Archives for May 2013

Scotia Investments one time dent

May 31, 2013 by IC Insider.com

The Government of Jamaica debt exchange cost shareholders $238 million as Scotia Investments participation resulted in the write-off of premium that was originally booked on the bonds that were swapped. The effect after tax would translate to a third less. Net profit for the half year to April was $858 million, down $176 million or 17 percent from the same period last year. Earnings per share was $2.03 compared to $2.45 for the same six month period last year.

Profit for the quarter was $371 million, down $115 million or 24 percent below the $487 million earned in the previous quarter and also below the $536 million earned in 2012. Had it not been for the debt exchange, profits in the quarter would have close to that earned in the similar quarter of 2012.

Net Interest | After impairment losses Net Interest for the six months was $1.39 billion, remaining relatively flat over the same period last year and for the quarter it was $625 million, $137 million or 18 percent below the results of the previous quarter as well as below the 2012 quarter of $706 million. Interest earnings continue to be impacted by lower yields on the securities portfolio and would have suffered from lower yields on government bonds based on the debt swap. Gains on foreign currency trading and the impact of the movement of the Jamaican dollar on holding of foreign exchange denominated investments would have helped to cushion some of the effects of the lower interest yields.

Non-Interest Income | Non-interest income, which includes fee income, securities trading gains and net foreign exchange trading income, was $669 million for the period, down $8 million or 1 percent compared to the same period last year; and $324 million for the quarter, down $21 million or 6 percent over the $345 million recorded last quarter.

Total operating expenses for the quarter was $417 million, 3 percent below the previous quarter. Year-to-date operating expenses was $845 million, representing an increase of 29 percent or $188 million over same period last year. This variance was mainly reflected in staff related costs and other operating expenses associated with the newly imposed asset tax.

Managed Funds | The investment bank is reporting that the Scotia Premium Money Market Fund surpassed the $3 billion mark in just over 18 months since its launch; and the Caribbean Income Fund surpassed the US$75 million mark. The company is placing more emphasis on pooled investment funds so as to move away form the repos investment where the company takes the risk on the underlying investments while granting investors fixed rates of return for a specified period.

As these funds grow either from new investments inflows in or by improvement in values as a result of income or growth in the underlying assets in the funds, management fees earned will increase going forward. This is where the company is planning much of its growth.

As interest rates stay low, investors will be looking at ways of boosting their income and in some cases with flexibility. The low rates favour increased stock market activities, increased values for stocks and more fees for Scotia Investments as their brokerage arm enjoy more trading income from trading stocks for clients as well as for the equity fund they manage.

Assets under management including the Company’s custody book were $109.5 billion as at the end of the quarter, up $10.8 billion or 11 percent above the same period last year and $2.7 billion or 2.5 percent over the previous quarter. The growth was driven by increased net asset values in managed funds. The company would most likely be holding stocks in its portfolio that would benefit from a stock market rally.

Stock Outlook | The price earnings ratio for the stock is around 6 at $27, the last selling price and a net asset value of $34, placing the stock in the undervalued category.

Filed Under: Company News, Company Results Tagged With: BNS, Scotia

JSE: Junior market dominant

May 31, 2013 by IC Insider.com

Thursday, 30th May 2013 | Trading activity was mostly focused on the junior market as the Lasco stocks all traded at 52 weeks highs for the day. Lasco Financial closed at $10.15 up $1.15 an all time high, 154,320 units traded between $10 and $10.15, manufacturing traded 66,350 units and closed at $15.20 up a $1.20 an all time high and distributors traded at $15.40 an all time high but slipped back to $14.60 at the close, while trading 131,348 units. Blue Power closed at $6.81 up 61 cents for the day when 42,000 shares traded. Dolphin Cove traded 208,868 units at $8.35, Consolidated Bakery saw 975,000 units going through the market for $1.01 each.

The junior market index closed at 761.34 up 13.70 points on the day. Technically, this leg of the junior market movement should take it to 950 points with a second leg to 1,350 or beyond. The second leg may seem like a stretch at first, but with interest rates so low the potential for stocks have gone up, making present PEs much lower than they may first appear to be. The junior market index 50-day moving average has crossed over the 120-day moving index and the current level of the index is well above the 200-day moving average. The 50-day moving average is about to cross over the 200-day moving average — all bullish signals.

Investors may have to wait on the next set of company results to see a major push of the index upwards. The three Lasco companies were the main pushers this week. Their last quarter results cannot be expected to push their price much further for now. The stocks are selling at a PE of 10 times the latest earnings, a level that some other junior companies are trading at. Blue Power, Caribbean Cream and Paramount Trading should be releasing full-year results soon and that could help the market move further.

The Main Market | The all Jamaica index closed over 88,000 points when it hit 88,443.97 points, up 494.15 and the highest since January 23 when it closed at 88,841.39. Notwithstanding the index move, the market was pretty subdued today. The major movers in the main market were Grace put on 75 cents, JMMB 49 cents and Kingston Wharves 50 cents.

The JSE market has broken out of the downward channel and is poised for the 105,000, with 130,000 as the next major target.

The market traded 6.2 million shares at a value of $28.8 million as 10 stocks advanced and 6 declined.

Filed Under: JSE Main Market, Stock Market Tagged With: Daily Trading, JSE Company, Trading Activity

Jamaican Teas buys property

May 31, 2013 by IC Insider.com

Jamaican Teas advised that they signed an agreement to purchase a property located at 2 Bell Road in Kingston. The property previously housed the operations of Beal Industries which manufactured Comet Matches, which closed some time ago.

The property will be used to house the manufacturing operations of Jamaican Teas as the current facility rented at Norman Road in Kingston is inadequate to meet the company’s growth.

The property is approximately 1.5 Acres and the building is 17,000 square feet. The company expects to move in later this year after the necessary renovations are completed.

The acquisition will be funded by a combination of internally generated funds and external funding.

Filed Under: Company News, General Business News Tagged With: Jamaican Teas

FX: More liquidity but rates rise

May 31, 2013 by IC Insider.com

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Wednesday 29 May, 2013 | The level of buying of foreign currency climbed as Wednesday trades topped the high level of Tuesday’s trading. Although the amount bought out-paced the amounts sold, the selling rate for the US dollar inched up for the third day in a row. Buying ($40 million) exceeded selling for the second day in a row and selling was in the mid $30 million range. The US dollar selling rate went up by 8 cents and the pound sterling gained 26 cents while the Canadian dollar fell by 97 cents.

At the same time the central bank launched two new variable rate instruments to manage liquidity effective Friday May 29.

A 184-day Certificate of Deposit, for an unlimited amount. The instrument re-prices quarterly at 0.15 percentage point above the 3-month GOJ Treasury Bill rate existing at the start of each re-pricing period. The initial coupon for the first three months is 6.77 per cent per annum. This offer is extended to all Primary Dealers and commercial banks from 29 May 2013 to 07 June 2013.

An 18-month Certificate of Deposit, for an unlimited amount. The instrument re-prices quarterly at 0.25 percentage point above the 3-month GOJ Treasury Bill rate existing at the start of each re-pricing period. The initial coupon for the first three months is 6.87 per cent per annum. This offer is extended to all Primary Dealers and commercial banks from 29 May 2013 to 07 June 2013.

The move suggests that the central bank is more than comfortable with the existing rate of the Jamaica dollar versus the main intervention currency the US dollar.

Filed Under: FX Market, Stock Market Tagged With: Daily Trading, FX Market, Trading Activity

TTSE: Still threading water

May 29, 2013 by IC Insider.com

Wednesday, 29th May 2013 | With a mere 217,710 units trading on the Trinidad & Tobago stock market, today marked another lackluster day of trading continuing the low levels of trades seen since last week. There was trading in 13 securities of which 2 advanced, 3 declined and 8 traded firm.

Only $981,839 was invested in shares on the market as Trinidad Cement dominated trading with 103,048 shares changing hands valued at $97,896. Sagicor Financial Corporation traded 66,132 shares for $417,371. There was minimal trading in the rest of the market with very moderate price changes.

The market is still characterized by the stocks that are in demand but there seems to be very little interest in selling. That is not surprising with interest rates so low in the twin island state. Government of Trinidad & Tobago Treasury bill rates are under 1 percent currently and long term rates less than 2 percent.

Filed Under: Stock Market, TTSE Market Tagged With: Daily Trading, Trading Activity, TTSE

JSE: Juniors marching on

May 29, 2013 by IC Insider.com

Wednesday, 29th May 2013 | The junior market index jumped 4.33 percent today, the most by any of the indices as most of the market focus was on these stocks. With the exception of cross traded index and the US dollar indices, where no price action took place, all other indices moved up on a day of light trading.

The junior market index closed up 31 points and closed at 747.64, not very far from the important 800 level where resistance comes into play. The all Jamaica index closed up 188.48 points to close the day at 87,949.82 on a day when market activity was low and only $8,804,947 worth of stocks traded.

52 weeks High | Six stocks traded at new 52 weeks high during the day with 3 ending up closing at 52 weeks high. Lasco Financial traded as high as $10 but closed at $9.50 which remains the highest closing price. The same went for Jamaican Teas that traded at $4.60 during the day but closed back at the 52 weeks high previously attained this month at $4.40.

Lasco Distributors closed at $15 while gaining $1.30 for the day and Manufacturing put on $1 and closed at $14, Grace Kennedy closed at $60.25 but traded as high as $62 failing to record a new 52 weeks high at the close. Kingston Wharves closed at $7.50 the highest price attained in the last 12 months while gaining 48 cents.

Filed Under: JSE Main Market, Stock Market Tagged With: Daily Trading, JSE Company, Trading Activity

FX: Trading picks up big

May 29, 2013 by IC Insider.com

Tuesday, 28th May 2013 | The decline in the level of trading was clearly not a sign of things to come. At least that is what Tuesday’s data in the foreign currency market is saying.

Trading picked up markedly from yesterday’s poor showing with US$42 million bought for all currencies and selling of US$37.1 million. Rates inched up a bit today with the US dollar purchased for 80 cents more and sold 2 cents more than on Monday. In the case of the Canadian dollar it was 59 cents more on the buy side and $1.32 on the selling side while the Pound Sterling was fetching 53 cents more on the buy and just 19 cents more on the sell side than on Monday.

The amount of US dollar sold was over US$4 million more than that purchased, while the Canadian sold Can$1.66 million compared to only Can$900,000 bought. Sterling was heavily in favour of buying as nearly a million pounds less was sold than bought.

The highs and lowest rates saw marked moves in Canadian on the buy side climbing $1.17 for the highest rates and down $12.09 on the lowest rate sold. The pound was sold for $1.41 less at the lowest rate.

Filed Under: FX Market, Stock Market Tagged With: Daily Trading, FX Market, Trading Activity

JSE: 130,000 in 2013?

May 29, 2013 by IC Insider.com

Tuesday, 29th May 2013 | The market was dominated by Scotia Group with 2.265 million shares trading for value of $49.4 million in a market that traded $59.6 million for the day. The bulk of the trades in this stock were crosses done by Scotia Investments on behalf of clients. The stock jumped $1.24 on the day to close at $21.80. The gain in Scotia, plus a 40 cent increase in Sagicor Life which closed at $8.50, were the main contributors to the 1,452 points rise in the all Jamaica Index which closed above 87,000 points for the first time since February 6^th and it now sits just below January 25^th close of 87,888.49 on a day when advancing stocks again out paced declining stocks 3 to 1 with 12 stocks climbing versus 4 that fell.

Technically speaking | The junior market is heading to the 800 points level before it meets resistance and closed today at 716.63, so the target may not be that far away. The main market has broken the 85,000 mark decisively and today broke a minor resistance level created this year when the market slipped with the NDX and tax announcements. It now looks as if the market’s next serious resistance level is around 130,000 points. Using the all Jamaica Composite index, even if the market moved at the level it did today, it would take until mid-July to reach it.

The challenges the main market faces is that it requires the big companies to fully participate in any major rally to meet such a target within the time frame. So far, two of the big ones, National Commercial Bank (NCB) and Scotia Group, have not made any great moves to lend confidence that they are about to contribute in any major rally. Based on where money market interest rates are and the low level of stock valuation, this level may only be a temporary stop — if it becomes one at all. An indicator of the near-term future of the market can be measured by the advance decline ratio, as well as the number of stocks closing either bids higher or offers lower than the last sale price. At the end of Tuesday’s trade it was 8 to 1 a positive for continued advances.

Other price movers | Other stocks to post worthwhile moves include Carreras up $2 on Mondays last traded price with the stock closing at $60 with 16,246 units trading between $58 and $60. Jamaica Broilers gained 30 cents to close at $4.90 while trading 86,706 units. All three Lasco companies posted gains in continued response to the 10 for 1 stock split. Distributors gained $1.69 to close at $13.70 with 83,079 shares trading, Financial Services traded only 7,500 units to close $1.20 higher at $9.50 and Manufacturing was up 94 cents on just 5,000 units to close at $13. NCB shed 21 cents, closing at $18.80 as 19,134 units traded. Scotia Investments gained 50 cents with only 1,000 shares changing hands.

Filed Under: JSE Main Market, Stock Market Tagged With: Daily Trading, JSE Company, Trading Activity

Scotia Group’s profit surprise

May 29, 2013 by IC Insider.com

Scotia Group Jamaica was the one exception of the financial institutions to buck the trend of lower profit resulting from the write-off of fair value investments gains from the debt swap of Government of Jamaica bonds in February.

The banking group reported improved results for the second quarter of the 2013 financial year to April, with net income of $2,930 million, $210 million above the previous quarter and $214 million above the quarter ended April, 2012. For the six months ended April, 2013, net profit was $5,651 million compared to $5,364 million for the same period last year. Profit available to shareholders was $5.47 billion, resulting in earnings per share of $1.76, this is after the group took a one time charge of $397 million for the write-off of fair value securities gains.

Net interest income | After impairment losses for the period, Net Interest Income was $11.13 billion, up $341 million or 3% compared to the same period last year. For the quarter, interest income and interest cost declined but net income fell compared with the January 2013 quarter by $470 million and was marginally up on the similar quarter for 2012 by $48 million. The reduction in interest rates that obtained after the debt swap would have been a major contributing factor to the decline. A partial switch in the portfolio from Jamaican dollar denominated investments to foreign currency ones would also be a contributing factor as foreign exchange gains climbed to $955 million versus $526 million in the first quarter.

Other Revenue | For the six months Other Revenue was $5.5 billion, up $858 million or 18.6% compared with prior year due to increased insurance revenue and fee income gains on securities trading as well as higher gains on foreign currency trading and investments.

Operating Expenses | $9.11 billion for the quarter, an increase of $1 billion or 13% over prior year. Staff related costs represented $439 million (10.2% increase), other operating expenses increased by $606 million reflecting primarily inflationary increases, devaluation of the Jamaican dollar and the impact of new tax measures.

Non-performing loans | (NPLs) at April stood at $5 billion, $440 million less that at April 2012, an increase of $270 million over January this year, the increase is a charge against the income for the year to date. During the six months period in 2012, the bank recovered a large corporate loan that was classified as non-performing during 2011, resulting in a net charge in 2012. Total NPLs is down to 3.88% of total gross loans compared to 4.83% last year and 3.82% as at January 2013 due greatly to the growth in the loan portfolio.

Balance Sheet | Total assets increased year over year by $33 billion or 9.46% to $382 billion as at April this year. Loans grew by $16.2 billion to $127.26 billion. Customer liabilities (deposits, repo liabilities and policyholder’s funds) grew to $294 billion, an increase of $28 billion over last year. As per the management report, “This growth was mainly reflected in the deposit portfolio as we continued to acquire new customers and see increased balances from existing customers.”

Bruce Bowen, President and CEO said, “Scotia Group generated strong results for Q2 with continued growth in all of our key business lines. Our culture of prudent risk management and strong liquidity enabled us to weather the challenges in the market during the quarter. Looking forward, the National Debt Exchange (NDX) has reduced margins and recent tax measures have increased operating costs. To offset these effects we are focused on deepening our relationship with clients and growing our customer base, while improving operating efficiencies and maintaining tight control of expenses.”

Bowen went on to say, “In times of turmoil in the financial sector Scotiabank is known for providing Jamaicans a safe place to bank. With the addition of Scotia Investments, Scotia Jamaica Life Insurance and Scotia Jamaica Building Society, and our commitment to providing a great customer experience, I believe that we can truly help our customers be financially better off. If we focus on our customers we are in an excellent position to build market share during this difficult economic period.”

Filed Under: Company News, Company Results Tagged With: BNS, JSE Company, Scotia

TTSE: Bids rise for some stocks

May 29, 2013 by IC Insider.com

Tuesday, 28th May 2013 | Market activity continues to be subdued in today’s trading on the T&T Stock Exchange with 14 securities trading with 2 advancing, 4 declining and 8 traded firm.

A volume of 460,713 shares crossed the floor of the exchange with a value of $9,072,623. Sagicor Financial Corporation traded 171,175 shares for a value of $1,079,945. There was trading in 146,740 Trinidad Cement valued at $140,420. ANSA McAL traded 100,000 shares with a value of $6,722,000.

All price movements were moderate, more importantly, the number of socks closing with bids above last selling price climbed to 9 from 5 on Monday. Two stocks that closed with higher bids than last sale are Scotia Bank and West Indian Tobacco, two stocks that having been rising for a few weeks.