Solid buy – Stationery and Office Supplies

Stationary and Office Supplies – Montego Bay offices.

Stationery and Office Supplies stock is under pressure, having traded around the $5 level for some time, dropped to $4 in trading during last week with minimal demand for the stock currently.
But investors should probably be taking a different approach to the stock and piling into it for a big rally down the road as the fundamentals are strong and getting better.
Revenues climbed 23.7 percent in the June quarter to $212 million and 22 percent to $432 million for the half year, by the September quarter the growth climbed to 37 percent to $233 million, pushing revenues for the year to September to an increase of 27 percent to $665 million. Based on the bounce in revenues that some companies received after listing, the strong growth in revenues seen in the third quarter is said to have continued for the December quarter. Full year results are expected, by the first week in March and should be in the range of $100 million based on IC Insider.com projections. Reports are that the full year results for 2017 exceeded expectations which was around $70 million at the time the IPO was offered and adjusted internally upwards based on third quarter results. At the end of September profit before tax reached $69 million well ahead of the $48 million recorded at the same time in 2016 and vastly more than the $53 million reported for all of 2016. The 2017 results are not likely to show any weakness as occurred in 2016.
SOS had acquired a building which was converted to a warehouse to allow for expansion of It’s offerings, this is now in use with some 6,000 square feet occupied. According to reports there are “lots of plans and expectations going forward for good business growth”. IC Indsider.com gathers that the December quarter that is normally the worse quarter for them due to the holidays, but the 2017 last quarter was the best quarter in the company’s history.
IC Insider.com projects earnings before tax at 50 cents per share for 2017 based on the average number of shares issued for the year, up from 40 cents when the shares were offered for sale and 75 cents for 2018 based on projection for continued strong growth in revenues.
At a last traded price of $4.50 on the Junior Market of the Jamaica Stock Exchange, the stock remains a buy as it will benefit from strong growth in 2017 and future growth in 2018 and beyond. Investors should take advantage of the current softness in the stock price and wait for the inevitable strong gains ahead.

Lasco Financial beats 2017 profit in 9 months

Lasco Financial reports profit for 9 months at $222 million.

Lasco Financial’s profit for the nine months to December, has already eclipsed the full 2017 fiscal year profit of $188 million as nine months profit climbed 36.6 percent to $222 million, from a 35 percent revenue increase from $830 million to $1.12 billion.
Profit after tax, suffered a decline in the third quarter, falling to $54.7 million from $62 million in 2016, as revenues increased by 36 percent to $405 million from $298 million in the 2016 period. The results reflect just one month’s of CrediScotia’s operation.
Responding to the growth in the December quarter results, Lasco’s Managing director, Jacinth Hall-Tracey stated in her report to shareholders, “This is attributed to seasonally strong remittance and cambio inflows bolstered by the income from its new acquisition of CreditScotia, renamed LASCO Microfinance. After recognizing some direct expenses for the acquisition and normal seasonal operational increases, profit from operations for the quarter closed at $91.4 million, an increase of 18.5 percent.” Interest cost associated with the funding of the acquisition was pushed up by $20 million in the quarter and reduced the positive gains in operating profit below pretax profit in 2016 of $75 million to $69 million.
Administrative and other expenses, jumped a sharp 63 percent to $179 million in the third quarter, but for the nine months, it rose by a more moderate 41 percent, to $531 million, well ahead of the increased revenues. Marketing cost rose 22 percent in the quarter to $135 million and 20 percent for the nine months, to $389 million.
Total assets jumped from $1.55 billion at the end of March 2017 to $3.3 billion with the acquisition of the CrediScotia shares, funded by $1.27 billion from by short-term loans, from related companies. The short-term loans will be repaid in full from a long term instrument being arranged.

Access Financial has assets of $3.3 billion at September 2017.

The acquisition pushed Lasco’s assets to the same amount that Access Financial had at the end of September. There are two differences, Access Financial is valued by the stock market at twice the market value of Lasco’s market value of $6.6 billion, with Access at $11.55 billion. Access’s loan portfolio stood at $2.68 billion at September while Lasco is less than $1.5 billion at the end of December last year.
According to the quarterly report, in the coming months, the loan business will be combined into the subsidiary company. The combined businesses own a network of 13 branches, a large customer base and a billion dollar loan portfolio.
The company looks like it will end 2018 fiscal year with profits around $300 million level with earnings per share of 25 cents. The stock last traded on the Junior Market of the Stock Exchange at$5.24 at a PE around 20 times current fiscal year’s earning, but the focus will be on the next fiscal year when the full benefits of the acquisition of the CrediScotia is fully reflected in the results and one off cost are removed.

Junior stocks set for strong 2018

IC Insider.com Junior Market TOP 10 stocks for 2018

Junior market stocks performed better than main market stocks in 2017 but that performance does not show in the gains in the market indices of both markets.
The Junior Market rose just 5.3 percent at the end of the year, down from a high of 31 percent in May.
The pull back of the index from its peak pushed the market into very negative technical readings. The first negative is a head and shoulder pattern, then the deadly cross where the short and medium term moving averages have fallen below the long term moving average and to that is an examination of the potential gains for individual stocks show that more two third of them are valued around or above the market average for 2017 earnings. That means that there is not much ammunition left to seriously push this market much higher based on 2017 profit out turn. Weighting down on the juniors is a series of company results that are not reflected positive price driven data.

General Accident could be a leader in the Junior Market in 2018 as they benefit from higher premium rates.

The reports include, Paramount Trading with strong rise in revenues for the November quarter but lower profits as administrative cost rise Caribbean Cream enjoyed a strong 18 percent increase in revenues but that could not overcome a rise in administrative and direct cost in the November quarter, resulting in profit falling from $19 million in 2016 to less than $1 million in 2017 and helped to push six months profit to $71 million versus $137 million in 2016. AMG Packaging revenues jumped 24 percent in the quarter to November but increased cost wipe the sales gains away and more to leave a profit of $10 million versus $18 in the prior year period.
Express Catering is continuing to deliver strong increased earnings but the stock is already well priced and so too is Knutsford Express at which revenues rose by 18 percent in the November quarter but at a slower pace than in the prior year. For the August quarter and profit grew by just 15 percent, with half year earnings per share coming in at 19 cents, full year earnings should come close to 50 cents but the stock is already a high price relative to the overall market.
The positives in the market is that the 45 days moving average is now over stretched and should enjoy some rebound sooner than later. Looking fully at 2018 thinks appear brighter with IC Insider.com pointing to 14 stocks including the IPO, Elite Diagnostics that could double in price and around 8 that could gain over 50 percent.

Elite Diagnostics could be in the Junior Market TOP 10 by the end of 2018.

Based on projected earnings for 2018, the average PE ratio suggests that Junior Market stock prices should grow by 36 percent. Technical readings have the junior market moving to 3,900 points, 43 percent higher than the end of 2017, before major resistance sets in.
The Top 10 Junior market stocks are taken from those listed at the start of 2018. The list therefore excludes Elite Diagnostics which should end in the top of 2018 best Junior Market stocks at the end of the year.
The list comprise some 2017 under performers, insurance companies that should benefit from increased premium income and in the case of Key Insurance reduced administrative cost. Paramount Trading is adding new product lines that should not only boost top line but with bottom-line growth, while Caribbean Producers and Dolphin Cove will benefit from the strong growth in tourism.

Elite still BUY RATED regardless

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Elite Diagnostics

Elite Diagnostics put out a prospectus that has erroneous interim results for the first quarter and even after sending out an addendum there are still errors in it that best the question as to credibility of the figures in the report, more importantly, the profit reported.
The question has been asked that in light of the errors and lack of credibility in the interim figures if the stock is still a buy.
First, the audited figures to June appear in order with earnings of 16 cents per share, while revenues 36 percent in the year to June over 2016. The report for the September quarter shows growth in revenues of 23 percent which appears credible when viewed against the increase for the 2017 fiscal year. Expenses for the quarter appear in line with what can be normally expected to flow from historical data. The new location on Old Hope Road, will add to cost and that is unknown as well as the likely increase in revenues that can be expected. The prospectus gives some indication of manning an equipment levels, that provides a good guide as to what can be expected for cost with 7 persons being engaged compared to 27 at the original location.
IC Insider.com delved further into the numbers and now forecast profit of 22 cents per share for the current year to June and 35 cents for 2019. The assumptions assumes growth of 33 percent in revenues for the rest of the fiscal year with the new location contributing to it, while cost is projected to jump by 30 percent and would result in profits of $78 million and $120 million in 2019 from a 23 percent increase in revenues. But revenues could grow faster with the benefits of listing.
Data shows that Junior Market companies get sizable bounce in revenues after listings, that flow from the injection of capital, new directors and most importantly, greater publicity from listing and trading. For example

Stationary and Office Supplies had a 13% point bounce in revenues after IPO

Stationery and Office Supplies saw a bounce of about 13 percentage point jump in revenues over and above the growth rate of 24 percent in the quarter prior to the IPO. In 2016, Jetcon Corporation got a major bounce in sales after listing as well. Recently listed FosRich also reported increased business as a result of their listing. IC Insider.com expects to see quite some increase in revenues for Elite due to the increased exposure from the listing.
Elite shares now rank as the sixth highest ranked Junior Market stocks for gains in 2018.
The Elite shares remain  BUY RATED notwithstanding the foul up of the interim figures. The concern is with the directorship as it would be expected that the company would have had budget with the figures compared with the actual. In such cases the directors should have picked up that the depreciation was omitted from the report, well before it was incorporated in the prospectus. The discrepancy between the cash flow, the income statement and the addition of fixed assets would have been more challenging, but with a board of 9 comprising a number of experience business and financial personnel one would not expect the type of error but it will be a moment of embarrassment for them and it one they will never forget, hopefully Elite will be the better for it.

Incredible stocks selection

347% average gains over 4 1/2 years – IC Insider.com
A winning investment formula, is to invest in good quality stocks that have the hallmarks of growth,good management and are undervalued. In 2013 that is the formula IC Insider.com used in starting IC Insider Buy Rated Stocks listing. As the years rolled on we refined the selections and scored some spectacular winners with gains of more than 1,000 percent in some cases. In the process, even as more stocks were added to the list and some removed, the list below shows average gains of 347 percent over the four and half years period, unadjusted for the time the stocks were added.
It just pays to visit IC Insider.com and get great information & its free for now.

Elite Diagnostics IPO a buy

Elite Diagnostics is the first 2018 IPO out of 9, that is expected this year.

The initial public offer for Elite Diagnostics will open on January 22 at $2 per share and is scheduled to close on January 29, the prospectus which is now out states.
A total of 70.68 million shares are offered to raise $141 million. The shares to be listed on the Junior Market of the Jamaica Stock Exchange, if the issue is successful and will bring the total company listings on the Junior Market to 35 and the total listings to 39 and the total listings on the entire exchange to 96. Elite will be the second medical related company expected to list on the market and the second within two months.
Based on interim first quarter results to September last year the stock is attractively price and seems set to be heavily oversubscribed to be followed by a big bounce after listing. Elite has done well in just 5 years and seems set to expand at a nice pace going forward.
The company operates from Holburn Road in Kingston and now have a new office on 164½ Old Hope Road. The 4 year old company provides imaging and Diagnostic Medical Facility offers services such as MRI, CT Scan, X-Ray, Ultrasound & Fluoroscopy.
Of the shares available for subscription in the IPO, 18 million units are reserved for subscription at $2 each. The company has 282 million issued shares. The proceeds of the IPO will put the company in a position to repay a substantial part of the debt due lenders amounting to $202 million.
A number of Imaging diagnostic service providers operate in Kingston and Saint Andrew. These providers compete with the company for the provision of services in the Kingston and Saint Andrew market.
For the September quarter 2017, the company had net profits of $23 million on revenues of $69.8 million compared to revenues of $56.9 million in 2016 and profits of $14.4 million. Annualised, net profits would be $92 million or an increase of 108 percent over the previous financial year, if the current trend continues and would result in earnings per share of 30 cents for a PE ratio of 6.7 times earnings.
In the first year of operations in 2014 a loss of J$48.7 million was realized on revenues of $58.3 million. For 2015, revenues increased 127 percent and profit of $498,079 was realised. For the financial year ended June last year, revenues increased to J$263 million and net profits moved to J$44.2 million from $29 million in 2016. Gross Profit margin is very high at 67 percent for the 2017 fiscal year with administrative expenses at 31 percent of revenues, excluding depreciation.
In 2017, a new office was set up at 164½ Old Hope Road, opening in November 2017 and is expected to generate additional income for the benefit of the company commencing the current financial year, the company says.
Directors are, Steven Gooden, B.Sc., M.Sc., CFA, Chairman, Warren Chung, B.Sc. Executive Director, Dr. Neil Fong, B.Sc., M.B.B.S Executive Director, Andre Ho Lung, FCCA, M.Sc. Non-executive Directors are Kevin Donaldson, B.Sc., M.B.A, Paula Kerr-Jarrett, B.A., LL.M., Quentin Hugh Sam, B.Sc., Peter D. Chin, B.Sc., M.B.A., William Mahfood, B.Sc.
The company believes that its principal competitive advantage lies in using state of the art diagnostic equipment. “It 64-Slice or Multi-Slice CT Scanner is one example. It produces clearer images compared to older models by allowing technicians and radiologist to acquire thinner slices and 3D images at lower doses of radiation leading to a more detailed view of the patients’ anatomy. This leads to faster and more accurate diagnosis. 10.20 The Company has recently acquired a 3 Tesla (3T) MRI scanner – to the company’s knowledge only one of two in the Caribbean, the other being located in the Cayman Islands. The strength of the magnetic field generated by a 3T MRI scanner is twice that of the current industry standard 1.5T MRI scanners. The image quality of an MRI scanner is generally dependent on the strength of the magnetic field it is able to generate, the higher the magnetic field the better the image clarity. This increased image clarity aids Radiologists in their interpretations of diagnostic images. In certain circumstances the more powerful scanner is also capable of reducing scan times thereby reducing patient turnaround time.”
NCB Capital Markets and Sagicor Investments are brokers for the issue.

Barita is back VM Investments out – TOP 10

There is only one change to the TOP 10 lists, since we last reported on it, with Victoria Mutual Investments rising to more than $4 from the IPO price of $2.45, after listing in December and is replaced by Barita Investments.
Junior market stocks show some noted position change due to price movements. Key Insurance slipped in price to move atop that list, while Jamaican Teas gained and moved into the second half of the listing. CAC2000 posted results that were just 2 cents lower than IC Insider.com’s forecast of 80 cents, with the price climbing to $7.31 at close of the week and should really be going higher based on those numbers. Access Financial climbed back to $42, pushing it to the bottom of the list.
Former TOP 10 listing, Main Event reported a 79 percent jump in earnings for 2018, to 38 cents per share before taxation, the price may bounce about for a while around the $6, until it is clear that 2018 earnings should hit 55 cents per share.
With the Initial Public offerings (IPOS) out of the way, more life returned to the secondary market this past week with the main market enjoying buoyant volumes and the Junior Market recording some recovery with more buying interest.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 8.6 and 8.4 for the main market TOP 10. The average PE for the overall main market is 15 and 13.6 for the Junior Market, based on 2017 estimated earnings.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 37 percent to the average of the market for Junior Market Top stocks and 44 percent for the main market.
Market Watch| Investors should still keep a keen eye on Caribbean Cement for which supply seems to be declining and word that the company is close to an agreement in refinancing the leased assets that is expected to result in major savings in cost for 2018 onwards. FosRich and GWest Corporation, pulled back from their highs this past week with FosRich hitting $2.50 in trading on Friday, this one could see some rebounding but GWest Corporation could decline some more. Others to be watched are, CAC2000, General Accident, Cable & Wireless, NCB Financial, Berger Paints, JMMB Group, Main Event, Lasco Financial, Paramount Trading and Stationery and Office. Wisynco pulled back this past week to $10.80 and may well trade around this level for a while with a PE of 15 times 2018 earnings, as profit taking continues.

TOP 10 stocks – Watch for Wisynco

Wata produced by Wisynco

Movement in the TOP 10 lists, resulted in just one move out, while some changed positions notably on the list. Main Event was the sole stock dropping from the top list leaving room for Caribbean Cream to move in.
With the Initial Public offerings (IPOS) out of the way, more life returned to the secondary market this past week with the main market gaining strongly but Junior Market stocks continue to struggle but helped by gains in price of two new listings.
The year ahead will see a number of changes to the TOP listings with several of the current listing carrying over. Only ISP Finance so far is showing as a new likely TOP 10 listing for 2018 in the Junior Market. The main market list is likely to see about 4 new entrants for 2018, with Cable & Wireless, Barita Investments, Palace Amusement and Wisynco depending on when it list, joining the top stocks. Radio Jamaica sits just below the TOP 10 and could well squeeze into the 10 by the start of 2018. Profit results for the fourth quarter, are likely to impact prices of most stocks as the information will provide important fuel for price movements.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 7.9 and 8.2 for the main market TOP 10. The average PE for the overall main market is 14.2 and 13.4 for the Junior Market, based on 2017 estimated earnings.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 41 percent to the average of the market for Junior Market Top stocks and 42 percent for the main market.
Market Watch| Investors should still keep a keen eye on Caribbean Cement for which supply seems to be declining with the focus on refinancing of leased assets that is expected to result in major savings in cost for 2018 onwards. FosRich and GWest Corporation, the recent IPOs, started trading on the Junior Market last week with strong gains so far, they should be watched in the few trading days left for the year, to glean further directions as both are now richly priced. Others to be watched are, General Accident, Cable & Wireless , NCB Financial, Berger Paints, JMMB Group, Main Event, Lasco Financial, Paramount Trading and Stationery and Office. Wisynco could start trading this week and is expected to create some excitement with the issue more about twice oversubscribed.

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TOP 10 stocks – Watch FosRich on Tuesday

With the Initial Public offerings (IPOS) out of the way, more life returned to the secondary market this past week resulting in some changes to the TOP 10 lists.
Initial Public offerings for 2017 now seem to be over until they reappear in January, with Sygnus Capital Investments planning to be out of the block early. Others that were prepared to go in December could come to market in January, the start of what now appears to be another interesting year for local stocks. Coming Tuesday in the wider market, FosRich Group, the recent IPO will list and start trading on the Junior Market.
Prior to the past week, the focus on IPOs negatively affected trading in the secondary market with the Junior Market giving up almost all the gains make in the first half of the year and is still trading close to the low for the year.
The past week ended with Main Event as the only new entrant into the TOP 10 Junior Market stocks, with Blue Power leaving, as the price rose back to the $44. Sagicor Group returns to the Main Market list pushing out Pulse Investments. Interestingly, General Accident jumped to $3 by week end with limited supplies and slipped to number 2 on the list.
Investors should bear in mind that as the year closes, there will be changes to the TOP list for 2018, with a number on the current list, expected to repeat, but there will be new ones.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 8.1 and a PE of 8.2 for the main market TOP 10. The average PE for the overall main market is 14.2 and 12.8 for the Junior Market, based on 2017 estimated earnings.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 36 percent to the average of the market for Junior Market Top stocks and 44 percent for the main market.
Market Watch| The two markets seem to have found support this past week after retreating sharply over the prior two weeks. Investors should still keep a keen eye on Caribbean Cement for which supply seems to be declining fast and a focus on refinancing leased assets is expected to result in major savings in cost for 2018 onwards. FosRich, the recent IPO that starts trading on the Junior Market on Tuesday, General Accident, Cable & Wireless that appears scarce under $1, NCB Financial, Berger Paints, JMMB Group, Main Event, Lasco Financial, Paramount Trading and Stationery and Office.

VM Investments in TOP 10

VM Investments press conference for launch its IPO. from left is Michael McMorris – Chairman of VMBS, Courtney Campbell Group CEO, Devon Barrett CEO of VMIL and Janice McKenley – Group Chief Financial Offer.

Initial Public offerings were all the rage in Jamaica Stock Market this past week, with three IPOS opening and closing during the week all being oversubscribed and one new one coming to market to open on Monday and expected to close on the same day.
The focus on IPOs negatively affected trading in the secondary market with the Junior Market giving up almost all of the gains make in the first half of the year. The week ended with no movement in and out of the TOP 10 Junior Market stocks but VM Investments is a new one in the Main Market list along Pulse Investments that returned with a fall in the stock price during the week, and out goes Wisynco and Sagicor Group.
As indicated last week, the bulk of Wisynco’s gain should come in the latter part of 2018, based on current operations that should deliver earnings of 70 cents for the current year and $1 for the next fiscal as the company continues to recover from the ravages of the fire back in 2016. Much is expected from VM Investments that is priced to bounce well. Investors ought to bear in mind that that has the year closely, they will be changes to the TOP list for 2018, quite a number on the current list are expected to repeat in 2018.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended the week at 7.9 and a PE of 8 for the main market TOP 10. The average PE for the overall main market is 14.1 and 12.6 for the Junior Market, based on 2017 estimated earnings.
At the close of the week, discount for both the main and Junior markets have virtually merged, with the IC Insider.com’s TOP 10 stocks now trading at an average discount of 44 percent to the average of the market for Junior Market Top stocks and 46 percent for the main market.
Market Watch| The two markets retreated sharply over the past two weeks and broken through support levels with some individual stocks pulling back and pushing the market index down markedly, but the main market seems to have found a bottom and may be on the way up now that the major IPOs are closed. The junior market could be going through a consolidation phase for a while, at least that is what the market seems to be suggesting.
Investors should still keep a keen eye on Caribbean Cement for which supply seems to be declining fast, Cable & Wireless that appears scarce under $1, NCB Financial, Berger Paints, JMMB Group, Main Event, Lasco Financial, Paramount Trading and Stationery and Office.