JSE: Trading picks up

Tuesday, 12th November 2013 | There was trading in 30 securities on the Jamaica Stock Exchange resulting in 2,829,064 shares trading with a value of $14,337,405 and 9 stocks advanced to 7 declining.

Caribbean Cement 102,500 at $2.78 was down 17 cents; Desnoes & Geddes had 535,437 units and closed firm at $4.80; Gleaner 1,095,213 units unchanged at $1.11; Grace Kennedy 19,742 units to close firm at $58.50; Jamaica Broilers saw trading in 78,891 shares and closed at $4.30 a fall of 20 cents; Jamaica Money Market Brokers had 4,631 shares, closing unchanged at $8.05; Mayberry Investments had 27,575 units to close up a cent at $1.91; National Commercial Bank 58,455 units resulted in a closing price of $18.40 up 90 cents; Proven Investments exchanged 73,389 units as the price at close to 11.95 US cents; Sagicor Investments Jamaica had 28,253 units to close at $15.66, down 34 cents and investors pushed through 51,479 Sagicor Life shares to close at $7.58, down 2 cents.  Scotia Group 251,504 units ended upping the price to $19.10 at the close up 60 cents and Supreme Ventures exchanged 19,294 shares to close unchanged at $2.60.

JSEIndicesNov12Junior market | Access Financial Services 20,760 traded at $8.28; Caribbean Flavours & Fragrances 23,917 $2.60, off 5 cents; Caribbean Producers had 17,239 units to close firm at $1.92; Honey Bun traded 7,233 to close firm at $3.05; Jamaican Teas traded 12,626 to close firm at $3.60; Lasco Distributors 79,847 shares unchanged at $1.45; Lasco Financial Services 20,149 units at $1 down a cent; Lasco Manufacturing traded 117,397 units at $1.40 up 2 cents.

IC bid-offer Indicator | At the end of trading, the bid-offer indicator showed that there were bids for 6 stocks higher and 2 stocks with offers lower than their last selling price.

Big profit jump at Purity

Profit more than tripled before taxes at Consolidated Bakeries (Purity) and was up more than 400 percent after factoring taxation in the 2012 period to September, as profit after tax rose to $30.4 million up from $5.7 million, a 429 percent increase. For the September quarter, profit rose to $6 million compared to the 2012 quarter when the company reported a loss of $2.8 million.

The improved numbers did not show up in the quarter over quarter results as profit was lower than the $10 million earned in the June quarter. Some of the improvement is a recovery from a bad period in 2012. The second half of 2012, the year Consolidated went public, was not a good one as the company recorded a loss in the period compared to a profit in the 2011 period.

Consolidated_Purity150x150Revenue for the nine month period increased by 37.6 percent to reach $500 million compared to revenue of $363 million for the same period in 2012.  For the quarter, revenue is up by 53.2 percent over the same period in 2012 to reach $172 million up from $112 million. “These increases represent growth in both unit sales and average sales per customer. During the quarter under review, input cost increased due to exchange rate movements and other factors,” management stated in their report to shareholders. Gross profit margin came in at 49 percent for the quarter down from 53 percent in 2012 and is 54 percent year to date, an improvement over the 52 percent enjoyed in 2012.

It looks as if the company will enjoy profits in the order of $35-40 million for the year or earnings per share around 20 cents. The company is focusing on improved efficiency, increased sales from existing products and new ones for both the local and export markets.

Cash funds and investments are up to $99 million from $24 million last year September and $98 million at the end of December. Current assets are up to $205 million from $184 million at the end of 2012 helped by increased receivables and inventories which grew $40 million year over year. At the same time, current liabilities are down as a result of the clearing of overdraft balance of $13 million and taxation of $9 million leaving $61 million as owing to third parties. Borrowing is up from $19 million to $49 million at the end of September this year versus last year September.

Related posts | Consolidated Bakeries hiked profit | Consolidated Bakeries’ Q1 Profits Up

TTSE: Republic puts on $2

Tuesday, 12th November 2013 |  IC Insider’s Buy Rated Republic Bank jumped $2.01 to end the day at $115.01 as 2,786 units traded on a day when trading levels were very low. The number of companies involved in trading increased to 14 from just 9 on Monday of which 5 advanced, 2 declined and 7 traded firm with a mere 97,729 shares traded, valued at $2,296,309. Scotia Bank and Unilever hit new 52 weeks high at the end of trading.

In trading, Trinidad Cement had a volume 16,000 shares changing hands for a value of $35,201 as the price remained unchanged at $2.20; First Citizens Bank volume was 9,295 shares valued at $334,596 as the price closed firm at $35.99; Jamaica Money Market Brokers added 5,815 shares valued at $3,499 as it closed firm at 60 cents; Neal & Massy had a volume of 3,956 units as the price gained 33 cents to land at $58; Sagicor Financial Corporation contributed 9,278 shares with a value of $67,266, while the price closed unchanged at $7.25. West Indian Tobacco traded unchanged at $120 with 2,471 units trading.

TTSENov12Clico Investment Fund posted a volume of 45,110 shares valued at $969,851 as the price closed unchanged at $21.50.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer indicator showed that there were bids for 4 stocks being higher and 4 stocks with offers lower, than their last selling price.

Buy Rated bargains

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Monday, 11th November 2013 | The stock market in Trinidad continues to maintain most of the gains registered for our Buy Rated selection with only 3 negative movements so far and 8 registering some gains ranging from 3 percent to 120 percent with one that has not mowed.

Our Jamaica Stock Market selections have not fared as well with most registering declines to date but they still remain attractive buys. In fact, a number have become even better buys now than when we selected them. Remember that the greater the fall in price, the better the chance of success if investors buy in at the low prices.

Related posts | Carib Cement & AMP now Buy Rated

BuyRatedPerformanceThe IC Insider’s Buy Rated seal of approval is given to a stock that we believe is a compelling buy with earnings that are strong relative to the price and strong prospects of generating high price gains within the next twelve months.

Our research is backed by published reports of the company’s performance and insights of future earnings that can be found at ICInsider.com. The final decision to buy, or not, is your personal choice.

To find published reports for a Buy Rated stock on IC Insider, please choose the category Buy Rated’ under Company News or enter the company name, in full or part at ‘Search IC Insider’.

Carib Cement turns profit

Aggressive pricing and increased cement sales helped Carib Cement Company turn a big loss last year into a profit this year. For the quarter ending September, profit jumped to $169 million, a marked change from a $245 million loss in the similar quarter of 2012.

For the nine months, profit was only $32 million reflecting a very poor first quarter resulting from a loss incurred along with a big foreign exchange loss of $689 million and interest of $349 million. The nine month figures may not appear great, but when viewed against a mammoth loss of $1.45 billion in the same period in 2012, the extent of the about turn is vivid.

Admittedly, the parent company had to step in to restructure loans that were lent to Carib Cement and were choking them, thus cutting interest cost. Revenues climbed 50 percent to reach $3.2 billion in the quarter and $8.89 billion for the nine months, an increase of 30 percent. The improvement flowed from increased volume of cement and clinker sales which accelerated in the third quarter by 34 percent over the 2012 quarter. For the year to date, volume sales climbed 7.6 percent, as exports declined in the 2013 nine months period. Export sales rose in the latest quarter by 44 percent and local sales by 19 percent, year to date it is up by only 10 percent.

cementblocks150x150Price increases | Since last year, the company has increased the price of its product on a number of occasions. In January, cement prices increased by 16.5 percent on average, 3 percent in April, 1 percent in July and in October, a 2.7 percent increase, which was on top of a 9.2 percent increase in July last year.

The full 2013 results should come out to be in the order of 20-25 cents per share if all goes well, but it’s the 2014 numbers investors should be focusing on from now as it looks like earnings could well be in the 80 cents per share range, which would see a big hike in the stock price. The situation could get even better if some of the major infrastructure works that have been announced come on stream along with any pick up in the housing market.

All this is why IC Insider has now upgraded the stock to Buy Rated. There are still risks involved. Cement plants are notorious for bad news flowing from accidents or other major setbacks, as is the case in the company parent Trinidad Cement. The company seemed to have been doing very well only to be hit by problems in the factory, as well as in Barbados, and just barely reported a profit in the September quarter. While the company has depended on Trinidad Cement to bank roll it, the group is under strict dictates of its lenders.

Balance sheet | End of the period cash funds were down to $149 million from $244 million at the end of December last year. This needs to be rebuilt to reasonable levels to provide for smooth operations and for the company to be able to ride out any storm they may encounter.

Even if the company was able to continue the profits levels seen in the third quarter, it is going to take about 7 to 8 years for them to wipe out the huge accumulated loss of $7.5 billion and be in a position to start paying dividends again. It may well happen before that time frame due to the likely impact of inflation in driving up profits in the years ahead and, if the Jamaican economy starts to grow at a reasonable pace, sales of cement could surge and boost profits.

Both Trinidad Cement Limited (TCL) and Caribbean Cement Company are IC Insider Buy Rated stock.

Related posts | Cement profit surge – not so fast | Carib Cement profit mired in concrete | Cement could be good for your pocket

Carib Cement & AMG now Buy Rated

Monday, 11th November 2013 | We added two new stocks to the Buy Rated list based on the information emanating from their latest quarterly results.

Caribbean Cement underwent major changes to its finances with the parent company, Trinidad Cement, restructuring the debt by converting it to preference shares thus cutting cost of financing. Revenues have also climbed with increased prices and volume sales.

AMG Packaging sales are growing in double digits and was up 37 percent in the quarter ending August. A new, multi-functional machine is in the factory and expected to be in production in December and will replace older manual ones and a rotary die cut machine. Management states that the new machine will allow for automation of the processes. This will make for more efficiency in the production process and allow for increased production and sales to meet demand. The company is expecting significant reduction in overtime and energy costs as a result of the new machine.

Related posts | Carib Cement turns profit | AMG gearing for further growth

Buy&WatchNov11About Buy Rated stocks | The IC Insider’s Buy Rated seal of approval is given to a stock that we believe is a compelling buy with earnings that are strong relative to the price and strong prospects of generating high price gains within the next twelve months.

Our research is backed by published reports of the company’s performance and insights of future earnings that can be found at ICInsider.com. The final decision to buy, or not, is your personal choice.

To find published reports for a Buy Rated stock on IC Insider, please choose the category Buy Rated’ under Company News or enter the company name, in full or part at ‘Search IC Insider’.

JSE: Monday’s light trade

Monday, 11th November 2013 | On Monday, the Jamaican Stock market almost fell a sleep with just 20 companies trading leading to a total volume of 1,000,953 shares with a value of a mere $3,260,573.

At the end of trading 6 stocks advanced in price to 4 that recorded declines. The main market index closed down marginally at 78,634.19, while the All Jamaica Index closed off at 78,528.16 and the junior market index barely inched up to close at 723.02.

Main Market | Trading in the main market resulted in Caribbean Cement swapping 14,114 units to close up 26 cents at $2.95;  Desnoes & Geddes switched ownership of 6,500 units to close at $4.80, up 28 cents; Grace Kennedy gained $1.50 to close at  $58.50 with 5,000 shares; National Commercial Bank traded 15,983 units as the price lost 50 cents to $17.50; Sagicor Life exchanged 71,641 units as it closed at $7.99, down a cent; Scotia Group closed at $18.50 up 15 cents on the day while Supreme Ventures ended with 50,000 units and closed at 10 cents, down at $2.60.

JSEIndicesNov11Jamaica Money Market Brokers 8.75% preference shares traded 356,700 to close firm at $3.

Junior Market | Caribbean Cream traded 50,000 units at $1.05; Caribbean Producers traded 198,000 to close at $1.92; General Accident exchanged 58,635 units to close at $1.60 down a cent; Lasco Financial Services swapped 42,897 units and traded at $1.01 at the close and Lasco Manufacturing had 108,080 units to close at $1.38.

IC bid-offer Indicator | At the end of trading, the bid-offer indicator showed that there were bids for 8 stocks higher and 3 stocks with offers lower than their last selling price.

Caribbean Producers’ impressive profit

When Caribbean Producers pitched their vision of an impressive future, many investors saw a new rising star on the horizon coming from the west and the company easily raised $425 million. The shares were heavily oversubscribed and shot up as high as $3 but reported results never met the hyped expectations.

All that has now changed with the latest quarterly results to September showing a 19 percent jump in revenues and a big turnaround for CPJ in the first quarter of the 2014 fiscal year which ends in June. From a loss of US$172,981 in the 2012 quarter, the company swung into a profit of US$447,421. IC Insider projects the company should pull in profits for the full year of US$8 million, around J$0.80 per share. However, the market’s lackluster reaction to the robust results leaves one searching for reasons why CPJ is not pleasing to investors’ palates.

Cost control | Although sales rose strongly from US$14 million to US$17 million contributing to the big improvement in profit, a major factor is the improved profit margin that rose from 37 percent in 2012 to 44 percent in the latest quarter helping to increase gross profit by a strong 35 percent. Also contributing is the maintenance of other cost increases to levels below or just above revenue growth as well as a turnaround of other operating activity from a loss of US$48,000 to a surplus of US$7,041. Selling and administrative cost rose 20 percent, a shade over the rise in revenues. Depreciation increased faster than sales, at 27 percent to reach US$435,500 but finance cost rose by just 7 percent to US$476,664.

CPJSpirits450x450The numbers suggest that the expansion into meat and juice processing is now bearing fruit and should get even better as they capture more market share with their new products.

Borrowings | The company took on a large amount of debt to help fund its expansion with borrowings at US$29 million at the end of September and equity of US$13.5 million, which was quite a risky financing arrangement. Since September 2012, loans have been used to fund a US$3 million increase in inventories and receivables and US$1.6 million increase in plant and machinery.

Positive cash | The good news is that in the latest quarter, there was a strong positive cash inflow of more than US$900,000 which should end up around US$10 million by the end of the fiscal year. That will be enough, coupled with cash now on hand of US$2.7 million, to meet loan payment of US$8.6 million due by June next year and US$9.5 million due in the next twelve months.

If the forecasted cash inflows materialise, equity would jump to US$21 million and borrowed funds should fall in line with equity, subject to funds being used in further expansion by the financial year end.

The company’s working capital is in very good shape with slightly more than 2 to 1 ratio, a situation that should improve as loans are reduced.

The company will begin operations in St. Lucia in 2013 with a well-established partner in the Eastern Caribbean. The new company, CPJ St. Lucia, will primarily focus on setting up beverage system programmes for the hotel sector on the island.

Insider call | IC insider is not only forecasting continued strong growth for this new fiscal year but a continuation into the next year as well, making the stock a good medium term investment. Caribbean Producers Jamaica Limited is an IC Insider Buy Rated stock.

Related posts | Caribbean Producers Profit down | Buy Rated: TTSE stocks climbing, JSE falters |

TTSE: Clico fund tops market

Monday, 11 November 2013 | As it was on Friday, the market was dominated by Clico Investment Fund as the fund recorded a volume of 156,183 shares valued at $3,357,910 out of a total of 273,015 shares that traded on the market valued at $4,531,868. The price for the fund remained at $21.50.

Overall Market activity resulted from trading in 9 securities of which 2 advanced, 4 declined and 3 traded firm.

Trading activity saw First Citizens Bank volume of 2,360 shares as the price closed down a cent at $35.99; Guardian Holdings with 65,500 shares changing hands for a value of $981,845 with the price closing down a cent at $14.99; Jamaica Money Market Brokers with a volume of 34,830 shares traded for $20,883 the rice was unmoved at 60 cents; National Flour Mills contributed 5,000 shares with a value of $4,750 as the stock closed up a cent at 95 cents; Sagicor Financial Corporation put in 4,542 shares valued at $32,930 and ended trading at $7.25 off by a cent.

TTSENov11IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer indicator showed that there were bids for 4 stocks being higher and 4 stocks with offers lower than their last selling price.

LASCO manufactures more profits

Profit rose 15.5 percent for Lasco Manufacturing in the September quarter over the similar period of 2012 to reach $176.4 million versus $152.7 million. This reflects an improvement over the results in the first quarter, which when combined with the second quarter results, amounted to $315.2 million compared to $306.3 million for the same period last year, an increase of $8.9 million or 2.9  percent. The company had taken a $40 million hit in custom duties for spoilt raw material in the first quarter that occurred during the 2013 fiscal year.

The improved profit for the latest quarter came about primarily due to a rise in revenue, from $958 million in 2012 to $1.03 billion in 2013, an increase of 10.75 percent and far stronger than the year-to-date performance of 4.6 percent increase to $1.88 billion up from $1.79 billion to September last year. Gross profit for the six months rose from $502.4 million to $526.2 million, an increase of $23.8 million or 4.7 percent. For the quarter to date, gross profit rose margin declined a bit as evidenced by the by slower growth in gross profit of $18.5 million or 7.2 percent, which is below the growth in revenues. “The company was able to mitigate the effects of foreign exchange volatility by making early payments to foreign suppliers” management stated in their release with the results.

Operating expenses for the six months to September 2013 rose by a mere 2.2 percent or $4.5 million over the prior year’s $200 million to move to $205 million in 2013. For the quarter, operating expenses was just $97 million, a reduction compared to $108 million in prior year.

Lasco_FoodManufactoring150x150Improved cash management has resulted in a reduction in the finance cost of $7.2 million over prior year’s $13.8 million in 2012, compared to $6.7 million in 2013.

The new factory is expected to come into production during this month starting with liquid products of water and juices. The powder products factory will come into operation in 2014. The company was allowed to add interest on it $1 billion plus loan to the cost of the plant but once it’s in operation, interest and depreciation will be expensed and this could have a drag on profits for awhile until sales from the new plant can cover fixed cost.

Financial position | The company increased amounts tied up in inventories sharply to $664 million up from $283 million last year September and $490 million in March as trade and other receivables grew to $881 million from $710 in September last year and $629 in March this year. Trade and Other Payables have also gone up with the amount standing at $699 million from $481 last year and just $259 in March. Long Term Debt used in the expansion is now $1.37 billion versus $350,000 in 2012 and $804 million in March. The rate on the loan is under 9 percent.

The future | The real excitement about Lasco Manufacturing is the major expansion of the factory operations and the relocation of some of its activities that should reduce cost while expanding the products to be produced. This should translate into strong revenues and profits going forward, more likely in the next fiscal year which starts in April next year.

IC Insider is projecting earnings of 17 cents per share for the year ending in March 2014 and 30 cents for the following year with the new factory in full operation.

Lasco Manufacturing is an IC Insider Buy Rated Stock.

Related posts | LASCO Manufacturing profits in the future | Buy Rated: TTSE stocks climbing, JSE falters