Seprod traded just 2,605 shares up to a 52 weeks’ high of $90 in Wednesday’s morning trading session on the Jamaica Stock Exchange. Trading is suspended as the price breached the circuit breaker, as there was limited selling of the stock.
Buying in the stocks could be better, with 43,579 units on the bid at $75 and 9,539 units between $75.01 and $80.90. Sellers range from 9,000 units at $80.90, 9,400 shares at $80.95, 2,989 units at $90 and 3,000 shares at $150.
As trading in the stock is suspended, more sellers and buyers could come to the market and change the day’s outcome.
At $90, the stock traded at a PE ratio of 18 times this year’s earnings. The significant publicly known development is the pending listing of Seprod subsidiary, AS Bryden and Sons, on the Jamaica Stock Exchange later this week. That will not affect the result of the group as it will neither increase nor decrease its earnings. It will not even change the group’s reported net asset value.
Seprod traded 1,459,106 shares in Tuesday trading session and closed at $79.99 with a gain of $6.97.
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Seprod stock trades at $90
Seprod dominates Main Market trading
Seprod jumped $6.97 to $79.99 while trading 1.46 million units and accounted for more than a half of the total value of stocks traded on the Jamaica Stock Exchange Main Market on Tuesday, on a day when the volume of stocks traded jumped 243 percent and the value, 508 percent more than in trading on Monday and ended, with 53 securities changing hands, down from 59 on Monday, with prices of 20 risings, 19 declining and 14 ending unchanged.
At the close, 17,113,084 shares were traded with a value of $207,420,352, pushed by Seprod accounting for $113.5 million of the value traded. Monday trading ended with 4,982,626 units at $34,117,477.
Trading averaged 322,888 shares at $3,913,592, sharply higher than the 84,451 shares, with an average of $578,262 on Monday. Trading for the month to date ended with an average of 146,335 units at $1,691,498, up from 103,994 units at $1,158,598 on the previous day. October closed with an average of 214,410 units at $1,325,907.
Wigton Windfarm led trading with 5.27 million shares for 30.8 percent of total volume, followed by Carreras with 4.06 million units for 23.7 percent of the day’s trade, First Rock Real Estate with 2.01 million units for 11.7 percent market share, Seprod with 1.46 million units for 8.5 percent market share and Transjamaican Highway with 1.42 million units for 8.3 percent of total volume.
The All Jamaican Composite Index popped 342.51 points to close at 346,001.30, the JSE Main Index climbed 1,171.68 points to finish at 311,866.67 and the JSE Financial Index rose 0.31 points to end at 68.27.
The Main Market ended trading with an average PE Ratio of 12.1. The JSE Main and USD Market PE ratios are based on the last traded prices and earnings forecasts done by ICInsider.com for companies with the financial year ending around August 2024.
Investor’s Choice bid-offer indicator shows eight stocks ended with bids higher than their last selling prices and eight with lower offers.
At the close, Barita Investments skidded 85 cents to $70.05 and closed with an exchange of 1,765 shares, Berger Paints rallied 40 cents in closing at $7.40 with stakeholders exchanging 2,178 units, First Rock Real Estate fell 50 cents to close at $7.50 in switching ownership of 2,009,206 shares. GraceKennedy rose 99 cents and ended at $72.50, with 51,377 stock units clearing the market after the price hit a 52 weeks’ low of $60 before the price rebounded to close out the day positively, Guardian Holdings advanced $15 to end at $440 after an exchange of just two shares, 
Jamaica Broilers popped 95 cents to $34.95 after 152,408 stock units were traded. Jamaica Producers gained 85 cents to close at $20 with a transfer of 218,591 stocks, Jamaica Stock Exchange climbed 49 cents to $9.19 after 35,951 units passed through the market, Massy Holdings rose $1 in closing at $91 in trading 10,596 shares. Mayberry Investments popped $1 and ended at $8 after exchanging 75,606 stock units, NCB Financial increased $2.50 to $65 with investors transferring 240,233 stocks, Sagicor Group declined $1.48 in closing at $42 in an exchange of 40,903 units. Seprod climbed $6.97 and ended at $79.99, with 1,459,106 stocks changing hands, Stanley Motta shed 80 cents to end at $5.20 as investors exchanged 2,092 units and Wisynco Group rose 70 cents to close at $21 trading 52,967 shares.
In the preference segment, Jamaica Public Service 7% gained 54 cents to $49 with just one stock unit crossing the exchange and Productive Business Solutions 9.75% preference share lost $19.99 to end at $101 with traders dealing in 6 shares.
Prices of securities trading are those for the last transaction of each stock unless otherwise stated.
Seprod slated to make big acquisition
Seprod is in the process of acquiring a distribution company headquartered in Trinidad and Tobago and is involved in food, grocery, hardware, housewares, pharmaceuticals and beverages.
ICinsider.com gathers the acquisition, which Seprod states is slated to be concluded by the end of May, would about double Seprod’s size in revenues. The target has 1,300 employees and revenues of US$240 million around J$37 billion, just below Seprod‘s sales of J$43 billion for 2021. The group, AS Brydens which is being acquired, also operates in Barbados and Guyana and is expected to boost Sperod’s profit per share, from the majority ownership that they will hold along with others within the Musson Group.
IC Insider.com gathers that Seprod expects to benefit from increased sales of locally manufactured goods through the new linkage.
Seprod early report inadequate info
Seprod midyear quarterly interim financial report is quick out of the box, well ahead of the August 14 deadline; last year, the company released the results early as well, on July 23. While the company’s management can be commended for the timeliness of the report, they, unfortunately, fall on adequate disclosure.
While operating revenues rose marginally, direct cost increased sharply by $1.8 billion, from $5.7 billion to $7.5 billion in the latest quarter. Other operating expenses that include administrative expenses dropped by nearly a billion, from $2.73 billion to $1.75 billion. Management never thought it important to provide shareholders with the reasons for the sharp differences.
The first quarter results had no such variation. The data suggest that investors are not getting information on a like for like basis. It would also be nice if the report stated the number of issued shares.
For the three months to June, the Group’s revenues pushed 8 percent higher to $10.25 billion, from $9.47 billion in the similar quarter in 2020 and netted a profit of $661 million, a minor decrease fall from $668 million in 2020.
For the six months to June, revenues rose 7 percent from $18.6 billion to $19.8 billion, with a net profit slipping from $1.3 billion to $1.21 billion. Other operating income plunged from $94 million in the June 2020 quarter to $50 million this year, while profit fell from $217 million to $178 for the half year.
According to the report of the directors, Paul Scott, Chairman and Richard Pandohie, Managing director, ”the year to date profit performance down 7 percent, showed improvement compared to Q1 results down 14 percent, as we have narrowed the deficit through realignment of the cost structure and price increases in Q2. The cost of goods has climbed considerably driven by global supply chain challenges.” which negatively impacted certain inputs into production.
Some of Seprod”s products.
Segment results show the Manufacturing division enjoying a 7.3 percent increase in revenues to $4.9 billion to third parties and contributed segment results of $1.6 billion, down from $2.1 billion. In comparison, the distribution segment saw an 8 percent fall in profit to $859 million with revenues rising 6 percent to $14.9 billion.
Finance cost declined in the quarter to $233 million from $315 million in 2020 and from $595 million to $501 million for the six months period.
Gross cash flow raked in $1.8 billion, but working capital and long term capital needs, a dividend payment of $220 million resulted in cash increasing just $77 million to add to the $2.79 billion at the end of 2020.
Total current assets stood at $18 billion inclusive of trade and other receivables of $6.4 billion, cash and bank balances of $2.86 billion and $7.8 billion in inventories. Net current assets ended the period at $9.6 billion, with Current liabilities standing at $8 billion. At the end of June, shareholders’ equity stood at $18 billion with long term loans of $11 million and short term borrowings at $2.5 billion.
The stock traded at $69.10 on the Jamaica Stock Exchange Main Market on Friday. Earnings per share came out at 92 cents for the quarter and $1.70 for the half year. ICInsider.com is forecasting earnings of $3.75 per share for this year and puts the stock value at a PE of 18.4 times earnings and above the market average of 16.3. Net asset value is $24.56, with the stock selling at 2.8 book value.
Seprod’s sugar closure sweetens profit
Seprod’s costly journey into a new difficult area of sugar manufacturing resulted in billion-dollar losses for the group. That management chooses to take on the worse performing and most difficult sugar operation in Jamaica raises some fundamental questions about corporate decision making, but then sometimes experience teaches wisdom.
After shedding the above loss-making business, profit from continuing operations surged 351 percent to $1.3 billion for the September quarter, up from just $285 million in 2019, but the jump benefited from $780 million, generated from other operating income, with $762 million of it being gains realized on the sale of a property.
Without the additional boost from the property sale, profit from continuing operations would stand at $551 million for the quarter, an increase of 94 percent, and $1.8 billion for the nine months to September, an increase of 52 percent. Earnings per share came out at $1.75 for the quarter and $3.38 for the nine months to September but would stand at 75 cents for the quarter and $2.41 for the year to date when adjusted for the one-off gain.
Revenue saw a sharp increase of 23 percent for the quarter to $10.1 billion from $8.2 billion and more moderate growth of 16 percent for the nine months to September to $28.7 billion from $24.5 billion in 2019.
Direct Expenses grew 12 percent for the quarter from $5.3 billion in 2019 to just under $6 billion in 2019, and 15 percent for the year-to-date from $15.8 billion to $18.1 billion. Gross profit margin increased to 41 percent for the quarter from 35.2 in 2019 and 37 percent for the nine-month period from 36.4 percent. Gross profit (GOP) jumped 42 percent for the September quarter moving from $2.9 billion in 2019 to $4.1 billion in 2020. GOP increased 17 percent to $18 billion from $15.8 billion for the nine months to September in 2019.
The Manufacturing segment generated revenues from third parties of $7.26 billion, up from $6.7 billion in 2019 while, Distribution accounted for revenues of $21.4 billion in 2020 and $18 billion in 2019. Segment results for the Manufacturing amounted to $2.47 billion in 2020 from $2 billion in 2019, while Distribution contributed $1.36 billion from just $684 million in 2019.
Despite a 52 percent increase in administrative and other operating expenses from $2.1 billion to $3.3 billion, profit before finance and other costs grew by 159 percent for the period from $651 million to $1.7 billion.
Some of Seprod”s products.
Loss from discontinued sugar manufacturing operations contributed to a loss of $31 million for the September quarter and $47 million for nine months. Total comprehensive income stood at $1.3 billion for the quarter, up from a loss of $124 million, and $2.6 billion for the nine months to September, up from $470 million in 2019.
Gross cash flow from operating activities stood at $4 billion, and working capital pulled the amount down to $2 billion. Dividend payment of $367 million and acquisition of property net and loan receipts of $1 billion saw net funds for the period increasing $1.6 billion to end at $3 billion. At the end of September, shareholders’ equity stood at $16.5 billion, while $14 billion was due from borrowings. Current assets ended the period at $17 billion including, Inventories of $6 billion, receivables $7 billion and cash and bank balances of $3 billion, while Current Liabilities stood at $9.6 billion with current loan liability amounting to $3.6 billion.
The stock is currently trading at $60.75 on the Main Market of the Jamaica Stock Exchange. With the most profitable period being the December quarter, IC Insider.com is forecasting earnings of $4 per share for a PE of 15.2 based on 2020 earnings.
The group is involved in the Manufacturing and Distribution of various household goods for the local and overseas markets, including cereals, flour, milk, cooking oil, margarine, to name a few. the stock has moved up in price since the results, historically, it has delivered some of the best returns for investors in the local market over several years. It’s a good long term investment.
Seprod distributing cash and kind
The Jamaica Stock Exchange-listed Seprod Limited will be paying shares a dividend split between cash and shares in Eppley Caribbean Property Fund in October.
The Board of Directors of Seprod decided at a meeting held on September 17 at which an interim dividend on the capital of the Company will be payable on October 19, to Shareholders on record on September 30. The ex-dividend date is September 29, 2020. The dividend will comprise Cash of 30 cents per share. In addition, 15,447,465 shares recently purchased in the Eppley Caribbean Property Fund – Value Fund will also be distributed at a ratio of 0.02171 CPFV Shares for every Seprod share held. The Company last paid a dividend of fifty cents per share on January 31 this year.
Seprod shareholders owning less than 20,000 shares will receive cash instead of CPFV Shares in proportion to their holdings. Cash payments in place of CPFV Shares will be based on the closing price of CPFV Shares on the Jamaica Stock Exchange on September 17, 2020, of $57.48.
On September 8, Eppley Caribbean Property Fund – Value Fund advised the JSE that they completed the acquisition of 105-107 Marcus Garvey Drive, a 3.4-acre parcel of land located in New Port West containing two buildings, including a cold storage facility, totaling over 86,000 square feet. ECPF’s acquisition was structured to have the effect of purchasing the property using 15,447,465 newly issued shares as consideration at a price equivalent to its NAV per share. The property is fully tenanted.
The move will broaden the number of shareholders in the Eppley Caribbean Property Fund but will most likely increase the supply on the market as several investors try to offload the stock they get.
Profit soars 103% at Seprod
Seprod expected their entry into sugar production in 2009 was going to be a lucrative endeavour with their business acumen, strong capital base and vision they would succeed where others failed for decades. According to a Gleaner report in 2010, “the company not only acquired some 820 hectares of lands last year to add to its Golden Grove Sugar Company operations but also upgraded its factory. The strategy of an upgraded factory and “economies of scale” is expected to reap increased revenues for the group, according to Group Chairman Paul Scott.” Shortly after they acquired the business, the directors were told they were undertaking a huge gamble and would have been better off if they had left it alone. Ten years later, with billion-dollar losses, Seprod finally stopped the costly experiment.
Having disposed of the sugar manufacturing operation, the company slashed its sugar losses by 89 percent from $139 million for the first quarter in 2019, to just under $15 million for the quarter just ended. The reduction in the sugar operating losses helped the net profit to soar 103 percent to $633 million, up from $312 million from the first quarter of 2019 that includes net loss from discontinued operations of $139 million. So strong are the first-quarter numbers that the profit amounts to 65 percent of the full year’s profit in 2019. Earnings per share came out at 86 cents for the quarter.
First-quarter revenues increased six percent to $9.14 billion over the $8.6 billion for the comparative period last year. Manufacturing segment revenue was up 17 percent to $5.2 billion compared to March 2019, while distribution revenues increased 14 percent to $6.9 billion. Segment profit for the Manufacturing segment grew from $682 million to $1.14 million and that for the distribution segment increased from $156 million to $418 million. Export sales rose 13 percent over last year’s first quarter, accounting for $405 million in revenue or 4 percent of the total revenue.
Some of Seprod’s products.
For the quarter, direct expenses rose a modest one percent coming in at $6.4 billion and other operating expenses increased two percent to $1.78 billion year over year and finance costs fell three percent, from $287 million at the end of March 2019 to $280 million at the close of 2020 first quarter.
Seprod raked in $1.1 billion in operating profit for the quarter, a 32 percent increase over the $835 million in the corresponding period to March 2019. Operating profit margin rose 20 percent from 10 percent to 12 percent, year-over-year.
The group generated gross Cash inflows of $1 billion and ended with cash and equivalents of $1.1 billion, down from $1.48 billion at the start of the year. There was a sharp reduction in payables but a big increase in receivables since December 2019 and there was a near billion-dollar drop in inventories. Net current assets ended the period at $7.8 billion, after accounting for current liabilities of $6 billion. At the end of March, shareholders’ equity stood at $15.6 billion, but borrowings totaled $13.5 billion. Seprod paid $366 million in dividends compared to $330 million in the previous year’s first quarter.
The company executives note that COVID-19 had a “minor negative impact” on its first-quarter results and it is expected that the full effect of the pandemic on company operations will be realized in subsequent quarters. Notwithstanding, it is important to note that the Seprod group includes several companies that manufacture or distribute what many consumers deem as essential foods and pharmaceutical items, which should also factor into the company’s ability to withstand this economic shock during this period.
IC Insider.com is forecasting $4 per share for 2020, with the stock trading at $51 on the Jamaica Stock Exchange with a PE ratio of 12.8 times 2020 earnings.
Seprod & Sygnus jump IC Top 10
Seprod after climbing from $34.85 at the end of the first full week in February to $39 in the week following, the price made more gains this past week, to end at $48 and dropped out of the TOP 10 main market listing.
Another main market stock, Sygnus Credit Investments garnered increased buying interest after the company posted positive December quarter results and moved back to the 2018 IPO price of $13.72 to leave the TOP 10. Grace Kennedy and Stanley Motta moved in to fill the breach left by the above two companies.
Caribbean Cream and Jamaican Teas entered the TOP 10 last week but left the list, by the end of this past week. Also moving on, was Lasco Manufacturing. Entering the Junior Market TOP 10 are tTech, Main Event with the price dropping to $5 and Iron Rock with the price declining to $3.50.
The three leading Junior Market stocks are General Accident, with potential gains of 300 percent, Paramount Trading with potential gains of 281 percent but not likely until the second half of 2019 when the company starts releasing the 2020 fiscal year results and Medical Disposables with 263 percent projected gains.
The three leading main market stocks are, Victoria Mutual investments with 153 percent likely gain, Sterling Investments with 135 percent and Sagicor Group with likely gain of 125 percent. Strong gains in the 
price of Carib Cement pushed it down to number 4 from 2 last week following strong increased profit for 2018.
The main market closed the week with the overall PE at 13.9 and the Junior Market at 10.2. The PE ratio for Junior Market Top 10 stocks average 6 and the main market PE is now 8.7.
The TOP 10 stocks now trade at an average discount of 41 percent to the average for the Junior Market Top stocks and main market stocks trade at a discount of 38 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected 
earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.
Seprod jumps $7 to $46 – Tuesday
Seprod jumped $7.01 to close at $46.
Seprod an IC Insider.com Stock to Watch, for the week, jumped a sharp $7.01 to close at $46 after hitting $47 during the trading session, in trading 69,936 shares, in response to the company reporting a big jump in profit for 2018.
Profit after tax moved from $735 million in 2017 to $1.276 billion from an increase in revenues of 48 percent to $24.4 billion with profit rising over 2,000 percent to $304 million in the December quarter, from a doubling in revenues.
Trading on the main market of the Jamaica Stock Exchange ended as JSE All Jamaican Composite Index increased by 3,739.64 points to 421,424.01 and the JSE Index advanced 3,398.24 points to 383,952.65.
At the close market activity, the main and US markets traded 38 securities, compared to 34 securities trading on Monday, with 15 advanced, 13 declined and 10 traded with prices unchanged.
Main market activity ended with, 15,805,801 units valued at $87,341,139 compared to 4,631,898 units valued $132,673,939 changing hands, on Monday.
An average of 451,594 units valued at an average of $2,495,461 for each security traded. In contrast to 149,416 units for an average of $4,279,804 on Monday. The average volume and value for the month to date, amounts to 325,058 shares with a value of $13,668,348 and previously, 313,874 shares with a value of $14,739,721. Trading for January resulted in an average of 101,980 units, valued at $3,042,494, for each security traded.
JMMB Group 7.25% preference share led trading with 11,919,446 shares for 75.4 percent of the day’s volume, Pulse Investments was next with 901,239 shares, accounting for 5.7 percent of the total main market volume changing hands and Ciboney ended with 607,166 shares, for 3.8 percent of the day’s volume.
IC bid-offer Indicator|The Investor’s Choice bid-offer indicator ended with the reading showing 4 stocks ending with bids higher than their last selling prices and 3 stocks closed with lower offers.
In main market activity, Barita Investments declined by $1.49 trading 99,034 shares, to close at $48.01, Berger Paints fell 50 cents to end at $19.50, with an exchange of 4,506 stock units, Caribbean Cement exchanged 24,981 shares but fell 49 cents, to end at $43.01, Grace Kennedy traded 20,001 stock units with a fall of $1.99 to end at $59. Jamaica Stock Exchange rose 35 cents to close at $17.50, with 134,109 shares trading. JMMB Group lost 25 cents trading of 82,352 shares at $31.75, Kingston Wharves jumped $1.90 to close at $77, with 1,112 units changing hands, Pulse Investments lost 25 cents to close at $2.90, with an exchange of 901,239 shares. Radio Jamaica rose 24 cents and 
settled at $1.24, with 366,704 shares, Sagicor Group climbed $1.50 and ended trading of 48,877 stock units at $40, Salada Foods jumped 57 cents trading 8,199 shares at $35, Stanley Motta rose 80 cents to end at $5, with an exchange of 5,850 shares. Sygnus Credit Investments gained 70 cents to end at $13 with an exchange of 24,206 shares and another Stock to Watch, Wisynco Group gained 80 cents and ended trading of 194,598 shares at $11.80.
Trading in the US dollar market resulted in 83,275 units valued at US$14,233 units changing hands. Proven Investments gained 1 cent in trading 54,975 units, with the price closing at 22 US cents, Sterling Investments traded 10,000 units at 0.0385 US cents and Sygnus Credit Investments ended with 18,300 units trading unchanged at 9 US cents. The JSE USD Equities Index advanced by 3.01 points to close at 174.10.
Seprod stock allocation fowl up to cost JSE
Seprod’s shareholders did not get full allocation of shares.
There is a big fowl up in the allocation of shares to Seprod’s shareholders who applied for shares in the recent offer of the share by the Musson Group.
On Monday November 12, NCB Capital Market announced that all applicants for reserved shares were fully allocated but that has so far turned out to be incorrect. Information gleaned by this publication is that applicants in the general pool apparently got more shares than they should, apparently at the expense of shares reserved for shareholder’s of Seprod as of the end of August, the cut off date for the purposes of allocating the shares.
IC Insider.com gathers that several of the applications for the Seprod reserved shares did not get their full allocation as they were placed in the general pool. IC Insider.com can confirm that around ten applications that should have been placed in the shareholders poll did not get the full allocation.
The problem, IC Insider.com gathers stems from a glitch in the system at the Jamaica Central Depository, a subsidiary of the Jamaica Stock Exchange. The staff of the JCSD have been working to determine the extent of the error but our sources indicates that up Thursday the matter was still be worked on a suggestion that the extent of the error is wide spread.
The Jamaica Stock Exchange subsidiary
Shareholders who should have received their full allocation will in fact get them subject to funds being provided by the to complete the purchase. From all indications, the stock exchange seems poised to absorb the loss that is likely to be incurred to obtain the shares required to satisfy those shareholders who affected.
A total of 92 million shares were publicly offered for sale with 55 million reserved. A total of 15 million units were reserved for existing shareholders of Seprod. Since the close of the issue that offered the shares at $24 each, the stock now trades at $32 a difference of $8, with the price seeming set to rise.
