacturing Sector Average of 22.3x.

(Sources: JSE and NCBCM Research)