All three main indices of the Trinidad & Tobago Stock Exchange, closed higher on Tuesday, with the Composite Index fell 0.52 points to 1,218.30, the All T&T Index rose 0.89 points to 1,690.25, while the Cross Listed Index shed 0.27 points to close at 100.33.
At close, 16 securities changed hands, with the price of 3 rising, 3 declining and 10 remaining unchanged, against 11 trading on Friday.
The market ended trading of just 562,645 shares valued $7,567,683, compared to 116,235 shares valued $1,984,887 changing hands on Friday.
IC bid-offer Indicator| At the end of trading, the Investor’s Choice bid-offer indicator reading closed with 2 stocks ending with higher bids than the last selling prices and 3 with lower offers.
Stocks closing with gains|Sagicor Financial advanced 5 cents and ended at $7.75, with 10,750 stock units changing hands, Trinidad Cement gained 6 cents and settled at $2.86, after exchanging 13,255 shares and West Indian Tobacco closed 10 cents higher at $88.55, with 1,946 units trading.
Stocks closing with losses| JMMB Group fell 5 cents and finished at $1.60, after exchanging 205,278 shares, One Caribbean Media fell 1 cent and closed at $12.10, after exchanging 1,980 shares and Trinidad & Tobago NGL lost 10 cents in completing trading of 1,500 shares to close at $29.15.
Stocks trading with no price change|Angostura Holdings concluded trading at $15.75, with 1,000 stock units changing hands, Ansa Mcal closed at $56 trading 25,385 units, Ansa Merchant completed trading at $38, after exchanging 3,774 shares, Clico Investments ended at $19.90, with 1,505 stock units changing hands, First Caribbean International Bank concluded trading 11,600 units at $8.50, First Citizens concluded trading at $32.60, after exchanging 1,365 shares, Grace Kennedy closed at $2.70, with 200,000 stock units changing hands, Massy Holdings closed at $47.20, after trading 30,521 shares, Prestige Holdings closed at $8 after trading 5,000 units and Scotiabank ended at $64.94, trading 47,786 units.
Prices of securities trading for the day are those at which the last trade took place.
Modest price changes on TTSE – Tuesday
Split & rights issues for Sterling
Sterling Investments is considering a 5 for 1 stock split and a rights issue of ordinary shares to existing shareholders.
The company will hold an Extraordinary General Meeting at the Knutsford Court Hotel, on October 8, to consider the an increase in the authorized share capital by the addition of 1,850,000,000 ordinary shares and to approve the issue up to 2,000,000,000 ordinary shares currently un-issued, by way of a Rights Issue, on terms to be decided by the directors, including the number and price of the shares.
November 14 is the expected date for the commencement of the rights issue, Yanique Leiba-Ebanks advised IC Insider.com.
“Proceeds of the rights will be used to fund private equity and investment in some local stocks. We have been participating in IPO share issues that have done well for the fund,” Leiba-Ebanks said. So it will be more of that, going forward along with the focus on leveraged fixed income investments.
The issues were necessary as the company has just under 300 shareholders with limited interest in trading the stock by the general public. The company was encouraged recently to split the stock and issue more shares to broaden the shareholdings to provide a platform for more liquidity for the stock that trades infrequently.
Sterling’s fortunes will be boosted with net profit that grew by 20.5 percent in the 2018 half year, to $52 million and $27 million in the June quarter, from $25 million, in the similar period in 2017. Sterling has 59.15 million shares issued and enjoyed earnings of 87 cents for each share for the half year.
Others to expect splits from are, Barita Investments and they could well have a rights issue to fund acquisitions and other expansion and new products such a margin facilities. CAC2000 with the stock price rising into the mid-teens, Stationery & Office Supplies with the stock price expected to be priced in the teens sooner or later is expected to split by 2019. At the annual general meeting held earlier this year, shareholders were informed that the board had be looking at it but no decision was make. Access Financial directors and NCB Financial indicates that they don’t see any benefit to their company in doing a split but it only a matter of time that they will be forced to, the same applies to Palace Amusement. Some investors are of the view that with Derrimon Trading splitting when the stock got in the teens that Caribbean Flavours is likely to follow. Investors should not ignore the possibility of Berger Paints and ISP Finance joining the queue in the near future.
Everything Fresh down but not out
Everything Fresh is one of a hand full of initial public stock offers to be selling below the IPO price months after the issue. The stock that was over priced has only been partially helped by a big jump in 2018 half year profit.
The fall in the price was due to over pricing the initial offer and failure to provide more up to date information on the 2018 performance to the time of the IPO and to address developments with the margins. Even with improved results, the stock remains one of the higher priced units on the Junior Market, at a PE of 14 times this year’s pretax earnings and is in line with the market’s average.
Boosted by a big jump in profit margins, earnings after tax jumped 180 percent in the June quarter, to $26.5 million from $9.5 million in 2017. For the six months to June, profit climbed 99 percent to $38.6 million from $19.4 million in 2017. For the next five years, profit will be free of corporate taxes and in the second five years will pay taxes at half the regular rate.
Sales revenue rose 9.7 percent for the quarter, to $494 million from $451 million and increased 6 percent for the half year, to $969 million from $915 million in 2017.
Improvement in profit margin in the first half of the year that grew from 8 percent to 11 percent, increased further to 13 percent in the June quarter and was the major contributor for the sharp increase in profit. The Chairman, Gregory Pullen informed IC Insider.com, that the company took a deliberate decision in 2017 to go after certain clients with an introduction of low margins, with the expectation that they would be able to enjoy higher margins in 2018 onwards.
The effect of the changes, operating profit rose 84 percent in the quarter, to $66 million from $36 million and increased 49 percent for the year to date, to $108 million from $72 million in 2017.
Sharp increase in administrative expenses by 38 percent to $28 million in the quarter and by 30 percent in the six months period to $54 million, kept the growth in the top line from filtering fully into profit. Marketing expenses associated the public of share issue added to cost in the period. Finance cost rose in the quarter, to $5 million from $4.3 million in 2017 and from $8.7 million to $9.3 million for the six months.
Earnings per share before tax came out at 5 cents for the quarter and 8 cents for the six months and should end the year at 15 cents for PE of 14 times 2018 earnings and 10 times 2019 projected earnings of 20 cents per share. The stock traded at $2.10 on the Junior Market of the Jamaica Stock Exchange on Friday.
Gross cash flow brought in $48 million but changes in working capital and inflows from the issue of shares, resulted in $213 million of cash funds as of June. A large portion of the share issue proceeds was received after the end of the quarter, the chairman’s report to shareholders stated.
At the end of June, shareholders’ equity climbed to $651 million from $225 million in 2017. Borrowings stood at just $107 million. Net current assets ended the period at $614 million inclusive of trade and other receivables of $503 million and cash and bank balances of $213 million. Current liabilities ended the period at $207 million.
The company is looking at three meat processing facility locally with a view to acquiring one and expects that discussions will conclude by the end of this year or early in 2019. The plan is to enable the manufacturing of products by them to sell directly to its clients at more competitive prices.
Sales jump sharply at Main Event
Growth in revenues while not an exact proxy for increased profits, is often a very good indicator of greater gains ahead. That may be exactly what is happening at the Junior market listed Main Event.
The results for the nine months to July show strong sales growth but flat profits. Revenues for the July quarter surged nearly 26 percent to $364 million, but profit fell 7 percent to $24.5 million from $26.3 million in 2017. For the nine months to July, profit was up just 4 percent to $105.5 million that flowed from a 13 percent rise in revenues to $1.07 billion, compared to net income of $101 million in 2017.
The company incurred increased cost as it seeks to expand its service offerings. The results to date suggest that the full year earnings will not vary much from the 2017 full year results of 37 cents. But 2019 could be a blow out year for them, if revenue growth seen so far for this year, continues into 2019.
Profit margin in the first half of the year, was held to the same level as in 2017, at 48 percent and declined in the July quarter to 45 percent from 49 percent in the 2017, the impact, operating profit rose just 15 percent in the quarter to $164 million from $143 million but fell to 14 percent for the year to date, to $512 million from $447 million in 2017.
Administrative expenses rose 20 percent to $111 million in the quarter and increased 15 percent in the nine months period to $311 million. Marketing and sales expenses increased by 44 percent to $15 million for the nine months. Depreciation rose 49 percent to $24 million in the quarter and increased 29 percent in the nine months to $69 million, an indication of increased capital spend to accommodate expansion and increased income. Finance cost was flat in the quarter, at $5.2 million and rose just 5 percent to $13.6 million for the nine months.
Earnings per share came out at 9 cents for the quarter and 37 cents for the nine months and should end the fiscal year around 40 cents. For 2019 earnings should be in the order of a string increase to 75 cents.
“Performance has been negatively impacted by write downs on trade receivables to align to reporting standard, IFRS 9, continued start up expenditure for new service offerings and cost with higher head counts and incentive compensation,” the Chairman Ian Blair and Chief Executive Officer reported to shareholders in their commentary accompanying the quarterly.
Gross cash flow brought in $175 million but growth in receivables, inventories, addition to fixed assets of $160 million, offset by net loan inflows and increased payables resulted in net cash flow ended at a negative $63 million and leaving $29 million in cash at the end of July. Shareholders’ equity stood at $551 million with borrowings at just $185 million, including amounts due to related parties. Net current assets ended the period at $141 million, inclusive of trade and other receivables of $304 million, cash and bank balances of $29 million. Current liabilities amounted to $209 million inclusive of short term borrowings.
The stock traded at $5.50 on the Junior Market of the Jamaica Stock Exchange with a relatively low PE ratio of 7.3 times 2018 earnings and is elevated to BUY RATED status.
Wisynco adds $2.5B in sugar & rum sales
Wisynco Group, is set to lose revenues and profit with the ban on single use plastic straws and Styrofoam but the contract to distribute sugar and rum manufactured by Worthy Park should add $2.5 billion to revenues.
The sugar and rum revenues will more than make up for the cut in revenues of approximately $1 billion per year and profits by an insignificant $70 million information released by the company to Jamaica Stock Exchange suggests.
Investors in the company’s stock could not get enough after it listed in December last year, driving it to a high of $13.81 for a then rich PE of more than 20. With the PE below 10 times the current year’s earnings and set to go to 20 by 2019, investors are dumping the stock at a PE of 8. But now they should be holding and buying more, as the stock has few that are likely to deliver better returns in the next twelve months.
According to the company, plastic straws represent less than 0.1 percent of the Company’s revenue and Styrofoam represents 4 percent of the company’s revenue and approximately 3 percent of the company’s net income. Investors seem to be concerned about the impact of the ban on the company’s operations and profit. With earnings of 62 cents for the 2018 fiscal year and 15 cents in the June quarter, investors may not be seeing a boost in profit to come to warrant holding the stock.
IC Insider.com spoke with the company’s CEO William Mahfood, advises of a number of positive developments that bode well for the future fortunes of the group. The company on Friday released information on a new distribution agreement with Worthy Park Estate (WPEL) for the distribution of WPEL’s spirits and sugar. Wisynco advised that the distribution of WPEL’s spirits will commence on November 1 and will include the ‘Rum-Bar’ and Worthy Park Estate brands of spirits. The distribution of WPEL’s sugar will commence on January 1, 2019, the start of the new sugar crop.
The new products could add around $750 million to gross profit. According to Mahfood the company has just added three new production lines to alleviate production capacity constraint and is expected to help increase sales around 20 percent. The expanded capacity will facilitate expanded production of Wata, carbonated products and juices. “New process has cut the production cost of plastics by more than 50 percent and this will result in significant cost savings,” Mahfood said. Importantly, Mahfood expects revenues from existing product lines to be up 20 percent for the fiscal year. Add to that, revenues from the new contract resulting in revenues probably increasing 30 percent in the period ahead.
IC Insider.com projects profit of approximately $4 billion or earnings per share of $1.10 and that should push the stock to $20 in 2019. IC Insider.com is placing the BUY RATED stamp on the stock.