Lasco Manufacturers Limited Equity Report

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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