The main market pulled back on but blasted to a new intraday high on Friday confirming that the bull run is in its early stages, while the Junior Market continues to bounce around.
The main market has gained nearly 3,600 points for July, thus mirroring the start of the usual summer rally on the Jamaica Stock Exchange.
The main market is being steered higher by an upward sloping support line as well the 45 and 125 day moving averages, lending support just below the index and the Junior Market is being steered by an upward rising long term support line and the start of a golden cross.
The market saw many developments that confirm that a bull market is in place with all three initial public offers closing ahead of the scheduled close.
The past week saw a few strong results being posted and more are expected this week that should include NCB Financial and Proven Investments. Barita Investments got the offer to buy 75% of the shares at $9.20 each. IC Insider.com is of the view that the stock is worth much more with good prospects to build on the strong foundation that it has. Jamaican Stock Exchange released strong gains in profit and announced a dividend as well, and could benefit from both, with eyes focused on even greater improvement in 2019. Caribbean Cement stock is another to watch, with the annual general meeting on this week and results for the June quarter due. Margaritaville had a bid of 16.9 cents versus a last sale of 15 cents and is being offered at 18 cents to sell 43,795 units, Proven Investments had a bid of 16 cents versus a last sale of 15 cents and is being offered at 18.5 cents to sell 1,050 units.
Medical Disposables came in for strong demand in the past week with the price going as high as $5.50. Trading during the week removed supplies that was overhanging the market leaving little supply at the end of the week and could go higher in the coming week. Caribbean Cream after posting a 59 percent increase in profit for the 2019 first quarter saw no more continuation of the demand that lifted the price into the $6 region but could well make some increased interest this week.
2 new IC TOP 10 listings
This weeks’ review comes against the back drop of the main market hitting a record high on Friday in the morning session and the Junior market continuing to eke out modest gains.
Unlike last week when there are several changes to the TOP stocks, there are only two new additions this week. Victoria Mutual Investments and Jamaican Teas are out of the TOP 10 with Berger Paints that fell in price to $18.76 and Caribbean Cream are back in the TOP 10 lists.
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.
The past week saw a few results being posted and more are expected this week, including NCB Financial and Proven Investments that entered the TOP 10 last week, both are expected to report positive gains with NCB continuing from increases seen up to the second quarter and Proven that President, Christopher Williams informed IC Insider.com is performing well in all divisions, see Collapse of the JSE US market.
The PE ratio for Junior Market Top stocks averages 7.4 compared to an average PE for the overall market of 11.8, based on 2018 estimated earnings and the main market PE stands at 7.5 for the top stocks, compared to a market average of 12.5, this is a good indication of the level of undervaluation of these stocks.
IC Insider.com last week stated that there are warning signs of a tsunami that is on the way for the market. During last week one more sign came to the fore with a sharp drop in Treasury bill rates again, this coupled with scarcity of supply for many stocks. Investors seem to be going about their business as if prices will remain around current levels for a prolonged period. Late comers to buying stocks who try to join the party will find get stocks but at a much higher prices as the year rolls on and that is confirmed by technical indicators in both the Main and Junior markets.
The TOP 10 stocks now trade at an average discount of 37 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 40 percent to the market.
Financiers bullish on Carib tourism
Entities eyeing the Caribbean region and in need of financing should be encouraged by findings by top accounting firm KPMG included in their annual survey on financing for the sector amongst banks and non-banks.
“Confidence levels of banks increased yet again for an amazing ninth year in a row,” the survey stated and went on to indicate that “confidence levels of non-banks also increased.” “Overall non-banks remain more confident than banks registering 7.43 out of 10 in terms of their level of confidence versus 7.11 out of 10 for banks. For both banks and non-banks to exhibit these high levels of confidence would be very positive at any time but for them to do so following what can only be described as a catastrophic 2017 hurricane season for the region, represents very welcome, positive news,” the KPMG report stated.
“Canadian headquartered banks have for many years been the primary financiers of developments in the region’s tourism industry. However, it is now firmly established that the landscape has changed, although the Canadian banks remain very much part of that new landscape. The consensus view appears to be that they are “back in the market but more selective than before”. Other “players” are predominantly local banks who are increasingly participating in syndicated deals, U.S. funds, pension funds and insurance companies and development banks who are also active in the marketplace,” the survey finding went ion to say.
TTSE volume traded down value up – Friday
Trading on the Trinidad & Tobago Stock Exchange on Friday ended with 17 securities changing hands against 12 on Thursday, leading to 75,042 units valued $1,676,375 being exchanged compared to 151,203 units valued just $700,274 on Thursday.
Trading closed with 5 securities rising, 5 declining and 7 remaining unchanged. The Composite Index rose 0.15 points to 1,226.46, the All T&T Index lost 0.51 points to 1,719.82 and the Cross Listed Index rose 0.11 points to close at 98.46.
IC bid-offer Indicator| At the end of trading, the Investor’s Choice bid-offer indicator reading shows market sentiment with 3 stocks ending with higher bids than the last selling prices and 3 with lower offers.
Gains| First Caribbean International Bank rose 9 cents and ended at $8.10, with 434 units changing hands, First Citizens added 1 cent and completed trading at $34.92, after exchanging 4,573 shares, Guardian Holdings gained 9 cents and ended at $16.60, with 18,191 units, One Caribbean Media rose 10 cents and settled at $12.10, after exchanging 2,372 shares and Republic Financial Holdings closed with a gain of 2 cents at 52 weeks’ high of $102.79, after exchanging 6,441 shares.
Losses| Grace Kennedy lost 10 cents and concluded trading at a 52 weeks’ low of $2.80, with 15,119 stock units changing hands, Point Lisas ended trading 10 cents lower at a 52 weeks’ low of $3.70, with 466 stock units changing hands, Scotiabank concluded trading with a loss of 5 cents at $65.05, with 1,000 units, Trinidad & Tobago NGL declined 10 cents and ended at $29.56, after exchanging 2,370 shares and Trinidad Cement fell 5 cents and closed at $2.90, after 6,300 shares traded.
Firm Trades| Ansa McAl ended at $58, in exchanging 413 units, Clico Investments concluded market activity at $20.43, with 11,406 stock units changing hands, Massy Holdings settled at $46.95, after exchanging 311 shares, National Enterprises closed at $9.55, with 2,000 stock units changing hands, National Flour traded 1,844 units at $1.75, Sagicor Financial concluded trading at $7.80, with 1,602 stock units changing hands and West Indian Tobacco ended at $87 trading 200 units.
Prices of securities trading for the day are those at which the last trade took place.
All Jamaica nears record 341,000 points
NCB Financial climbed to $99.80 and Jamaica Broilers at a record $30 after just after 11 on Friday morning and pushed the main market to a new record high, surpassing the record reached last week Friday.
At minutes after 11, the All Jamaican Composite Index jumped 2,522.73 points to a record 340,798.92 surpassing the record of 340,315.50 reached last Friday with the JSE Index rising 2,298.49 points to 310,506.28 versus a record 310,065.85 last week. . The Junior Market added 23.66 points to trade at 3,064.01. the main market rose further to 340,893.72 points on the All Jamaican Composite Index and the JSE Index climbed to 310,624.04 at 11:15 am.
Carreras traded 612.643 shares at $9.20 and NCB Financial traded 274,733 units and now trades at $95. In the Junior Market C2W Music traded at a 52 weeks’ high of $1.70.
Profit up 19% at Lasco Distributors
Revenues at Lasco Distributors rose just 3.5 percent for the June quarter, to $4.28 billion from $4.13 billion in 2017 but profit before taxation climbed a much stronger 17 percent in the quarter to $254 million from $217 million in 2017.
The improved profit out turn was helped by modest improvement in gross profit of $50 million and improvement in other income from $18.4 million to $42.7 million. The improvement comes off a strong period in the last fiscal year with profit rising 65 percent to $1 billion from $610 million in 2017. the 2017 profit slipped below the $717 million for 2016.
Administrative and other expenses rose faster than revenues at 5 percent, to $630 million and depreciation increased 31 percent to $30 million.
Taxation was flat at $20 million, leaving net profit for the quarter rising 19 percent to $234 million. Earnings per share rose to 7 cents, from 6 cents in 2017.
Gross cash flow brought in $263 million but growth in receivables, offset by reduced inventories and reduction in amount owed to creditors, resulted in negative cash flows of $222 million and left cash and equivalent with at reduced $1.33 billion.
At the end of December, shareholders’ equity stands at $4.8 billion with borrowings at just $233 million. Net current assets ended the period $3.3 billion almost equal to Payables of $3.4 billion.
The stock traded at $4 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 11 times 2019 estimated earnings. In April the company paid out $408 million in dividends.