Analysis and News

Equity Highlight: Jamaica's Medical Disposables and Supplies Limited

BY GEOCAP's Contributor: Matthew Gaul‍

Medical Disposables & Supplies Limited is a burgeoning Jamaican based distributor of healthcare and consumer products with a catalogue spanning pharmaceuticals, vaccines, consumer products and beauty items. The company was first listed on the Junior Jamaican Stock Exchange in 2014 owing to a need for more operating capital to facilitate business expansion.

For the year 2021, the stock price for Medical Disposables & Supplies Limited has appreciated by 4.5%, increasing from $4.22 to $4.41 as of May 31, 2021. The company has managed to transform from a small, family business to a corporate entity owing to continued growth over the past 20 years (MDS 2020 Annual Report). According to the company’s 2020 Annual Report, the company recorded its highest-ever sales figure in the last financial year. In 2020, the company surpassed the $2 billion mark in revenue attained for the third consecutive year, earning $2.481 billion due to an increase in product offerings, price increases and above-average growth in the pharmaceutical division (MDS 2020 Annual Report).

Notwithstanding its record sales figure in the last financial year after tax profit plummeted significantly. According to the 2020 Annual Report, net profit after tax fell to $34.56 million from $112.8 million at the end of the 2019 financial year. This was due mainly to costs associated with the growth in sales, talent acquisition and retention, and foreign exchange losses. The Net Profit Margin has been on a decline over the past five (5) years moving from 7.34% in 2016 to a record low of 1.39% in 2020 (MDS 2020 Annual Report). This indicates that the costs associated with the growth in sales are increasing to a larger extent relative to its sales.  

The COVID-19 pandemic has forced businesses to diversify operations to hedge against the inherent risks associated with heavy concentration in one particular area. The company’s rapidly expanding consumer goods division combined with its core offerings in the medical supplies and pharmaceuticals industries bodes well for its future growth prospects.

The COVID-19 pandemic has contributed to a decline in commercial activity for MDS. The policies implemented by the Jamaican government including curfews, lockdowns and social distancing measures have impacted the company’s operations. Hospitals cancelled conducting elective surgeries which negatively impacted the performance of the Medical Division. Furthermore, according to the 2020 MDS Annual Report, the Pharmaceuticals Division has also experienced revenue decline due to a reduction in demand and shorter opening hours (MDS 2020 Annual Report). These divisions are expected to rebound in the latter half of 2021 as more Jamaicans become vaccinated and the country progresses towards a return to normalcy.

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