J$ slippage pumps up Mo-Bay Ice

Montego Bay Ice Company shed two major loss making operations last year and the move is paying off with a small operating profit in the first quarter to March. However, it was the slippage in the exchange rate for the Jamaican dollar that had a profound effect on profits. The Montego Bay based company, while reporting reduced income of $4.188 million compared to $7.7 million in 2012, recorded $3.8 million in profits before tax after picking up a nice $3.77 million in foreign exchange gains.

After taxation of $310,000, the company is reporting after tax profits of $3.49 million, well up on a loss of $372,000 in 2012. After accounting for profit that is due to minority interest in a subsidiary, the shareholders of Montego Bay Ice ended up with $2.4 million. The group principal activity is now the rental of properties and cold storage facilities as they discontinued the retailing of ice and the sale of bottled spring water in July and November 2012 respectively.

The group still has work to do to radically transform its profitability. Ignoring the gains from foreign exchange holdings, revenues were just able to cover expenses leaving less than $60,000 as surplus from what can be regarded to be normal ongoing profits.

The company has improved its cash position, now having $64.8 million in liquid funds amounting to around ten dollars per share. Hopefully, management will manage these funds well to help improve profits and not necessarily hold the bulk of it in US dollars hoping for a further Jamaica dollar slippage. Liabilities are not much, at less than $4 million and receivables are even less at $1 million.

Stock outlook | Montego Bay Ice needs to find the right business to move into to return to regular and predictable profitability so that investors can reap the benefit from their investment in the company.

The company’s shares have not traded since November 2011 and it traded $18.00 which is around book value. The real value may be twice this amount if the properties it owns were factored in at market value.

TT Cement huge turnaround but…

Trinidad Cement is reporting a huge turn around in its fortunes in a release to the stock exchange. Revenues jumped to T$482 million up from $365 million in the first quarter of last year. Profit before tax climbed to $16.657 million from a big $85 million loss in 2012. Profit after tax amounted to $14 million versus a loss of $74.9 million before minority interest. The group has been saddled with problems which led to financial restructuring that took quite a while. Last year the Trinidad operation was closed as workers went on strike. Cement was imported from Jamaica to help fill the gap. Jamaica with its loss remains a big drag on the parent company’s operation. Last year total losses amounted to $390 million. (All currency is the TT$)

The company stated in its quarterly report that revenue for the quarter, increased by $117 million compared with the prior year as a result of higher cement sales volumes (in Trinidad and Tobago by 52 percent, in Jamaica by 7 percent and in export markets by 29 percent) and higher selling prices in most markets. Concrete volumes have also exceeded the prior year period by 10 percent. As a result of the significant expenditure made in the latter part of last year, plant performance has been more reliable and efficient with clinker production exceeding prior year by 32 percent (partially due to the TCL strike in 2012) and cement production by 21 percent.

TCL equity remains strong with nearly TT$700 million, working capital is tight with it being a little more than one to one.

Management concluded their statement as follows: The Trinidad and Tobago market has recorded very strong demand and it is anticipated this will continue. While there was declining demand in Jamaica and Barbados, it is hoped that with a post IMF agreement in the former, and general elections in the latter, growth will return to these markets. In addition, growth being experienced in Guyana and Suriname and the initiatives by the Group in the pursuit of additional export markets, plant efficiency and cost containment are likely to contribute to the continuation of the good results for the coming months.

Stock outlook | The group is still loaded with debt with finance charges of $65 million in the quarter, an increase over the $51 million paid in 2012. With such cost and principal repayment there is little room to slip as debt servicing is a large part of income. The debt to equity ratio seems well out of line and the call ought to be for them to go to the stock market for fresh long term capital.

Caribbean Cream over by 1,177 shares

The latest IPO to hit the Jamaican market, Caribbean Cream producers of the Kremi brand of ice cream, was oversubscribed by 1,177 units at the close on May 1, 2013.

The application for listing on the stock exchange is now before them and a decision is expected by Monday after which listing should commence. No listing date as been determined as yet, the broker informed IC Insdier.com, but the view is that trading could commence in the stock towards the end of next week.

A total of 387 applications covering units valued J$75,714,000 were received and processed for this Initial Public Offering (IPO). Of this number, 386 applicants covering 72,713,623 units received 100% of the total allotment requested.

The offer was for the subscription of 75,713,623 ordinary shares at the price of $1.00 per share. Applications in the public pool of up to 2,500,000 shares, received 100% allotment and one applicant over 2,500,000 shares was allocated 2.5 million shares plus approximately 0 .998446% of the excess.

Stock outlook | Investor’s Choice analysts project earnings per share of 17 cents for the year ended February 2013 and 39 cents for the 2014 year. The stock is likely to struggle at the issue price for a while with the less than robust reception to the issue. The annual results should be out soon, which should help the stock price once more financial data is released to the public.

ForEx: Wednesday, 8th May 2013

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Rates up in trades

The average buying and selling rates inched up on Wednesday for the US and Canadian dollar. It took less for the public to buy  the Pound, while authorized dealers also paid less for the British currency than yesterday on average on a day when there were more purchases of foreign exchange by authorized dealers than by the general public for all the major currencies. Purchases in the foreign exchange market amounted to $40.278 million and $37 million were sold, with the average selling rate for the US dollar inching up to $99.0324 from $99.0056 on Tuesday. Purchases took place at an average of $98.5543 compared to yesterdays $98.5034.

ForExSummaryMay8The Canadian dollar changed hands at $97.2189 and was sold at $98.585 compared with yesterday’s $96.446 buying and $97.9598 selling. The Pound sold today for $153.6649 compared to Tuesdays $153.7841 and was bought at $150.8328 with yesterday’s trade working out at $151.1563. On both days the level of buying of pounds and Canadian dollars were well in excess of sales.

This is the first day since the start of last week that the rate of the US has actually moved against the Jamaican dollar.

The highest rates today were $104 selling for the US dollar, the same as Tuesday, and buying $99.95 versus $99.20 on Tuesday. On the low, the US dollars were bought for $81.16, the same as yesterday, and sold at a low of $97.20. Yesterday the lowest sale was at $83.26 and the purchase at $81.16.


JSE: Wednesday, 8th May 2013

Low levels of trade

The total volume of shares trading today amounted to 1,445,101 units valued at over $9,519,690. Cable & Wireless was the volume leader with 711,901 units (53.12%) followed by Mayberry Investments with 119,220 units (8.90%) closing at a price of $2.05 and Barita Investments with 100,000 units (7.46%) as the stock closed at $3 having fallen 20 cents.

There were 12 advancing stocks compared to 7 which declined but the market indices shows otherwise as all indices that were affected by trading declined except for the junior market index which rose marginally. Unlike yesterday when no stocks in the junior market traded, the 5 that traded included General Accident with 91,580 units being the highest volume and Lasco Financial traded a higher amount in dollars that General Accident with the former trading $187,583 versus $153,791 for the latter.

The JSE Market Index declined by 440.13 points (0.52%) to close at 83,824.52. The JSE Select Index declined by 28.23 points (1.23%) to close at 2,263.66.  The JSE All Jamaican Composite declined by 774.85 points (0.93%) to close at 82,508.01. The JSE Junior Market Index advanced by 2.01 points (0.32%) to close at 622.76. The JSE Combined Index declined by 418.47 points (0.49%) to close at 85,288.11.

JSEINdicesMay8Grace lost 50 cents to close at $55 although the bid was at $56 at the close, having traded 24,645 shares. Pan Jam with 300 shares trading gained $2.70 to close at $53. Scotia group shed 77 cents to close at $21.21 with 21,564 units having traded. NCB lost 80 cents to close at $18 in trading 94,952 shares

5 stocks in the junior market and 5 in the main market closed with bids above the last sale price, which means higher prices ahead. In the junior market. Caribbean Producers bid is 2 cent higher than the last selling price of $2, Access is 15 Cents higher than the last price of $7, Honey bun is just a cent over the $4 the stock last traded at and Lasco Distributors is 5 cents more than the last sale price of $9.60.

In the main market, Ciboney, D&G, Grace and Jamaica Producers and Kingston Properties are all higher than the last sale price of their stocks.

Other Stocks to Watch |  Lasco manufacturing, General Accident, Carreras, Scotia Investments, Sagicor Life, Scotia Group, and Seprod.

Mayberry profit bleeds from NDX

Mayberry Investments

Containment in expenses and a slight boost in income helped Mayberry to record an operating profit of $158 million over the $104 generated in the first quarter of 2012.

But a one-off hit to the profit of $337.3 million arising from the NDX debt exchange, plunged the operations into a loss of $178 million before a tax credit of $87 million and share of associated profits of $24 million rescued it somewhat. However, not even those credits could save it from an overall loss of $67.7 million compared to a profit last year of $113 million. Revenues net of revaluation gains or losses came in at $473 million in the quarter up from $452 in 2012 which includes the above trading gains.

The company made increased profits from trading gains which rose to $117.9 million up from $36.4 in the similar quarter of 2012. During the quarter Mayberry sold 12,073,214 units of shares in Access Financial Services Limited, for a total of $69 million, which reduced their total shareholdings to 38%. The sale of Access would have contributed a large portion of the trading gains. Net foreign exchange gains helped in boosting the top line with an increase from $9 million to $40 million. So did dividend income which moved up from $15 million to $34 million while fees and commission fell from $70.6 million to $19.4 million this year. Gains on investments fell to a loss of $11 million from nearly $3 million gain the year before.

NDX continuing effects | Mayberry will feel the effects, for a quarter or two of the lower interest rates that the new government bonds carry. The net interest income for the first quarter reflects some of the interest income compression. Although, the big write-off of investment gains is not expected to repeat any time soon, if at all, the boost in income of the gain on sale in investment and the FX gains may not recur to the same degree. This applies to the FX gains as the local currency has been revaluing since mid-April. Mayberry’s fair value reserves at the end of the quarter amounted to negative $326 million up from the $142 million at the end of December last year. The company, in a release accompanying the quarterly report, stated that $230 million of the amount is due to the fall in stocks prices on the local exchange. Some of this would have been reversed as some prices have rebound since the end of the quarter.

Financial Position | The balance sheet shows contraction in assets, which are down from $23.7 billion at March 2012 and $20.77 billion in December to $19.5 billion at the end of the 2013 quarter. A decline in the investment portfolio of $5.5 billion countered by a decline of $5 billion on the liability side for securities sold under repurchase agreements accounted for the bulk of the change since March 2012.

Mayberry stock traded last at $2.05 per share after the release of the results as investors seem to be focusing on the results excluding the impact of the one off NDX charge.

This one needs watching | The performance of the local stock market could change their fortune considerably both from a fee income and capital gains standpoint.

TTSE: Wednesday, May 8th 2013

Total trade up but . . .

Wednesday’s trading on the T&T stock exchange resulted in some 786,889 units trading as Guardian Holdings fell 50 cents as 585,855 units valued at $10.5million changed hands after the company released first quarter results that was less than the previous year’s quarter. This was mainly caused by one-off charges but with the core business doing well with profit up 29 percent without the charges.

One Caribbean Media with very good first quarter results, saw a jump in the stock price of 40 cents on the trading of 10,000 units, to end the day at $17. There were no stocks on offer at the end of trade but there was a bid for 7,587 units at $16.76. Trinidad Cement traded 146,781 units and gained just one cent in the process, to close at 96 cents. Republic Bank traded 11,110 units at $110, up 1 cent on the day.

15 securities of which 7 advanced, 3 declined and 5 traded firm as 786,889 units traded with a value of $12.17 million.

The following stocks closed with bids higher than the last selling price; Ansa Merchant Bank bid $38.51 last sale $38.50, Berger last sale $3.55 closing bid $3.58, Grace Kennedy, bid $3.32 last price $3.23, National enterprises bid $16 last sale $15.58, Point Lisa with a bid of $3.65 versus a last sale of $3.60, Scotia Investments last sale price $1.55 with the closing bid of $1.58, Republic bid is a cent above the last selling price of $110 and West Indian Tobacco bid $110 last sale $107.07.

Clico Investment Fund traded 28,941 units with a value of $610,000.

Economy pressuring Berger

Berger Paints is reporting slightly higher profits for the year to March 2013. As it usually is the case, the final quarter profits are the lowest and in recent years the company makes a loss in the quarter. The loss made in the final quarter of the fiscal year was down on the same period in 2012, while profit before tax was actually up 8 percent at $14.9 million compared to $16.3 million, due purely to a cut in finance cost from $1.574 million to just $27,000 for the quarter. Revenues in the quarter fell 4 percent to $320 million. In 2012 revenues for the same quarter was $332 million. Uncertainty within the economy as Jamaicans awaited the outcome of the negotiation between the government and the IMF could have been a factor in the lower sales.

Revenues for the year climbed to $1.6 billion. However, the increase of 4.38 percent was not enough to offset cost. Profit before tax was down by $2.3 million as a result of the poor top line performance, while a lower tax bill resulted in profit after tax being up, but just about, with the company reporting $34.08 million versus $33.32 in 2012. The improvement was aided by a lower tax payment down from $16 million to $13 million and a boost by $9.8 million coming from a reduction in inventory obsolescence provision.

Stock outlookBerger’s fortunes have declined considerably in the last 3 years. In the March 2011 financial year, revenues were $1.5 billion with profits of $67.8 million and it will take some doing to get sales up and get back to those profit levels. The price earnings ratio (PE) of the stock is high at 14 times earnings, even as return on equity, is paltry at 7 percent. The company would need to put in a very robust performance for the stock price to rally in light of the high valuation.

The financial position of the company is healthy, with working capital being more than twice current assets to current liabilities. The company recently announced a 13 cents dividend that is payable in July 9th this year.


Daily Trading 7th May 2013

JSE | Junior market sets a record with no trades

The junior market achieved a record today when no shares traded. This has never happened, except in the early days when Access Financial Services was the only listed stock on the junior market. Many investors and brokerage house personnel told ICInsider.com that investors were wondering what had happened, some thinking a computer glitch had occurred. In the end, we were told that brokers did not effect any trades since the bids and offers were quite far apart for some stocks and in some cases the volumes on either side, offer or buy, were small.

Five stocks in the junior market and 5 in the main market closed with bids above the last sale price, which means higher prices ahead.

JSEINdicesMay7Bullish days ahead? | The junior market is not the only place that is showing signs of improved investor’s sentiment. In the main market, Scotia Group has rebounded from the post NDX effect by trading in good volumes, NCB is well off the low it reach after the NDX announcement, Grace Kennedy and Carreras have been moving higher.  A number of stocks seem to have found a floor, with strong bids at their last selling price. At the same time, supply is drying up for some stocks. That may well be so, but the all signals are not yet in place for a grand rally.

Interestingly, the market is not reacting negatively to the write-off of unrealized investment gains that have knocked off huge profits for the March Quarter among the financial institutions. Investors seem to be looking beyond that, to recognize that even with those one-off charges, stock prices are still undervalued on the whole. Also, interest rates are likely to fall some more and with very low yields on money market instruments, stocks may be the main thing in town for a long time to come.

Scotia Bank with 1.8 million shares changing hands today valued at $39.1 million commanded the bulk of trading and the stock price moved up 31 cents. Interestingly, the bid to offer ratio on this stock is pitched in favour of buyers as they outnumber sellers. Volumes have generally been low for the sell side while demand is much higher. NCB  rose 19 cents and does not have much volume below $20 per share on the sell side, a sign that the price could rise some more.

Jamaica Broilers has strong buying interest and so does the Gleaner with more than 3 million on the bid at $1.20.

Market signs | The market is displaying signs of upward movements to come but it will have to close well over 87,000 points on the All Jamaica Index before we see signs of a sustainable rally. With the market closing today at 83,282, there are still some movements to go before realizing what could be a bull run.

The market traded $50,469,026.73 in local currency as well as US$9,577.70 in the US dollar market.

TTSE | WITCO jumps $7, market heading higher

West Indian Tobacco Company (WITCO) stock jumped $7.07 to end the day at a all time record of $107.07.

A volume of 1,314,293 shares traded on the main market valued at $5,530,257.06. Trinidad Cement accounted for 637,564 shares valued at $605,685.80, followed by Jamaica Money Market Brokers with a volume of 430,000 shares being traded for $215,000.  Angostura Holdings contributed 125,055 shares with a value of $1,125,495 and Neal & Massy Holdings added 40,177 shares valued at $2,370,443.

TTSEMay7Point Lisas Industrial Port Development Corporation suffered the day’s sole decline, falling $0.01 to end the day at $3.64 on a day when trading took place in 14 securities of which 6 advanced, 1 declined and 7 traded firm.

Clico Investment Fund was the only active security on the Mutual Fund Market, posting a volume of 230,253 shares valued at $4,854,228.71 while advancing 0.07 to end at $21.08.

Closing prices point to a higher market ahead | Clear signs of this can be seen from the number of stocks that have bids at the same level as the last traded price but more importantly there are 7 stocks where the bids are above the last traded price. The companies are Ansa Merchant Bank bid $38.51 last sale $38.50, Berger last sale $3.55 closing bid $3.58, Grace Kennedy, bid $3.31 last price $3.23, One Caribbean Media, $16.75 is the bid versus last price of $16.60, Scotia Investments last sale price $1.55 with the closing bid of $1.57, Scotia Bank which last sold at $69.27 now has a bid of $69.30  and West Indian tobacco which traded today at $107.07 with a closing bid of $110.

ForEx | J$ appreciation continues

In Tuesday’s foreign exchange trading, the value of the Jamaican dollar continued its appreciation as it took J$99.0056 to purchase a US dollar. At the end of Monday’s trade it took J$99.0276 to purchase one US dollar.

ForExSummaryMay7Sellers of the US dollar were better off on average than on Monday as they got J$98.53 for each US dollar they sold compared to $98.4189 on Monday. Sellers of Canadian dollars and Pound sterling were not as fortunate as they got 24 cents less for selling on Monday compared to Tuesday for the Canadian dollar and 15 cents less for selling the pound. It took just 4 cents less to purchase the Canadian dollars and 18 cents less for the Pound.

The equivalent of US$39.2 million, were purchased and US$39.97 million were sold, as increased liquidity continues to enter the market.

Market signals | Highest selling rate for the US was J$104 and the lowest J$83.26 while the highest buying rate for the US was J$99.2 and the lowest J$81.16. The selloff of foreign currency and appreciation of the local currency seems set to continue.


TT government moves to mop up liquidity

The Government of the Republic of Trinidad and Tobago proposes to raise TT$1,000 million through the issue of a 7-year bond with a coupon rate of 2.60% per annum to mop up excess liquidity in the financial market.

The bonds will be issued through the automated auction system operated by the Central Bank. The issuance of this bond will reduce excess liquidity levels in the banking sector in accordance with established monetary policy, while the proceeds of the bond will be held in a frozen account at the Central Bank on behalf of the government. The issue document stated.

A single price auction system will be used and, as far as possible, applicants will be allotted bonds to the fullest extent of their applications. Government Securities Intermediaries are appointed by the Central Bank to act as counterparties in the auction and, thereafter, to provide a secondary market for the bonds. Bids can be placed competitively or non-competitively by submitting the relevant application form, along with payment to a Government Securities Intermediary. The maximum allotment that can be obtained through a non-competitive bid is $100,000 face value at a price established in the competitive side of the auction. This price is the minimum price, when the successful bids are ordered from the highest price to the lowest price and may be at par, premium or a discount.

The government in the offer document that it is also mindful of its role in the development of the local capital market and, in particular, the development of the government bond market. To this end, it continues to provide securities that will cater to the needs of all investors.

The auction will be opened at 10:45 a.m. on Monday May 6, 2013 and will close at 1:00 p.m. on Friday May 17, 2013. Bonds will be dated May 21, 2013.