Rate increase drives up 138 Student Living profit

University accommodations provider, 138 Student Living has seen a marked increase in revenues for the March quarter due in part to the rate hike across all halls.

Revenues closed on J$403 million, an increase of 14 per cent compared to the J$354 million recorded in the prior year. This movement is derived from increases in rates across all halls and short-term rental revenue as well as other income.

For the quarter, short-term rental income contributed J$29.4 million or seven per cent of total revenue and reflects a 26 per cent increase relative to March last year. The increase arose from the management’s deliberate strategy to focus more on groups.

138SL group performance for the quarter and the six months year-to-date are ahead of last year comparative for both revenue and net profit. Occupancy at the end of the March quarter was 92 per cent and was consistent when compared to 2023.

The outlook is that the positive trend will continue, as 138SL is well positioned in a captive niche, where students prefer quality on-campus accommodation in a secure environment.

Marked improvement in other income

Other income contributed J$37.8 million for the second quarter and J$64.6 million for the six months compared to J$34.2 and J$39.5 million for the corresponding periods, respectively. The increase is primarily driven by laundry operations and a one-off item for J$8.0 million during the current quarter.

Group activities resulted in an operating profit of J$203.7 million for the March quarter, an increase of six per cent when compared to the J$192.3 million in 2023. The results were impacted by increases in administrative expenses for general insurance, salaries and internet services.

A significant expenditure investment made during the quarter was IT services to enable enhanced WI-FI services for renters. Pre-tax profit was recorded at J$118.6 million for the first quarter compared to J$102.4 million for March 2023, an increase of 16 per cent. 138SL recorded an efficiency ratio of 49% at the end of March 2024 compared to 54 per cent in March 2023.

Earnings per stock unit (EPS) for the three months went down to J$0.23 compared to J$0.24 for March 2023. The marginal decline in the EPS is related to the increase in the number of shares from the recent additional public offering (APO).

The group’s total assets stood at J$10.4 billion, an increase from the prior year’s balance of J$9.9 billion. This movement primarily originated from an increase in cash and cash equivalent.

Balance sheet highlights

As at March 31, 2024, the company’s balance sheet reflected an amount from the University of the West Indies (UWI) of J$1.3 billion, an 18 per cent or J$185 million increase from the end of September 2023. Approximately 84 per cent of the total assets or J$8.70 billion is non-current assets and the remaining 16 per cent represents current assets.

Current liabilities stood at J$1.4 billion as at March 2024, a J$36.7 million or 3.61 per cent decrease from the J$1.4 billion recorded at the end of the 2023 financial year. This was primarily driven by the repayment of short-term loan notes.

Shareholders’ equity increased by J$657.1 million to end the second quarter of 2024 at J$5.5 billion. This increase was primarily driven by the increase in retained earnings and increase in share capital resulting from the recently concluded APO.

Cash flow from operations totalled J$283.4 million, compared to J$262.4 million in March 2023, an eight per cent or J$21.1 million increase. The cash flow from operations to net profit ratio was 1.72x, which is a slight reduction from the 1.73x recorded in the first quarter and is indicative of the company’s earnings quality.

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