The main market of the Jamaica Stock Exchange hit new record highs in mid-morning trading on Thursday with the JSE All Jamaican Composite Index surpassing the 520,000 mark for the first time.
The JSE All Jamaican Composite Index (AJI) rose 6,011.90 points to a record 521,685.45 and the JSE Index climbed 5,463.24 points to a record 475,064.08 at 10.50 am. The rise to more than 521,000 points on the AJI is a major development. The market has broken through an important resistance level of 520,000 points that has it genesis from as far back as the 2004 and 2005 peak. Continuing rallies above current levels, would confirm a big upside for stocks.
The Junior Market Index climbed 27.55 points to 3,126.49.
In trading, Barita Investments traded 66,243 shares at $45.05, JMMB Group is up to a record $49.95 with 15,329 shares changing hands, NCB Financial traded 106,754 units at $192. In the Junior Market, Fontana hit a new record of $6 trading 54,772 shares, the stock has gone on to trade at $6.50 with more than 164,00 share trading.
2 TTSE stocks rose 4 fall – Wednesday
Market activity on the Trinidad & Tobago Stock Exchange ended on Wednesday with trading in 13 securities against 16 on Tuesday.
Trading ended with 2 advancing, 4 declining and 7 remaining unchanged as Scotiabank and Trinidad Cement closed trading at 52 weeks’ lows.
The Composite Index lost 0.36 points to close at 1,386.70. The All T&T Index declined by 0.73 points to 1,798.47, while the Cross Listed Index remained unchanged to close at 131.79.
Trading ended with 122,312 shares valued $1,414,884 changing hands, compared to 251,890 shares at a value of $3,382,496 on Tuesday.
IC bid-offer Indicator| The Investor’s Choice bid-offer ended at 3 stocks with bids lower than their last selling prices and 6 with lower offers.
Stock closing with Gains and Clico Investments rose 15 cents and settled at $24.15, with 8,085 stock units trading and JMMB Group rose 4 cents and ended at $2.09, with investors exchanging 75,645 shares.
Stock closing with Losses| First Caribbean International Bank lost 2 cents in trading 1,215 shares to close at $8.30, Republic Financial Holdings shed 1 cent and completed trading of 3,259 units at $121, Scotiabank dropped 10 cents in closing at $62.15, in exchanging 1,430 shares and Trinidad Cement fell 5 cents and ended at $2.45, after exchanging 25 shares.
Firm Traded| Calypso Macro Index Fund ended trading of 600 shares at $14.50, Grace Kennedy closed at $3.23, with 4,350 units crossing the exchange, Guardian Holdings closed at $18.50, with 10,553 stock units trading, Point Lisas traded 25 shares at $3.61. Sagicor Financial ended at $10 with 3,204 units changing hands, Trinidad & Tobago NGL ended at $28.31, with 9,617 units trading and West Indian Tobacco ended at $110.25, with 300 units crossing the exchange.
Prices of securities trading for the day are those at which the last trade took place.
GWest shocking financial status
GWest went to market in 2017, presenting a picture to investors of a prosperous future but within less than two years of listing on the Junior Market of the Jamaica Stock Exchange, the picture is bleak.
The company’s auditors issued a qualified report casting doubts on the ability of the company to continue in business as a going concern. According to the company’s auditors Calvert Gordon and Associates, “the company recorded a net loss of $135.876 million during the year ended March 2019 and a net loss of $88.109 million in the previous year.”
These conditions along with other matters as set out in note 28, indicate the existence of an uncertainty which may cast doubt about the company’s ability to continue as a going concern.
Note 28 of the financial statements reads “The above factors indicate a material uncertainty that may cast doubt on the company’s ability to continue as a going concern and to therefore realise its assets and discharge its liabilities in the ordinary course of business. The continuation of the company as a going concern is dependent on the availability of the third party financing and on future sustained profitable operations.”
“Management is committed to continue operations as a going concern and is pursuing a number of strategies to return to profitability, which include: – sale of investment property units – commencement of operations of planned new surgery centre – increased marketing and promotion of new services being offered – continue rationalisation of expenses – obtaining additional third party financing for improved working capital “
“ At the date of these financial statements, the company was in an advanced stage of negotiations with its bankers regarding the restructuring its current borrowing arrangements and to obtain further financing for its strategic plans.
Additionally, subsequent to the year end, the company has signed sale agreements for two units of its investment property.”
“The ability of the company to generate sustained profitable operations is dependent on the successful implementation of the strategies being pursued. Based on these plans and strategies, the directors and management believe that the company will generate adequate cash flows and return to profitability.”
GWest presented a rosy forecast at the time of the IPO, to suggest a highly profitable future with revenues from medical services rising sharply in the 2018 fiscal year. The results to March that year, last year showed revenues well below forecast of $86 million from the new operations with only $17.4 million generated. Admittedly, the company had projected a loss to March of $110 million but came up much lower, with a loss of $88 million. The audited accounts show revenues from patients fess at just $77 million well up on the $17 million generated in the 2018 fiscal year but below the forecast for 2018 and mere 11 percent of the forecast of $710 million for 2019. With losses exceeded revenues for the 2019 fiscal year, the company will need to grow gross income considerably in the current year to prevent another year of losses. GWest reported revenues of $130 million and $66 million in 2018 with expenses of $228 million up from $119 million.
The company has just $465 million in shareholders’ equity owes $980 million in interest bearing debt and virtually has no free cash left on hand. The sale of some units owned by the company will go a far way in easing the crunch but it must generate a lot more income to stem the cash out flow that has plagued it.
The writing was on the wall for this stock from the start, it had no track record in the business it hoped to make most of its profit from, projections had no credible foundation and management exposed there weakness with the manager they handled the conversion of shareholders loans to preference shares. The stock that was sold to the public at $2.50 and rose to a high of $4 after listing but is now down to $1.05 just above the net book value of 95 cents and seems heading lower.
Treasury bill rates plummet
Investors pushed Treasury bill rates sharply downwards, on the two issues that were offered in June and maturating in September and December this year.
The two issues were for $700 million each and attracted $1.597 billion and $1.708 billion respectively and ended with average yields of 1.9548 percent and 1.836 percent. The previous auction in May yielded 2.09785 percent and 2.12567 percent.
The heavy oversubscription indicates that rates are heading much lower in the coming months.