Valuation
Our base case estimate of the LASM’s fair value is J$5.78, which, when compared to the current price of J$5.35, represents a potential total return of 9.47%. Given its underlying economics coupled with the ongoing COVID-19 pandemic, Barita Investments Limited recommends this stock as an MARKETWEIGHT.
Business Economics
The Company has a long history of being the dominant Nutritious Powdered Beverage Company in Jamaica. LASM expanded into Liquid Refreshing Beverages and Water segment of the market with a range of Juice Drinks and Water under the iCool Brand in 2014.
Over the years, the Company has consistently invested in plant, technology, and people development to provide capacity and know-how to expand its range of food and beverage products relevant to consumer needs and trends. As a result, the Company is well equipped. It has the capability and flexibility to supply current demand and meet anticipated growth in various market segments. The strategy includes continuous improvement in operational efficiencies, organization adoptions and waste elimination with technology application, and people development being at the core. Management has also indicated their intention to increase the percentage of revenues derived from the export market. This is aligned with the need to expand outside of the competitive domestic space which would be a necessary driver of future revenue growth. However, expected costs associated with exportation and higher shipment costs will have a direct impact on margins. As such, the approach towards increasing exports contribution to revenues needs to be closely managed in lieu of the aformentioned.
| Stock | Lasco Manufacturers Limited |
| Last Price (J$) | $5.35 |
| Year to Date Return | 38.97% |
| Dividend Yield | 1.36% |
| Estimated Fair Value (J$) | $7.42 |
| Price/Book | 1.91 |
| Forward P/B | 2.09 |
| Estimated Fair Value (J$) | $5.78 |
| Total Return Upside/Downside | 9.47% |
| Recommendation | MARKETWEIGHT |
As at July 15, 2021
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