Trinidad’s Republic Bank is in a quiet acquisition mood, having made an offer to takeover of 60 percent of HFC Bank of Ghana it does not own, that is likely to cost up to US$102 million. At the start of April Republic announced, along with Royal Bank of Canada, an agreement to acquire RBC Royal Bank (Suriname) N.V. (“RBC Suriname”), subject to customary closing conditions, including regulatory approvals.
“As we continue to focus our Caribbean operations on markets in which we can be a leading competitor for the long-term, we have made the decision to sell RBC Suriname to Republic Bank Limited,” said Kirk Dudtschak, executive vice-president and head, RBC Caribbean Banking. “This transaction supports the successful repositioning of our Caribbean business for the future and allows us to focus on markets where we can strengthen our operational capabilities and where we see opportunities for growth.”
Republic Bank in a release to the Trinidad Stock exchange disclosed a purchase price of US$39.8 million. RBC Canada reported that, the purchase price approximately reflects the book value of RBC Suriname and expects the transaction to result in a loss of C$23 million largely related to an estimated write-down for the proportionate share of RBC Suriname goodwill and other intangibles. In 2014, RBC Canada sold off its Jamaican operations to Sagicor Group.
Republic’s David Dulal-Whiteway, Managing Director said the acquisition fits in perfectly with his bank’s regional expansion strategy, and once completed, will expand the group to 8 territories in the Caribbean. According to Dulal-Whiteway, RBC Suriname operates a six branch network, with assets of approximately US$525 million and 199 employees.
Republic has assets of US$9.4 billion and made an offer to acquire all of the shares held by minorities in HFC Bank in Ghana under a mandatory takeover rule of the Ghana Security Exchange. Republic already holds 40 percent of the bank.
Archives for April 2015
Republic US$140m acquisitions
Forex trading nets US$13M on Tuesday
Dealers bought a net of US$13 million on Tuesday following net sales for most of the previous week. Purchases of all currencies by dealers amounted to a haul of US$67,556,589 equivalent, compared with US$36,675,222, on Thursday and selling of the equivalent of US$54,844,191 versus sale of US$44,135,664, on the previous trading day.
In US dollar trading, dealers bought US$63,349,319 compared to US$32,120,784 on Thursday. The buying rate for the US dollar rose 8 cents to $114.47 and US$52,595,395 was sold versus US$42,297,150 on Thursday, the selling rate fell 7 cents to end at $114.95. The Canadian dollar buying rate fell 99 cents to $89.16 with dealers buying C$2,164,603 and selling C$1,195,762, at an average rate that gained 47 cents to $91.34. The rate for buying the British Pound slipped 13 cents to $167.65 for the purchase of £1,600,733, while £561,850 was sold, at an average rate of $170.23, for a 66 cents rise. At the end of trading it took J$126.91 to purchase the Euro, $3.15 more than on Thursday, according to data from Bank of Jamaica, while dealers purchased the European common currency at J$124.32 for a rise of $3.07 on Thursday’s rate. Other currencies bought, amounted to the equivalent of US$176,779 while the equivalent of US$466,474, was sold.
Highs & Lows| The highest buying rate for the US dollar, rose 5 cents to $115.20. The lowest buying rate remained at $93.77. The highest selling dropped $1.07 to $120.16, while the lowest selling rate fell $18.53 to $97.77. The highest buying rate for the Canadian dollar rose 70 cents to $91.90, the lowest buying rate rose by 8 cents to $72.29, but the highest selling rate was up 51 cents to $94.17 with the lowest selling rate falling 50 cents to $86.50. The highest buying rate for the British Pound, rose $1.95 to $172.30, the lowest buying rate declined 16 cents to $136.29 but the highest selling rate jumped $1.76 to $175.69 and the lowest selling rate declined by 20 cents to $164.20.
4 stocks up 3 down on TTSE
Unilever hits a new 52 weeks’ high on TTSE on Tuesday
At the close of the market, the Composite Index advanced by 0.22 points to close at 1,155.44, the All T&T Index lost 0.39 points to close at 1,972.57 and the Cross Listed Index increased by a mere 0.12 points to end at 44.36.
Gains| Stocks increasing in price at the close are, First Citizens Bank trading 312 shares to close with a gain of 1 cent, at $35.38, Sagicor Financial gaining 5 cents to end at $5.80, while trading 10,200 shares. Scotiabank gaining 2 cents to close at $62.02, while 11,052 units valued at $685,445 changed hands and Unilever Caribbean trading 3,659 units with a value of $241,510, to close at a new 52 weeks’ high of $66.02.
Declines| The stocks declining at the end of trading are, Praetorian Property Mutual Fund declining by 2 cents to end at $3.48 with 2,000 units trading, Republic Bank adding 11,965 shares valued at $1,409,931 and lost 4 cents, in ending at a 52 weeks’ low of $117.83 and
Trinidad Cement with 11,500 shares traded and lost 1 cent in closing at $2.59.Firm Trades| Stocks closing with prices unchanged at the end of trading are, Agostini’s with just 10 shares, closed at $17.29, Clico Investment Fund with 14,120 shares valued at $318,026 remained at $22.52, Flavorite Foods trading 20 shares to close at $4.80, Guardian Holdings contributed 15,000 shares with a value of $217,500 to end at $14.50. National Commercial Bank with 40,000 shares changing hands at $1.55, National Enterprises with 6,600 shares to end at $17.35, National Flour Mills contributed 387 shares at $1.50 and One Caribbean Media with a volume of 33,283 shares being traded for $742,211 and ended at $22.30.
IC bid-offer Indicator| At the end of trading the Investor’s Choice bid-offer indicator had 3 stocks with the bid higher than their last selling prices and 3 stocks with offers that were lower.
JSE off to a slow start
Tuesday’s trading activity on the Jamaica Stock Exchange was lukewarm at best with the prices of 5 stocks rising, 4 declining as 19 securities changed hands, ending in 1,142,877 units trading, valued at a mere $3,840,399, in all market segments.
Main Market| The JSE Market Index lost 136.32 points to 84,969.60, the JSE All Jamaican Composite index fell 152.41 points to close at 93,718.26 and the JSE combined index declined by 6.16points to close at 86,781.76.
IC bid-offer Indicator| At the end of trading, in the main and junior markets, the Investor’s Choice bid-offer indicator shows 9 stocks with bids higher than their last selling prices and 5 with offers that were lower.
Stocks of interest include Carreras that traded only 1,100 shares to close at $41.51 with a gain of 43 cents, the bid is at $41.50 for 5,000 shares and the offer is at $44.50 for 3,978 shares.
Grace Kennedy traded 18,162 shares to gain $1 to $63, the stock closed with the offer at $63 for a small volume. Sagicor Group lost 20 cents to end at $10.20 while 65,291 units were traded between $10.20 and $10.45. At the close there were 1 million units on offer at $10.60.
Some of the stocks with bids that are higher than the last selling price are Jamaica Stock Exchange with a bid of $2.30 to buy 100,000 units against the last sale price of $2 and Radio Jamaica with a bid for 5,000 shares by Mayberry for in house purposes at $1.60 last selling price $1.50.
Access up $1.72 to $13.22
Access traded at up $1.72 on Tuesday with limited volume.
At the close of the market, there were 4 stocks with bids higher than their last selling prices and just 1 with a lower offer. The junior market ended with 6 securities closing with no bids to buy and 10 that had no stocks being offered for sale.
Stocks trading in the junior market are, Access Financial trading only 100 shares at $13.22, as the price rose $1.72, Paramount Trading gained 20 cents in closing at $3.80 with 1,100 shares changing hands. Honey Bun traded 1,550 units at $1.91, Lasco Distributors ended trading with 92,800 units at $1.37 while ended with 34,354 units changing hands at $2.30, Caribbean Flavours & Fragrances lost 11 cents in trading 35,000 shares at $1.80 and General Accident Insurance lost 9 cents while trading 32,000 units to end at $1.71.
JSE off to very slow start
JMMB profit down slightly but…
JMMB Group posted a 14 percent fall in net profit compared to 2013, with profit after tax of J$1.85 billion. Earnings per share amounted to J$1.14 for the nine month period to December 2014, and $644 million after tax, for the December quarter or 40 cents per share, in line with the September quarter results of $651 million but just 8 percent below 2013. Operating expenses, however, rose by $220 million in the quarter above that of the September quarter, helping to keep profit down.
Earnings for the full fiscal year to March, should end around $1.60 per share, at a stock price of $7 and a PE of 3.5, the stock is undervalued. Profit before tax was higher for the latest quarter, a near $100 million increase in corporate tax provision resulted in net profit falling behind the December 2013 quarter. Operating revenues grew 18.1 percent over prior period, to J$7.8 billion, due mainly to acquisition of two subsidiaries and $2.8 billion for the quarter versus $2.45 billion for the December 2013 quarter.
The group’s Net Interest Income grew J$270 million or 7.1 percent year-over-year to J$4 billion. Management attributed the growth to “expanded business lines through the acquisition of Intercommercial Bank (IBL) in October 2013, coupled with effectively managing the group’s investment portfolio and cost of funds. Other operating revenues, namely, gains on securities trading, foreign exchange margins from cambio trading, and commission income also reflected increases of 25.2 percent, 78.5 percent and 30.7 percent respectively, these were driven largely by volume increases and taking advantage of market opportunities. Our operations in the Dominican Republic continue to produce positive results contributing J$508 million to the Group and IBL contributed J$162 million to the group’s earnings.”
Operating expenses increased from J$3.99 billion to J$5.45 billion. ”Expenses associated with the expansion of the group through the acquisition of IBL and AIC Securities accounted for J$796 million (54.6 percent) of this increase and the remaining J$662 (45.4 percent) is attributable to costs associated with integration, growth in subsidiaries in the regional markets, increase in asset tax and normal inflationary increases”, management advised shareholders.
One of the effects of the increase in operating costs was that the group’s efficiency ratio (administrative costs as a percentage of operating revenue) moved from 60.4 percent in 2013 to 69.9 percent. Management is taking medium to long-term measures to correct this increase, mainly through extracting synergies from its recent acquisitions through its integrated financial services model across regional territories, the company stated.
Concerns|Insider selling of the company’s stock has been high, raising concerns about the prospects going forward, with the likely impact on earnings that could arise with the restrictions being placed on repo trades that will see smaller amounts no longer acceptable to be booked directly by dealers. This change will affect margins on such funds, even if they are shifted to unit trust. The company made much income from foreign exchange trading which could be curtailed with what seems set to be greater stability in rate of the Jamaican dollar against the US dollar. IBL is operating in Trinidad where the economy is facing reduced income from the energy industry with the fall in the price of oil and gas, the country also is faced with high inflation, these developments are likely to see measures being implemented that could constrain business activities and so affect income and profits in the subsidiaries in that country.
Locally, Treasury bill rates have been falling since the first half of 2014 and seem set to decline some more, this can be both positive and negative, depending on the length of time, funds are placed on the asset and liabilities sides. Lower rates mean less income being earned by the company’s own funds, some investments will see an increase in values and greater activity in the stock market which can lead to more fee income as well as appreciation in any stock portfolio it may hold.
JMMB Group will replace shares in Jamaica Money Brokers shortly, and become the listed company. Shareholders of the group were paid 33 cents in dividend last year.
Is this Honey worth buying?
Honey is a sweet product savoured by many, but is this Honey likely to attract many to buy into it? Junior Market listed Honey Bun is reporting first quarter results to December, which is not so sweet, but the results to come could get sweeter as the year unfolds based on many factors.
The company enjoyed increased sales of 11.6 percent, hitting $206 million and resulting in gross profit growing by 11.3 percent compared with the corresponding period last year. As gross profit margin fell slightly to 45.4 percent compared with 45.54 in 2013 and administrative and distribution costs rose by 17.4 percent, profit also declined, falling 17 percent for the quarter to $16.5 million or 17 cents per share. “This reduction was mainly due to increased distribution cost resulting from the takeover of a large contract distributor to maintain our customer service and the lease of vehicles due to accidents of two of our main distribution vehicles. Improvements in this area will be seen in the next quarter. Further, one time cost was incurred during this period as the building on the property acquired was demolished,” management reported, in a statement accompanying the financials.
In the last fiscal year to September, profit fell from $35 million in 2013 to only $23 million partly. The decline was due to added costs associated with the distribution of the products that rose by 20 percent when revenues grew by only 5.7 percent, gross profit margin slipped marginally in the last fiscal year, from 42 percent to 41 percent. But Honey Bun is set to benefit from a fall in the price of fuel used in the transport area and reduced energy cost based on a reduction in rates charged by Jamaica Public Service Company.
The bulk of profit is made in the first six months of the year, with the Easter period significant for sales. The September period is usually a period of losses. The company should be looking at earnings in the 50-55 cents region for the current year with reduced cost in some areas and continuation of growth in sales.
“Exports continue to rise and increased year over year corresponding period by over 150 percent. This was mainly due to the export of its Buccaneer Jamaica brand of fruitcakes to the UK market, where Honey Bun displayed their cakes in ASDA for the first time. We have also seen increased demand in the local market.” the company’s management reported.
At the end of the period, equity stood at $325 million in contrast to borrowed funds of only $64 million and cash funds of $33 million. The current asset ratio was 1.64 to 1.
The company’s stock last traded on the junior market of the Jamaica Stock Exchange at $1.91 and should enjoy some gains if the company hits the projected profit or comes close to it. The stock closed on Thursday with a bid to buy 20,994 units at $1.91, followed by a bid for 99,900 units at $1.80 but offers start at $2.90 to sell 11,000 units.
US$7.5M more sold off on Thursday
Dealers sold a net of US$7.5 million on Thursday following on net sale of US$10 million on Wednesday and US$9 million on Tuesday. There was also net sale on Monday but that was in keeping with surplus on the previous Friday. Purchases of all currencies by dealers amounted to a haul of US$36,675,222 equivalent, compared with US$33,890,697, on Wednesday and selling of the equivalent of US$44,135,664 versus sale of US$43,245,266, on the previous trading day.
In US dollar trading, dealers bought US$32,120,784 compared to US$27,646,745 on Wednesday. The buying rate for the US dollar fell 3 cents to $114.39 and US$42,297,150 was sold versus US$39,278,675 on Wednesday, the selling rate fell 2 cents to end at $115.02. The Canadian dollar buying rate rose just 9 cents to $90.15 with dealers buying C$3,026,782 and selling C$1,569,586, at an average rate that gained 12 cents to $90.87. The rate for buying the British Pound slipped 33 cents to $167.78 for the purchase of £1,383,469, while £340,974 was sold, at an average rate of $169.57, for a 47 cents fall. At the end of trading it took J$123.76 to purchase the Euro, 20 cents more than on Wednesday, according to data from Bank of Jamaica, while dealers purchased the European common currency at J$121.25 for a rise of 13 cents on Wednesday’s rate. Other currencies bought, amounted to the equivalent of US$139,921 while the equivalent of US$95,765, was sold.
Highs & Lows| The highest buying rate for the US dollar, dropped $1.35 to $115.15. The lowest buying and the highest selling rates remained at $93.77 and $121.23 respectively, while the lowest selling rate fell 70 cents to $112.30. The highest buying rate for the Canadian dollar rose 10 cents to $91.20, the lowest buying rate rose by 83 cents to $72.21, but the highest selling rate was fell 18 cents to $93.66 while the lowest selling rate fell $1 to $87. The highest buying rate for the British Pound, rose 10 cents to $170.35, the lowest buying rate rose 33 cents to $136.45 but the highest selling rate fell $1.55 to $173.93 and the lowest selling rate declined by $1.60 to $164.40.
Scotia pushed up JSE on Thursday
Scotia closed at a new 52 weeks’ high on Thursday
Trading resulted in the prices of 10 stocks rising, 3 declining as 20 securities changed hands, ending in 2,668,728 units trading, valued at $29,091,872, in all market segments.
Main Market| The JSE Market Index gained 1,509.67 points to 85,105.92, the JSE All Jamaican Composite index rose 1,687.89 points to close at 93,870.67 and the JSE combined index gained 1,494.99 points to close at 86,787.92.
IC bid-offer Indicator| At the end of trading, in the main and junior markets, the Investor’s Choice bid-offer indicator shows 9 stocks with bids higher than their last selling prices and 7 stocks with offers that were lower, an indication of a market that will move in a sideward manner near term.
Scotia Group traded 841,758 shares between $22.20 and $23 but closed at a new 52 weeks’ high of $22.50, Scotia visible supply, is only 111,000 shares between $22.50 and $24.49 while demand is above 363,000 down to $21.50 with more at $21.11 and lower. Jamaica Broilers Group traded 335,165 shares at $4.50 and ended with a bid of $4.30 to buy 112,000 units and an offer of 60,000 at $4.69, strong support is at $4 for 1.93 million units. National Commercial Bank traded 129,760 units to close at $25 and ended with a bid of $25 to purchase 83,333 shares with an offer of 200,000 shares at $25.28, there is also 679,000 units on offer at $25.50, good support is down to $24 to $24.17. Sagicor Group traded 229,350 shares and closed at $10.50. There are two offers one at $11.40 to sell $17,500 shares and another to sell 887,000 units at $12.50, there is good support at $10 with of 520,000 units.Other stocks of interest are Desnoes and Geddes with the bid at $5.50 to buy 20,000 shares but with only one offer to sell 10 million units at $6, stronger support is at $5.41. Carreras with a bid at $41 to buy 7,500 units with further support down to $40 with the lowest offer being at $44.50 for 4,000 shares, the next offer is at $46 for 12,000 and 2,000 shares at $47. Significant offer is at $50 and then $56.50.
Jamaica Money Market Brokers has a bid to but 100,000 units at $7.05 and the lowest offer is at $7.98 to sell 7,000 units, currently, there is not much on the sell side around the lowest offer, while buying is mostly around the $6.50 level. Radio Jamaica has 1 million units on the bid at $148 with one offer at $2 for 190,000 units for sale and Sagicor Real Estate Fund with 1.44 million units on the offer at $6.95 to sell and moderate demand with a bid for 16,030 at $6.90, total bids amounts to 60,000 units with $5 being the lowest.
