Published: Friday October 24, 2008
In five years, Pulse Investment Limited is projecting that it will add $2 billion to its stream of revenues, and is working to diversify its income beyond the sponsorships and advertising contracts on which it is so heavily reliant.
A model and fashion agency, chief executive officer Kingsley Cooper wants to branch out into being agent for sports figures, but in a briefing to financial journalists and analysts last week, he indicated that his plans were most heavily pinned on hospitality through his property, Villa Ronai, which is now being expanded.
Cooper has at least three projects in varying stages of execution, Villa Ronai being one of the more advanced.
For now, his income, which reached $1.35 billion in the financial year just ended in June 2008, is 85 per cent in sponsorships and advertising deals.
"We do not view their profit and loss as a true statement of income," said Michelle Hirst, analyst with Kingston brokerage Stocks and Securities Limited.
Redefining business mix
But now Pulse, the only model agency listed on the Jamaica Stock Exchange, is redefining its business mix to marry fashion, real estate, television, merchandising and hospitality, and focussing more centrally on the latter.
Cooper says his new projects will bring in half of new revenues but by his own reckoning, it seems he really is banking only on Villa Ronai receipts.
"At a relatively modest growth rate of 20 per cent per year current, Pulse business should earn approximately $3.4 billion at the end of fiscal year 2013," he said.
"Assuming the projects in development achieve the level of success anticipated, we estimate that earnings from these new projects should be approximately 50 per cent of total revenues by 2013."
In a nutshell, Pulse is projecting $2 billion of additional revenues, half of which is to come from new projects.
Expected income
But Cooper has also said that he expects Villa Ronai Spa and Suites to add $1 billion to top-line income, which would fully cover the 50 per cent from new sources.
"The Villa Ronai project is expected to be completed in three years, at the end of 2011," he tells the Financial Gleaner.
"Our projections for $1 billion in earnings would be in the second year of operation, 2013."
But Hirst has questioned whether the projection is realistic, saying the suggested US$1,000 to US$,2000 per night charge to stay at the property reflects top-end prices, which the market might not be willing to pay.
Cooper, it appears, also acknowledges he could face challenges in meeting his broader targets.
"We recognise that there are serious global and local economic challenges at this time," he said, "but based on the nature of our business, its structure, our low-debt model strategy and the potential of Caribbean talent, we are very optimistic regarding the future," he added.
His other projects include merchandising under the Pulse brand, the establishment of a social networking website, and a Peter Tosh museum.
Capital expenditure
The agency says its capital expenditure would reach $150 million over two years ending FY 2009, but says Villa Ronai will end up being a $300 million to $500 million project.
Cooper projects that he will spend $130 million per year up to 2011, making it the largest project on Pulse's books.
"We are in the process of completing fairly extensive refurbishing of existing buildings which will house about 15 suites as well as the main spa buildings, and restaurant," said Cooper, with additional suites to come from completely new buildings, already approved for construction in 2009 and 2010.
Television currently represents Pulse's top income earner but Cooper hopes to position Ronai at the top of the ticket as venue for certain events and functions.
Television, which consists of five shows sold to cable stations, free-to-air television and Internet broadcasters, both regionally and internationally, currently contributes $800 million to revenue.
Sponsorship revenues, which according to Cooper are "in kind" as well as "cash", are next in line, contributing $350 million.
Shows such as Caribbean model search, Miss Jamaica Universe and Caribbean Fashionweek which are ongoing projects for the company, generate approximately $110 million.
Rental and storage fees brought in $30 million at June 2008.
The company further expanded into real estate investment with the development of its Trafalgar Road property with a 150-unit storage facility, which became operational in early 2008.
The facility, built for $60 million, has less than 20 units occupied.
"With full occupancy, we expect earnings between $3 milion and $5 million per month," said Cooper.
Commission from international model agencies contributes $12 million to revenue, while 'other' business brings in $50 million.
Pulse made $429.9 million, up 62 per cent from $266 million made in 2007.
The stock has traded as high as $8 but last sold for $6.
Source:
Sabrina Gorodn
Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20081024/business/business5.html
sabrina.gordon@gleanerjm.com
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment