Equity Trader at JMMB, Clive Charlton, says that Tropical Battery’s expansion into the renewable energy sector is a smart long-term play.

Tropical Battery is an automotive battery manufacturing and distribution company. The company also manufactures and sells its own line of brake fluid, oil and distilled water in addition to selling other brands.

The company recently announced the acquisition of a 50% stake in Dominican Republic-based solar photovoltaic engineering, procurement and construction company KAYA Energy Group. 

Speaking on Taking Stock with Kalilah Reynolds, Charlton, said the acquisition was a strategic move to bring Tropical into the renewable energy and elective mobility space.

He also noted that the acquisition will diversify Tropical’s product and service offering and expand the company’s footprint across the Caribbean.

The acquisition will give the company the ability to capacity to develop projects and control sales in both the Dominican Republic and Jamaica. 

Charlton said this is a good move given Jamaica’s push towards a more sustainable and green economy.

“They are really moving into a value-added, high-tech, and high-income area of business while diversifying their revenue stream outside of Jamaica,” Charlton said.

The company was listed on the Junior Market of the Jamaica Stock Exchange in 2020 after raising some $325 million in an initial public offer. 

“The real significant value of coming to the market is two things. The 10-year tax break is a long-term play. But I think that there is a greater value when it comes to listing on the stock exchange, it opens them up to opportunities just by being a public company,” he said.

Tropical’s financial performance

The equity trader noted that Tropical’s profits quadrupled in the two years since listing on the JSE.

According to the company’s financial statement for the three months ended December 2022, the company earned $649 million in revenues and $44 million in profits.

“This company has also declared dividends three times since becoming public. So, they’ve rewarded shareholders, not only in terms of price movement but in terms of cash flow through dividends,” he said.

He also noted that the stock’s price has grown steadily from its IPO price of $1, trading as high as $3.02 and closing Thursday at $2.25.

“But in two years’ time, it has grown more than 200%,” he said, noting that there has been an average 60% annual gain. 

“So, if you had bought and held the stock you’d definitely be in the black,” he added.

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He said that he believes Tropical Battery is a good stock for conservative investors with a medium to long-term outlook.