WISYNCO Group (Caribbean) Limited, parent company of Wisynco Group Limited, has bought eight million ordinary shares in Honey Bun (1982) Limited to become the company’s fifth-largest shareholder.

The transaction which took place on June 27 saw Wisynco Group (Caribbean), a Barbados International Business Company (IBC), purchase the ordinary shares at $8.90 each from Michelle Chong, co-founder and chief executive officer (CEO), for $71.20 million. The purchase of shares from the open market on that day pushed its stake to 8,074,221 ordinary shares or 1.71 per cent of the company.

Before Wisynco ventured into owning shares in Honey Bun, Andrew Mahfood, CEO of Jamaican manufacturer Wisynco Group, was the eight-largest shareholder with 2,995,562 ordinary shares in June 2021. He first appeared in the December 2020 top 10 shareholding list before falling off that list in the September 2021 period.

This also represents the first sale of Honey Bun shares by Chong since April 2022 when she sold four million shares at $9.60 to Argyle Industries Inc for a consideration of $38.40 million. Argyle Industries is a special purpose vehicle (SPV) and parent company of Hardware & Lumber Limited (H&L).

Prior to that, Chong sold three million shares at $9.50 to Jamaican Money Market Brokers Limited for $28.50 million in December 2021. Honey Bun’s largest shareholder, Next Incorporated, a Belize IBC controlled by Michelle and Herbert Chong, sold 3,884,683 ordinary shares at $8.60 for a consideration of $33.41 million. While the purchaser in that transaction couldn’t be immediately ascertained by comparing the September and December 2021 periods, this was the same time that Mayberry Jamaican Equities Limited left the top 10 list and Cal’s Manufacturing Limited appeared as the sixth-largest shareholder with 6,644,122 shares that it likely paid $57.14 million to acquire. Cal’s Manufacturing has also expressed an interest in going public at a point in time and was Spur Tree Spices Jamaica Limited’s seventh-largest shareholder up to the June 2024 quarter.

The latest share sale by the CEO comes as Honey Bun’s principals sold the Swirls brand and retail pastry shop in the Half-Way-Tree Transport Centre in St Andrew to Honey Bun in June. The Swirls brand was owned by the previously mentioned Next Incorporation Limited which is owned by the founders Michelle and Herbert Chong. Although the transaction price wasn’t disclosed in its third-quarter report and likely won’t be known until the end of November, Honey Bun has announced its intention to invest $50–$100 million over the next two to three years to grow the quick service restaurant to five stores through new shops and equipment in strategic locations. Honey Bun purchased $3.08 million of goods from Next Incorporation in its 2023 financial year.

The purchase of the Swirls brand came less than two months after Honey Bun announced that it was planning to lease 160,000 square feet of space at MJS Technology Park in Angels, Spanish Town, St Catherine. This facility is set to become operational sometime between January and March in 2025 and is expected to double its production capacity from $1 billion in capital expenditure (capex) investments. The company will be occupying a 60,000-square-foot building which will initially absorb half of its operations from its current Retirement Crescent, St Andrew, head office. The Retirement Crescent location will focus its efforts on the Surrey County while the Angels facility will serve the rest of the island along with the company’s 12 distribution outlets. The company has already deployed $100 million in advanced deposits related to the new Angels production facility.

Honey Bun’s third quarter (April to June) saw its revenue rise 11 per cent to $956.50 million in a period where Easter occurred at the end of its second quarter. Easter and Christmas are periods when revenue tends to be higher from the increased holiday spending.

The company’s gross profit rose 12 per cent to $436.92 million, with its gross profit margin moving from 44.67 per cent to 45.68 per cent — a reflection of the company better managing its direct costs such as raw materials and utility costs. Despite this increased efficiency in its production process, a 19 per cent rise in operating expenses to $354.53 million and an impairment provision on financial assets pushed its operating profit down nine per cent to $84.49 million. After recording a net finance expense and its tax bill being cut in half, the company’s net profit rose three per cent to $73.24 million with an earnings per share of $0.17.

For the overall nine months, Honey Bun’s revenue improved by 13 per cent to $2.89 billion. Due to its greater efficiencies the company’s gross profit grew 20 per cent to $1.34 billion, which resulted in the gross profit margin rising from 43.72 per cent to 46.38 per cent.

Despite the 20 per cent jump in operating expenses from $858.02 million to $1.03 billion, the company’s operating profit increased by 16 per cent to $305.28 million. After accounting for reduced net finance income and a flat tax bill, Honey Bun’s net profit grew 19 per cent to $240.99 million with an earnings per share of $0.51. This leaves Honey Bun on track to surpass 2023’s revenue of $3.41 billion, with the company already surpassing 2023’s profit before taxation of $284.45 million.

Total assets for the nine months grew 11 per cent to $1.92 billion, with the company spending $88.41 million on capex to bring its property plant and equipment balance to $736.41 million. Due to the rise in receivables and inventory balances the company’s cash decreased to $387.68 million. Total liabilities increased four per cent to $440.02 million but the company’s total debt declined to $2.81 million. Shareholders’ equity grew 13 per cent to $1.48 billion, with the company paying $75.40 million or $0.16 during the period.

Honey Bun’s share price trended down 14 per cent on Monday to $7.13, with the stock halting down at $7.06 before having an intra-day high of $8.49. This left the company’s stock up 11 per cent this year with a market capitalisation of $3.36 billion. The company’s trailing twelve months EPS of $0.57 results in a price-to-earnings ratio of 12.51 times.

Honey Bun turned 42 years old this year, with Michelle Chong’s tenure as CEO now stretching to 38 years. The company appointed Daniel Chong as its first deputy CEO in April 2023, which formed part of its succession planning initiative. Honey Bun was listed on JSE in June 2011 and is collectively controlled by CEO Michelle Chong, Executive Chairman Herbert Chong, and Next Incorporated to the tune of 75.59 per cent.