Barita APO to be priced at $80

Barita Investments‘ directors have approved the issue of 125 million ordinary shares at $80 each, with an option to upsize the amount issued by 62.5 million shares to raise $15 billion in an additional public issue (APO).
The New Ordinary Shares will be reserved for the benefit of certain specified investors in amounts determined at the discretion of the Company. The APO should open on September 3, or such other date as determined by the Group Chief Executive Officer and is to close on September 21, or such other date as determined by the Group Chief Executive Officers.
The original notice to the Jamaica Stock Exchange stipulated the issue of up to 160 million units that could have been upsized 80 million shares. Since the first notice to the Jamaica Stock Exchange, on August 5, the stock price moved up from the low $83.90 to $92.77, with the proposed price being a discount of nearly 14 percent.
The company reported nine months results to June, with profit after tax for the June quarter coming in at $1.6 billion, up a strong 62 percent from $990 million reported in 2020 June quarter and ended the quarter, with earnings per share of $1.48 versus $1.21 in 2020. Earnings for the nine months ended at $3.38 per share from after tax profit of $3.67 billion, up 82 percent from $2 billion in 2020.

Jamaica’s tourist arrivals set for 170K in July

Tourism is Jamaica.

Tourist arrivals for July climbed just over 8 percent above arrivals in June this year, data out of the Sangster International Airport show, with 154,620 passengers arriving up from 142,727 in June.
Arrivals numbers are up nearly 400 percent above the 31,000 that came in July 2020, the second month of the country re-opening its borders to overseas’ visitors. Jamaica Tourist Board data show stopover arrivals in May 2021 at 122,522 compared to the airport arrivals through Montego Bay of 108,320. That means that Kingston accounted for around 24,000 visitor arrivals. Based on the above numbers, July should end up at 170,000 stopover arrivals and June is likely to end up around 160,000, as the country continues to record increasing numbers of guests following the dislocation last year.

30% Cement plant expansion on the blocks

Caribbean Cement Company has decided to expand its plant during the second half of 2022 to increase its production capacity by thirty percent.
The company “currently produces and supplies over One Million Metric Tonnes (1,000,000 MT) of cement to the local market annually. The planned capacity upgrade is expected to increase CCCL’s production by Three Hundred Thousand Metric Tonnes,” the company disclosed in a release to the Jamaica Stock Exchange.
“This planned capacity upgrade also involves the implementation of state-of-the-art technologies which will introduce novel grinding additives to the manufacturing process to reduce the clinker content in the cement produced by [CCC]. In addition, this upgrade is intended to minimize Jamaica’s carbon footprint by optimizing the heat consumption involved in the cement production process”, the release from the company further stated.
“The total investment for this capacity upgrade is estimated at Thirty Million United States Dollars, the Company stated. The planned expansion comes against the background of a 33 percent rise in the sale of cement by the company in the June quarter following a 31 percent increase in the first quarter and complaints by some dealers about a shortage of cement in the local market at a time when demand is at an all-time high.
The company’s shares that are listed on the Jamaica Stock Exchange closed at $94.90.

GDP growth underestimated by Jamaica government

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The economy’s recovery was highly underestimated by GOJ, with taxes on imports rising 22 percent faster than original estimates; nowhere was the forecast understated than in the tourism sector that has thrown up revenues over 100 percent in the first three months of the current fiscal year.

Faster tourism recovery in 2021 than expected

Up to June data on revenues collected shows that the sector is bouncing back by more than twice what was estimated with Travel Tax the best indicator as to visitor arrivals jumping 137 percent above estimate and accommodation Tax rising 90 percent above forecast to $367 million from a forecast of $194 million. The absolute numbers may not be meaningful in the overall fiscal income, but the percentage change tells a significant recovery story.
Travel Tax was projected to bring in $1.22 billion, actual collection ballooned to $2.9 billion in the three months to June this year, up 137 percent over forecast and is 175 percent higher than the inflows for the three months to June Last year, when just over $1.14 billion was collected with $1.6 collected in April. Elsewhere GCT on imported items surged 27 percent, resulting in $4.9 billion being collected above the forecast of $18.2 billion.
Total tax revenues are up 22 percent ahead of the $107 billion collected to June last year, with GCT on local goods and services up 16 percent and contractors levy up 38 percent, which is in line with increased cement sales for the quarter over that of 2020.
The implications of the sharp increase in the above revenue segment are that the economy is growing faster than the government agencies forecasted for the current fiscal year and, in particular, the extent of the recovery in the tourism sector.

GOJ revenues well ahead of budget

Revenue and grants for the government of Jamaica climbed 7 percent ahead of forecast with an increase of $11.6 billion over the budget of $163.8 billion to end at $175.4 billion for the three months to June this year. Expenditure, on the other hand, fell 4.6 percent or $7.6 billion to $165.7 billion.

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Tax revenues brought in $12 billion more than forecast and recurrent expenditure accounted for $7.6 billion of the underspending. Capital Spend was marginally more than the $18 billion budgeted.
Non-Tax revenues amount to $42.8 billion, with $34.5 billion collected in April and would have included the dividend from the Bank of Jamaica.
The government operation ended with a $5 million surplus in June and ended the three month period with a deficit of $1.7 billion, $22.4 billion better than forecast.
International Trade brought in 22 percent more revenues than the budgeted amount for the three months period, with a collection of $47.8 billion versus a forecast of $39 billion. Production and consumption taxes contributed $3.4 billion more to the revenue intake than planned, with an intake of $47.7 billion versus $44.3 budgeted.

Huge blast at Carib Cement

Caribbean Cement is reporting another quarter of blow profits with revenues of $6.3 billion, up 32.6 percent over the $4.78 billion in the 2020 June quarter. Revenues blasted 32 percent to $12.3 billion for the half year compared to $9.3 billion.

The second quarter revenues growth beats the 31 percent rise in the first quarter as well as exceeding by 6.4 percent the $5.97 billion in the first quarter.
Profit after tax surged 200 percent higher to $1.56 billion in the second quarter from $521 million in 2020. And more than tripled the 2020 half year results of $1 billion to $3.09 billion.
Similar to 2020, gross profit was 47 percent in the second quarter to $3 billion versus $2.25 billion in 2020, while year to date it rose to 48 percent to $5.88 billion.
The company generated earnings per share of $1.84 for the latest quarter versus just 61 cents in 2020 and made $3.63 per share for the half year, up from $1.18 in 2020 and is well on the way the reach forecast of $8.50 for the year, with the company stating “we expect continued buoyancy in the construction sector driven by both government-initiated infrastructure projects and many private developments.”
Foreign exchange losses are down to $50 million in the June quarter versus $376 million in 2020 and, for the six months, $258 million compared to $657 million.
Cash flows from operations amounted to $1.7 billion for the quarter and $4 billion year to date. $3.9 billion was repaid in loans for the six months period and will result in reduced interest cost in the second half of the year. The repayment of loans reduced borrowed funds to $3 billion. Shareholders’ equity stands at $14.7 billion, with accumulated profit at $5 billion.

Fontana coming to Portmore

Fontana announced plans to open its 7th location in Portmore, St. Catherine to be located at Braeton Parkway and Municipal Drive, adjacent to the new Pricemart and is expected to be opened late 2022 or early in 2023. The branch will be a fulfillment of expansion plans announced when the company went public in 2018.
Ray Therrien, Executive Director at Fontana in commenting on the new development stated, “We’re really excited to bring Fontana to Portmore and its surrounding communities.  It’s a great location that brings with it a large population covering a wide cross-section of people, and Fontana will provide an easy, safe and convenient shopping experience.” he said. “We have been assessing the opening of a store here, and we are honored to have the opportunity to serve them with our best-in-class pharmacy services.”
Following the company’s more modern iteration seen at the uber-popular Waterloo Square store, this new addition to the pharmacy chain will include a state-of-the-art pharmacy, a one-stop beauty hub, a baby and children’s selection, an extensive home décor collection, a business centre, courier services and over 200 parking spaces.
“We plan to deliver exceptional product breadth in a one stop location; it’s what our customers expect,” said Anne Chang, Managing Director of Fontana Pharmacy. “Our strategy is to continue to improve our stores with each new location, expediting innovation to make shopping faster and easier for our customers.  Portmore will benefit from being the latest great Fontana store.”
Furthermore, the new store will also have an entire department dedicated to Jamaican Artisan products, like its counterpart at Waterloo Square; Fontana’s way of embracing and supporting Brand Jamaica. Local authors and creators, who have benefitted from using the company as a distribution chain through shelf placement, will continue to benefit in this regard.
The new location is part of a larger development project and is anticipated to open in late 2022 or early 2023.  While not committing to a specific opening date, Executive Director Therrien commented that “the company is eager to get started on fulfilling the potential of a partnership with the people of Portmore.”
Fontana presently has 6 locations dispersed throughout the island including two in Kingston, Mandeville, Montego Bay, Ocho Rios, and Savanna-La-Mar.
Investment in the new location will be in excess of $100,000,000 and employ roughly upwards of 80 Jamaicans.

June stopover visitor arrivals set for 160,000

Stopover arrivals in May 2021 were 122,522 Jamaica Tourist Board recently released data shows, just over 2,500 above original May forecast. Data of passenger arrivals through the Sangster’s International Airport suggests that stopover arrivals for June should reach 160,000 or 67 percent of the arrivals of 239,000 June in 2019. 
If the trend continues, July is likely to see just over 200,000 stopover arrivals, which would amount to 77 percent of July 2019 stopover arrivals of 270,462.
In the meantime, arrivals for August this year could exceed the 215,000 arrivals in August 2019.
June arrivals through Sangster’s International Airport were 142,727, which amounts to 61 percent of the June 2019 numbers of 239,000.
For the January to May period, arrivals decreased by 36 percent to 366,499 stopovers, 207,632 less than the 574,131 that came in the first three months of 2020, with the industry closed until late June.
The total stopover arrivals, recently released by the Jamaica Tourist Board for May are down 42 percent from 2019, but a huge improvement over the decline of 65 percent that April suffered against the same period in 2019, additionally, May numbers are 48 percent above April this year, showing the strength of the recovery.

Stunning results from ICTOP10 stocks

Caribbean Cream

Caribbean Cream delivered stunning positive results this past week with profit doubling, in line with forecast and sent the stock up 25 percent to a 52 weeks’ high when it traded at $6.85 on Friday. The price is up 63 percent for the year to date but is set to clear $15, with projected earnings of 85 cents for the current year.
During the week, the Junior Market lost Caribbean Producers to the Main Market and the move attracted more trading in it, with Friday having the lowest volume of 104,442 and the highest 275,415 shares on the first day of the transfer, well up on the previous two days of 34,319 and 58,282 shares. The stock continues to move higher, with gains of 91 percent for the year to date.
tTech maintained last week’s price of $4.75 to return to Junior Market TOP10 this week, replacing Caribbean Producers that was the only new entrant to the JSE Main Market TOP10, replacing Jamaica Broilers.
This past week the average gains projected for the Junior Market fell from 202 percent last week to 183 percent and Main Market stocks moved to 176 percent from 170 percent.
The top three stocks in the Junior Market are General Accident, followed by Caribbean Assurance Brokers and Elite Diagnostic, with potential to gain between 233 percent and 242 percent compared to 240 and 282 percent last week, as Elite price moved up by 15 percent to $3.60 following the announcement a proposed dividend consideration and a change in the Chief Executive. The top three Main Market stocks are Radio Jamaica in the number one spot, followed by JMMB Group and PanJam Investment, with expected gains of 181 to 379 percent versus last weeks’ 161 to 379 percent.
The Junior Market closed the week with an average PE 13.1 based on’s 2021-22 earnings and currently trades well below the target of 20 as well as the recent historical average of 17 for the period to March this year based on 2020 earnings. For the Junior Market to trade at the historical average, the PE Ratio would have to rise by 30 percent and requires a rise of 53 percent to reach the targeted PE of 20 by March 2022. Main Market stocks would have to rise by 19 percent to hit a PE of 19 and 24 percent to get to the target of 20. The Junior Market Top 10 stocks average PE is a mere 7.2., just 55 percent of the market average, indicating substantial gains ahead.
The JSE Main Market ended the week with an overall PE of 16.1, a little distance from the 19 the market ended at in March, suggesting just an 18 percent rise at a PE of 19 and 24 percent at a PE of 20 from now to March 2022. The Main Market TOP 10 trades at a PE of 7.6 or 47 percent of the PE of that market, well off the potential of 20.
This week’s focus: Results for Caribbean Cream with revenues up a solid 28 percent and profit doubling to $54 million, from $27 million with earnings of 14 cents per share, speak for themselves. Radio Jamaica is at a totally different level. The company delivered an 11.6 percent revenue rise in the March quarter and a profit of $44 million, pushing full year’s profit to $171 million of just 7 cents per share. The year’s performance comes against the backdrop of $366 million in what can be considered one off costs and in a year when revenues fell 7 percent. The 2022 results are set to be a stunner.
IC TOP10 stocks are likely to deliver the best returns up to March 2022 and ranked in order of potential gains, based on likely increase for each company, taking into account the earnings and PE ratios for the current fiscal year. Expected values will change as stock prices fluctuate and result in movements in and out of the lists weekly. Revisions to earnings per share are ongoing, based on receipt of new information.

Persons who compiled this report may have an interest in securities commented on in this report.

Jamaica’s GDP drops 6.7 percent in Q1

GDP fell 6.7 percent in the first quarter of 2021 due to the 9.9 percent fall in category service industries, the Statistical Institute of Jamaica reported.

Mining records GDP gains in 2021

Declines recorded for service industries except for government services. GDP for Hotels and restaurants fell 56 percent, being the main contributor to the decline. The Goods Producing Industries grew by 2.6 percent, with mining and Quarrying up 7.1 percent. Construction grew 10.5 percent, but Manufacturing suffered a 1.1 percent decline. Agriculture fell 2 percent due to drought conditions, Statin stated.
Declines were experienced in Other Services 21.9 percent, Transport, Storage and Communication 7.8 percent, Electricity & Water Supply 6.9 percent, Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment 5.1 percent, Real Estate, Renting & Business Activities 1.9 percent and Finance and Insurance Services 1.2 percent.