Valuation & Recommendation
We estimated a price target for JBG using a justified price-to-earnings (P/E) ratio. Under this approach, we estimated a 1-year forward (FY 2024) earnings per share (EPS) of $5.68. The expected growth compared to the outturn of $4.43 per share for FY 2023 is anchored by our expectation of continued strong revenue growth, in both the Jamaican and US segments. Another factor driving our expectations for EPS growth in 2024 is the cessation of its operations in Haiti. Given that the Haiti operation was a loss-making venture, the Group is expected to realize some margin expansion going forward; additionally, the loss from discontinued operations of $1.09 billion in FY 2024, related to the Haiti operations, will not be repeated in FY 2024 improving net income. However, this projected improvement is partially offset by higher finance costs following the refinancing of debt and the addition of additional borrowings by JBG in FY 2023.
To arrive at a discount rate, we utilized the capital asset pricing model (CAPM), which resulted in an outturn of 14.77%. The long-term growth rate was estimated at 5.19%. Using these inputs, a justified P/E ratio of 10.43x was derived, resulting in a price target of $59.20, representing a 71.1% upside from the last closing price of $34.60. The company currently trades at a trailing P/E multiple of 7.81x, significantly below its peer average of 12.79x. Based on its current trading price and our target EPS, the company produces a forward P/E of 6.2-10x.
| Stock: | JBG |
|---|---|
| Last Closing Point | J$34.60 |
| 52 Week High | J$39.99 |
| 52 Week Low | $25.91 |
| YTD Return | 11.61% |
| Target Price | J$59.20 |
| Potential Return | 71.10% |
| Trailing P/E | 7.81x |
| Trailing P/B | 2.01x |
| Forward P/E | 6.10x |
| Dividend Yield (TTM) | 1.89% |
| Total Projected Return | 72.89% |
| Recommendation | OVERWEIGHT |
Jamaica Broilers Group Limited | Equity Analysis
