Pan Jam profit stable

Pan Jamaican Investment Trust released results for the half year to June and reported profit attributable to shareholders for the June quarter of $486 million, a slight 4 percent increase on the $468 million in the 2012 quarter. For the six months ended June, Pan Jam made $710 million, compared to $970 million for 2012, a decrease of 27 percent.  The results equated with earnings per share amounted to $2.28 for the quarter and $3.34 for the six months to June.

The year to date results were negatively affected by the decision by both Pan Jam and the Sagicor group, an associate, to swap older debt with a higher book value for new government of Jamaica debt at a lower value (JDX2) which resulted  in a large loss.

pan_jamaican_logo150x150Helping to boost the results was the share of results of associated and joint venture companies which rose from $227 million to $532 million in the June quarter and up from $305 million in 2012. For the six months to June, these investments resulted in $769 million being booked and is largely due to an increased shareholding in Sagicor, which was partly offset by increases in finance costs of $119 million.

In their comments on the results, Management stated that “Investment income of $44 million in the second quarter was lower than last year’s comparable quarter by $36 million, as unrealised losses on securities trading of $26 million eroded foreign exchange gains, interest income and dividends. Year to date investment income of $145 million is 27 percent ahead of last year due principally to significantly higher foreign exchange gains. Property income was flat compared to last year for both the quarter and year to date, as stable occupancy levels and continuing modest growth in rental income were offset by reduced property revaluation loss.

“Group operating profit for the 2nd quarter decreased by $73 million or 32 percent, compared to last year’s 2nd quarter. For the year to date, group operating profit of $388 million is $23 million or 6 percent less than last year’s level. Total revenue was lower for the quarter compared to last year by $32 million, 7 percent, principally attributable to the decline in investment income, but ahead of last year for the 6 months.”

Occupancy | The group enjoyed overall rental occupancy exceeding 95 percent for the 2nd  quarter, a slight decline from last year, while contribution to group operating profit of $158 million for the quarter ($342 million year-to-date) was $42 million ($16 million year-to-date) lower, attributable to reduced property revaluation gains.

Operating expenses | Management said that operating expenses increased by $41 million for the quarter, and $69 million for the 6 months, driven by increased levels of direct property costs, professional fees associated with investment opportunities and general increases in staff costs. Finance costs increased compared to last year by $119 million to $137 million for the quarter, and by $298 million to $331 million for the 6 months, resulting from increased loans booked.

PamJamChukkaCove150x150Associated Companies | The associated companies consist principally of a 32.8 percent investment in Sagicor; minority positions in New Castle Co. Limited, owners of the Walkerswood and Busha Browne lines of sauces and seasonings; Mavis Bank Coffee Factory Limited; Hardware & Lumber Limited; Caribe Hospitality Limited (developers of the planned New Kingston Marriott Courtyard Hotel) and Chukka Caribbean Adventures.

Pan Jam’s share of Sagicor’s comprehensive income for the quarter was a loss of $426 million consisting primarily of unrealized losses on available-for-sale securities, net of exchange gains. For the year-to-date, the share of the net unrealized loss is $275 million, compared to a share of net unrealized gains of $52 million for the comparable period last year.

According to management “New Castle’s results for their fiscal year ended April 30 2013 increased more than threefold on the back of a 44 percent jump in revenue, while Mavis Bank again posted good results. Chukka overcame Hurricane Sandy-related disruptions to cruise ship passenger arrivals and the temporary closure of the cruise ship port in Turks and Caicos to post returns in line with expectations.”

Balance Sheet | Total assets at June amounted to $22 billion, compared to $21.4 billion at the end 2012. Stockholders’ equity increased to $16.6 billion equating to a book value per stock unit of $77.85.

Related posts | Pan Jam’s profit dented too

JSE: Trading levels remains low

Wednesday 28th August 2013 | Trading on the Jamaica Stock Exchange remains low keyed with stocks of 32 companies trading as 11 stocks declined an 8 advanced. Volume amounted to 5,249,151 units valued at $15.5 million.

The Main Market Index closed at 84,480.16 down 169.90, the All Jamaica Composite ended at 84,336.24 off 298.93 and the Junior Market closed at 798.08, up 8.41.

Main market | Carreras dropped $3 to $45 but with only 1,090 shares trading the stock traded as low as $45 but had a bid at the end of the day at $47 for a small volume of 250 units. Jamaica Broilers Group closed firm at $5 with 37,050; Jamaica Money Market Brokers traded 31,163 to close firm at $8; Mayberry Investments closed at $2.60 with 106,728; National Commercial Bank closed at $18.61 as 29,676 units traded as the price shed a cent; Pulse Investments closed at 85 cents down 15 cents as 114,600 changed hands and Sagicor Investments traded 86,904 units firm at $16.55. Kingston Wharves lost 40 cents to close at $7 as 4,562 units traded. Carib Cement lost 6 cents to close at $2.74 as demand dropped with a bid at the close at $2.11.

JSEIndicesAug28Junior market | 11 stocks in the Junior Market traded with Dolphin Cove 25,000 units to close at $8.30 after it had traded at $9 the stock lost 20 cents; General Accident Insurance saw 1,542,480 units crossing the exchange and closed at $1.90 up 5 cents; Access Financial Services traded 10,554 at $8.25 down 25 cents; Consolidated Bakeries traded 10,000 units firm to close at $1.50. KLE Group hit a new all-time low at $1.61 while trading 7,000 and lost 9 cents. Lasco Distributors traded 114,060 to close at $1.55 up 9 cents; Lasco Financial Services contributed 2,507,000 units to the total at the closing price of $1.42, up a cent.

IC bid-offer Indicator| At the end of trading, the Investor’s Choice bid-offer indicator shows that bids for 5 stocks were higher with 4 stocks having offers lower than their last selling price.

Image courtesy of Photokanok/ 

Is C2W doomed?

After almost two years, C2W Music, which promised that they would be making profits by now is yet to show the income, much less profits.

In its prospectus for the IPO to raise $129 million on the Jamaica Stock Exchange, the company made this statement about profitability, “As a start-up, the Company is expected to post a Pre-Tax Loss for 2012 of approximately US$241,849. The Directors expect earnings to stabilize from 2013 onwards, with a projected profit before tax of US$668,100 in that year, increasing threefold to a projected Profit before Tax of US$2.36 million in 2016.”

The results to June indicates that those projections were just a pipe dream as the company not only reported a loss of US$345,855 for the six months to June 2013, but for the similar period in 2012 when the loss was US$131,284, and there was just US$1,803 income for the six months. While it is not impossible to win contracts for songs that could change the picture, one would need to see a steady, if even small, flow of income but that is not the case with a year and a half now gone.

C2WMusiclogo2Shareholder equity now stands at US$377,257 down from US$1.2 million at June last year. Cash is almost gone entirely with just US$14,335 left of the sum raised in the IPO. C2W has assets in the form of advances to song writers of more than US$300,000 but that is not income and only $24,000 are due within a year.

The company needs a knight in shining armour and FAST if it is to avoid the burial ground. Crunch time is nigh.

TTSE: Low volume, low price changes

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Wednesday 28th August 2013 |  With the exception of low priced Jamaica Money Market Brokers (JMMB) with 365,027 shares crossing the Trinidad Exchange and CIF with volume of 126,841 shares, trading was relatively low and so were the price changes as 11 securities traded of which 3 advanced, 4 declined and 4 traded firm with 524,976 units changing hands for a value of $3 million.

Jamaica Money Market Brokers (JMMB) 365,027 shares changed hands for a value of $200,765 as the stock traded firm at 55 cents. Grace Kennedy volume was 15,500 shares valued at $51,150 the stock closed at $3.30 down a cent. Sagicor Financial Corporation contributed 7,057 shares with a value of $48,340, the stock closed at $$6.95 losing 5 cents in the process, while National Flour Mills added 6,076 shares valued at $4,253 up a cent to 70 cents. Angostura Holding traded 1,000 units at $9.17 a gain of 4 cents. The trade of Clico Investment Fund units amounted to $2,720,466 and the stock price advanced by 18 cents to end at $21.45. Neal & Massy Holdings closed firm at $56.00 but only 729 units traded.

TTSEAug28IC bid-offer Indicator| At the end of trading, the Investor’s Choice bid-offer indicator shows that bids for 2 stocks were higher with 2 stocks having offers that were lower than their last selling price.

Trinidad Cement did not trade but it had 142,796 units on the bid at $2.56 compared to $2.31 for the last traded price. There are no stocks on offer at the close of trading.

First Citizens lousy investor’s relations

It was once said that as a country, Trinidad wanted to be the financial capital of the Caribbean, but recent activity on the country’s capital market indicates that they have a far way to go in achieving such a goal — if that is possible.

First Citizens Bank launched the largest ever Initial Public Offering (IPO) of shares in the history of the T&T Stock Exchange with a market value of approximately TT$1.1 billion on Monday 15th July at an offer price of TT$22 per share for 48,495,665 shares. The bank said the IPO will assist in widening its capital base in order to facilitate future strategic expansion plans. The offer was slated to close on August 9 and was extended to Monday, August 12th 2013 as the 9th was a public holiday.

First Citizens Brokerage & Advisory Services, a subsidiary of First Citizens Investment Services, is the Lead Broker for the Offer for Sale. The handling of the entire issue is a classic demonstration of poor investor relations and that is not a good sign for investors.

First_Citizensbuilding150x150Listing on September 16 | The T&T Stock Exchange has advised that First Citizens has applied to have its shares listed on the TTSE on September 16th 2013 subject to the approval of its application to list by the Board of the TTSE.

This is madness and is reflective of lack of sensitivity in their financial market. First off, the opening time for the issue was unnecessarily long so those who applied early had their funds tied up without any compensation. Even worse is after nearly a month of closing of the issue, investors are yet to know what is their allocation of shares. First Citizens said on their website that investors will find out between August 30 and September 6.

A check with the T&T Stock Exchange as to why it will take such a long time for the shares to be listed indicates that the problem is not with the Exchange, who are ready to list as soon the information is available and is approved by the Stock Exchange Council. A Stock Exchange source suggests that the delays maybe due to the broking community not being fully conversant with how to execute a timely IPO.

Oversubscription | Information obtained suggests that the issue was about two times oversubscribed with institutional investors probably being the main subscribers resulting in the high level of oversubscription.

While the management has made major missteps in dealing with this issue, IC Insider still rates the stock as Buy Rated based on the issue price and potential earnings. We believe there should be a steep appreciation in the stock’s value when it is compared with others within the financial sector.

Related Posts | First Citizens’ $1B IPO opens today | T&T Citizens Bank IPO oversubscribed | Buy Rated stock list grows

FX: Buoyant market as US rate stable

Tuesday, 27th August 2013 |The total foreign exchange purchased by authorised dealers amounted the equivalent of US32,639,090 with the equivalent of US35,446,396 sold. The average selling rate for the main currency traded, the US dollar, remained unchanged at the end of the day while the average buying rate just barely move by a cent.

The buying rate for the US dollar ended at $101.4299 up 1c as US$28,592,452 was bought by authorised dealers and the selling rate remained unchanged at $102.092 as US$32,461,468 was sold.

Buying of the Canadian dollar took place at $95.5065 up 66c, with C$890,410 being purchased and the selling rate was up by 27c to $97.5648 as C$639,956 was sold.

FX_TRADE+Currency+Aug27The buying rate for the British Pound was down by $1.39 to $156.3239 as £1,311,301, selling amounted to £670,839 as the rate went down 58c to $158.189.

The highest buying rate for the US dollar fell by 5 cents 102.60, lowest buying rate remain unchanged at $84.04. The highest selling rate remained unchanged at $107.70 while the lowest selling rate settled at 84.04 down by 12 cents.

The highest buying rate for the Canadian dollar increased by $1.81 to $99.50, the lowest buying rate increased by 42 cents to $78.44. The highest selling rate ended at $101.12, a decline of 5 cents and the lowest fell by 25 cents to $94.25.

FX_TRADE+HighLow+Aug27The highest buying rate for the British pound declined by 25 cents to $159.50, while the lowest buying rate ended unchanged at $128.73. The highest selling rate ended at $166.49 down 6 cents and the lowest moved up $1.20 to $154.15.

JSE: Carreras tumbles

Tuesday, 27th August 2013 | Carreras lost ground as the closed at $47, a 52 weeks low, with just 7,868 shares trading between $47 and $48.52, losing $2 in the process as demand for the stock evaporates following the smoking ban in public spaces and the sharp drop in profits in the June quarter. The stock seems destined to decline further as there are 343,835 units on the offer at $49 but only 6 bids for about 12,000 shares at the close with 10,000 of them at $42.01.

The market lost some ground in trading with the advance decline ratio being evenly matched with 9 stocks advancing in price to 10 that fell, the closeness is reflected in the small movement of the all Jamaican Composite Index that closed at 84,635.17, a fall of just 56.52 as the stocks of 31 companies traded, one of the highest numbers for some time. Thanks to a $1 fall in the heavily weighted First Caribbean International Bank, the Main Market Index dropped to 84,650.06, down 286.62. Trading resulted in 2.42 million units at value of $20,314,792.

Caribbean Cement lost ground after a relentless run, which took it from under a $1 prior to the release of the six months results, in trading 20,100 units to close at $2.75 a decline of 25 cents. On Friday last, the stock traded as high as $3.30. Grace Kennedy closed at $56.70 with 11,825 units changing hands as the stock lost 30 cents. Jamaica Money Market Brokers traded 69,034 to close at $8, down 3 cents; Jamaica Producers Group was the big trader on the day with 552,027 units valued at$10,045,787 at a closing price of $18.20 which is up 70 cents on the last traded price on Monday; National Commercial Bank had one of the better trading days for some time with 133,650 units at a closing price of $18.62, a 2 cents increase as trading accounted for $2,488,524.

Sagicor Life Jamaica contributed 35,895 units to trading at a closing price of $8.15, up 5 cents; Scotia Group chipped in with 27,963 units at a closing price of $21.05 up a cent and Supreme Ventures had 30,000 units trading at $2.65 up 10 cents. Salada lost 50 cents to close at $8.50 with 1.170 units.

JSEIndicesAug27Junior market | Ten junior market stocks traded, resulting in prices rising for 5 and falling for 2, helping to move the index up by 4.48 to 789.67. Stocks trading in worthwhile volume are Access Financial Services, 97,481 closed at $8.50 up 25 cents; Blue Power Grou, 166,271 closing at $10 for an increase of 50 cents; Caribbean Producers, 49,000, at a closing price of $2.03, down 7 cents; Dolphin Cove, 24,978 at $8.50 up 30 cents; Lasco Distributors contributed 63,652 units and closed at $1.46 off 9 cents on the day; Lasco Financial Services 956,518 units at $1.41 down 9 cents; Lasco Manufacturing 43,154 traded firm at $1.60 up 2 cents.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer indicator shows that bids for 5 stocks were higher with 4 stocks having offers lower than their last selling price. This ratio continues to reflect a weakened position for the market at least for the time being.

TTSE: TCL still roaring

Tuesday, 27th August 2013 | Trinidad Cement once more recorded another 52 weeks high as investors keep bidding the stock up with 87,000 shares changing hands for a value of $193,906 in today’s trading as it gained 25 cents to end at $2.31. The stock closed with the bid for 40,000 units at $2.36 and no stock on offer, a clear indication of further price gains.

Market activity resulted in 15 securities trading of which 8 advanced, 3 declined and 4 traded firm as 127,948 shares traded with a value of $930,672.

Sagicor Financial Corporation had a volume of 17,090 shares traded for $117,676 the price closed up 10 cents at $6.90. Neal & Massy Holdings contributed 4,663 shares with a value of $261,413 and closed at $56, while National Commercial Bank added 4,000 shares valued at $4,564 and closed firm at $1.15. Clico Investment Fund suffered a 3 cents fall to close at $21.27 as 7,207 shares valued at $153,291.

TTSEAug27Angostura Holding traded a mere 346 units at $9.13 a gain of 6 cents, the bid closed at $9.14 for 10,150 units. ANSA merchant bank traded 1,056 units at $38.60 for a 2 cents gain; Jamaica Money Market traded just 2,705 shares at 55 cents down 2 cents; One Caribbean Media chipped in with 1,225 units closed at $18.00 for a 1 cent loss; Scotia Bank gained a cent at the close of $70 with a mere 600 units trading; West Indian Tobacco traded 400 units firm at $117.05 while Unilever was up 6 cents at $55.31, a new 52 weeks high as the stock traded 700 units.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer indicator shows that bids for 3 stocks were higher with 4 stocks having offers lower than their last selling price

General Accident undervalued, but . . .

General Accident Insurance Company continued to perform well in the second quarter as they did in the first of this year with profit increasing 48 percent to $80 million in the second quarter bringing the six month results to $177.7 million, an increase of 57 percent over the same period in 2012. The company said they made more money in both our underwriting and investment operations and as a result were able to improve their overall profitability and capital efficiency.

Underwriting | For the two quarters, gross premiums grew to $3.2 billion, an increase of 21 percent over the first six months last year. Net earned premiums grew by 8 percent to $443 million. “Premium growth was driven by the healthy organic growth of our core commercial property and motor businesses as well as the execution of facultative transactions on behalf of large domestic and multinational clients,” the company said.

“Our combined ratio improved from 92 percent in the first six months of last year to 90 percent in the first six months of 2013. The improvement in our combined ratio, the insurance industry benchmark for underwriting profitability, occurred despite continued softness in insurance rates and a deteriorating loss ratio. As a result, our underwriting profit in the first half of 2013 stood at $42 million compared to $34 million during the same period last year”, management continued to state.

GeneralAccident_logo150x150Claim expenses rose from $247 million for the year to June last year by 25.5 percent to $310 million in 2013. Management expenses rose from $145 million for the year to June 2012 by 14 percent to $165 million in 2013 and in the latest quarter from $75 million to $88 million, an increase of 17 percent.

Investment Performance | For the six months to June investment income amounted to $145 million, an increase of 68 percent compared to $86 million in the first half of 2012. Investment income in the June quarter was only $52 million much less than the amount generated in the first quarter. A slower fall in the value of the Jamaican dollar would have resulted in a lower gains from foreign currency trading or translation.

Summary | A sharp change in commission expense from a loss of $78 million in the June quarter of 2012 to a small surplus of $6.5 million helped in no small manner to boost the bottom-line in the quarter even as net premiums earned declined from $205 million to $187 million and claims jumped from $118 million to $157 million over the same period.

The company paid out $50 million in cash dividends to shareholders in the first quarter.

Assets jump | The company that had assets totaling $3.9 billion at the end of December last year, has seen a major jump to June to $7 billion mainly as amounts due from reinsurers and co-insurers doubled to $2 billion. The amounts due from policy holders climbed $1.3 billion to $41.8 billion and cash and short term investments increased by $500 million.

On the other hand, amount due to reinsurers and co‐insurers moved up by $1.75 billion, insurance reserves up by $1.3 billion and shareholder’s equity by a little over a $100 million to $1.4 billion since December last year.

Return on average equity is 25 percent which is attractive if the company can maintain the current profit levels. If they can, then earnings per share should reach 35 cents for the year, which makes the stock now priced at $1.85 cents a bargain.

The stock traded at $2.81 in 2011 when profits were not as strong as it is now. Additionally, a number of junior market companies are trading around 6-7.5 times 2013 earnings with General Accident at 5.3 times, suggesting there is room for capital gains in the medium term. Of course Jamaica is in the midst of the hurricane season and some investors may not want to be bold ahead of the end of the season, just in case there is major damage and claims. This stock ought to be watched for benefit from what could be a nice price gain before year end.

Insider call | General Accident is an IC Insider Buy Rated stock.

Related posts | Buy Rated stock list grows | General Accident’s profit up 65 percent

FX: Big day with moderate rate change

Monday, 26th August 2013 | Trading in the forex market was at a high level on Monday as othe equivalent of US$43.2 million was purchased by dealers and US$46.75 was sold,. This is in contrast last week Monday when the equivalent of US$39.9 million was purchased by dealers and US$47.65 was sold. The Monday level of trading has been pretty consistent since the end of July with buying  in the $40 million to $50 million range.

Rates for buying and selling the US dollar climbed moderately with the buying rate moving up by 10 cents to reach $101.43 as dealers bought US$37.97 million and sold US$44.58 million at $102.09, an increase of 8 cents over Friday’s closing rate. It cost dealers 5 cents less to buy the US dollar at the highest rate of $102.65, but 12 cents more for the lowest rate, which ended at $84.04 and 16 cells more in selling at the highest level of $107.70. There was no price change in the lowest selling rate of $83.92.

FX_TRADE+Currency+Aug26The Canadian dollar shed 70 cents for the buying rate which closed at $97.69 as the market accounted for C$1.1 million and sold C$814,343 at $97.29 which is 4 cents up on Friday’s rate. The highest and lowest rates for the Canadian dollar all declined quite sharply. The highest buying rate fell $3.51 to S97.69, the lowest buying rate fell by $1.04 to $78.02 while the highest selling rate declined by 80 cents to $101.17 and the lowest was down by $1 to $94.

FX_TRADE+HighLow+Aug26The Pound gained $1.31 to close at $157.71 as £2.54 million was purchased and just £674,840 was sold at an average rate of $158.77 or 94 cents less than the opening rate. The Pound was purchased as high as $159.75, a drop of 5 cents and the lowest rate at $1.04 lower at $128.73 than the opening rate. Selling took place as high as $166.55 or 80 cents lower than the opening, while the lowest rate increased by $1.35 to $152.95.