Last updateMon, 07 Jul 2014 9am

Back You are here: Home Business Stock Analysis CUTIX PLC: It could only get better

CUTIX PLC: It could only get better

CUTIX Plc looks set to end the current financial year with new highs all round. According to the figures for the nine months to January 2013 released to the Stock exchange recently, its profit margin has almost doubled and indeed, should close the year on a still higher level.

The good news was that Cutix not only grew its core business turnover within the period, but that it did it ahead of growth recorded in all cost heads. On the one hand, core business revenue grew by 20.9 per cent to N1410.6m from N1166.5m, well head of what was recorded in all costs.

For example, cost of sales increased by only 14.9 per cent to N989, from N860.7m and the only other cost head that came close to this level of growth was the 15 per cent reported in finance charges to N36.9m from N32.1m. Even distribution and administration cost rose by only 7.14 per cent to N237m from N221.1m although income from other sources ended at 2.27 per cent to N7.21m.

In view of this, the company's profit before tax more than doubled within the period from N59.6m at the same time in 2012 to N154.9m (that is 159.9 per cent up). Thus, Cutix ended the nine months with a double digit margin (10.9 per cent) compared to 5.08 per cent by the first nine months of 2012 financial year.

Yet the chances are that the last three months to April 2013 will thicken the bottom line some more. After all, the 10.9 per cent reported was a marked improvement on the 7.49 per cent recorded by the close of 2012 financial year. This could be repeated this year leading to higher year end margin because by the nine months of 2012 finance cost was 93 per cent and should far less to the pressure from cost.

Meanwhile, cost of sales and overheads was accounted for in proportion to the period covered so far and may not beable to pull any surprises within the last quarter. Even core business turnover may addmore relatively than any of them can because by the same time in 2012, it was 74.2 per cent accounted for and so, not quite in step with the period covered out of the 12months in the year.

What is more, Cutix was far more liquid by January 2013 and looked able to take on any request customers could come up with. Even though its trade receivables grew by 38.1 per cent to N136.4m; stocks closed 11.2 per cent up at N542.2m from N488.2m; and tax liabilities decreased by 87 per cent to N9m from N70.2m; its cash closed 43.9 per cent up at N27.2m from N18.9m by the end of 2012 financial year.

The cash that made all these possible was generated internally with a little help from accumulated trade payables that went up by 79 per cent to NN78.6m  and current liabilities , up 7.09 per cent to N55.9m from N52.2m.

In the finally analysis, Cutix ended the nine months with 28 per cent improvement in its liquidity position from N439.6m to N562.8m.

Social Menu