New ICTOP10 listings & more big gains

Long time Junior Market ICTOP10 listed Access Financial, finally broke away from resistance and jumped 31 percent for the week to $26.28, but traded at a 52 weeks’ high of $28 on Wednesday and just barely hung on to the top ten in the tenth spot.

Access Financial Services top performing ICTOP10 stock for the past week.

In the Main Market, Radio Jamaica rose 19 percent to $4.10, the 2021 ICTOP10 top performer, Caribbean Producers, climbed 5 percent and finally slipped out of the top 10 after a ride lasting more than a year and a gain of 573 percent, but the stock has more room for healthy gains.
Sagicor Group returns to the TOP10 Main Market and Stationery & Office Supplies returns to the Junior Market listing after an earnings upgrade, following a review of the forecasted numbers as the company continues to recover to pre-Covid-19 sales and  Fontana dropped out with a 4 percent rise, but has much more room to grow in 2022.
Junior Market Elite Diagnostic gained 10 percent to $3.50, Honey Bun rose 7 percent. AMG Packaging lost 10 percent to end at $3.05, Lasco Financial lost 8 percent, Caribbean Assurance Brokers fell 7 percent and General Accident slipped 5 percent.
The week ended with the supplies for some stocks becoming very limited, this applies to Access and Radio Jamaica. Newly listed Spur Tree Spices came in for profit taking on Thursday and Friday after the price peaked at $2.75 and closed the week at $2.15 a fall of 22 percent from the peak, which suggests suggesting more room for decline before the price bottoms. That could take it to around $1.95 based on declines from peak to through of some previous IPOs.
The sharp price movements in the Junior Market reduced the potential gains markedly, with the average increase projected for the TOP 10 Junior Market stocks now at 119 percent versus 122 percent last week.
The top three stocks are Lasco Distributors followed by Caribbean Assurance Brokers and Lasco Financial to gain between 131 and 150 percent, compared to 124 and 160 percent, previously.
The potential gains for Main Market stocks moved from 144 percent to this weeks’ 139 percent this week, with the top three stocks being Guardian Holdings followed by JMMB Group and Sygnus Credit Investments all projected to gain between 151 and 254 percent down from 161 and 257 percent last week.
After trading at a big discount to the Main Market for two years, the average PE for both the JSE primary markets have virtually merged around 16 times earnings multiple based on 2021 earnings, with the Junior Market looking poised to surpass the main Market soon. The difference in potential gains for both TOP10 listings shows the Junior Market with an average rise of 118 percent versus 139 percent for the Main Market. That is an indication that the Junior Market is priced slightly higher than the Main Market.
The Junior Market closed the week, with an average PE of 16 based on ICInsider.com’s 2021-22 earnings and is currently below the target of 20 and the average of 17 at the end of March last year based on 2020 earnings. The TOP 10 stocks trade at a PE of a mere 9.2, with a 43 percent discount to that market’s average.
The Junior Market can gain 25 percent to March this year, based on an average PE of 20 and 6 percent based on an average PE of 17. Twelve stocks representing 29 percent of all Junior Market stocks with positive earnings are trading at or above this level averaging 25.
The average PE for the JSE Main Market is 16.5 just 15 percent less than the PE of 19 at the end of March and 21 percent below the target of 20 to March 2022. The Main Market TOP 10 average PE is 8.7 representing a 47 percent discount to the market and well below the potential of 20. A total of 14 stocks or 30 percent of the market trade at or above a PE of 19, with most over 20, for an average roundabout 25, suggesting that the accepted multiple is between 20 and 25 times the current year’s earnings.
ICTOP10 focuses on likely yearly winners, accordingly, the list may or may not include the best companies in the market. ICInsider.com ranks stocks based on projected earnings to highlight winners from the rest, allowing investors to focus on potential winning stocks and helping to remove emotional attachments to stocks that often result in costly mistakes.
IC TOP10 stocks are likely to deliver the best returns up to March 2022 and ranked in order of potential gains, based on the possible increase for each company, considering the earnings and PE ratios for the current fiscal year. Expected values will change as stock prices fluctuate and result in weekly movements in and out of the lists. 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.

The Main Market 15 for Investment2022

The 15 Jamaica Stock Exchange Main Market companies that seem poised to score big in 2022 are shown below. As is the case in the past some of these stocks may do better than projected and some may not do a swell, others may take longer to deliver the returns depending on how investors react to new to come about the companies or the industry they operate in. an example of this is the financial sector that ICInsider.com gathers had some negative results from Jamaican bonds with the rise in interest rates and reduction in trading activity as interest rate changes in Jamaica and pending rate change in the overseas markets.
Radio Jamaica – Earnings per share is projected at 65 cents for the year to March 2023 but they should end up with 45 cents for the 2022 fiscal year. The stock rose sharply with a strong increase in volume, followed by strong June quarter profits, with the stock price hitting $4.80 at the peak in 2021.
Management has done an excellent job in turning around the operations in 2020 and the group is benefitting from a leaner operation as well as a boost in revenues in 2021 and beyond. With growth expected in the local economy over the next several years, revenues and profit should continue to hit new record levels. In addition, management continues to focus on increased efficiency, implementation of new technology in various aspects of the operation that will drive growth and profit. There are plans to extract revenues out of other assets that are not readily visible to the general public currently. Not to be missed is the impact an improving economy will have on increasing revenues as businesses increase advertising spend. Futuristically, with the digitization of the network, the company will be in a position to provide internet facilities to its customers as an additional potential income stream.

Berger Paints

Berger Paints – Earnings per share is projected at $2.25 for 2022. The stock is not every bodies’ favourite, but the company is coming back into its own and benefitting from rapid expansion in the construction sector. Expect continued growth to take place as it benefits from the booming housing market locally.
Guardian Holdings – Earnings per share is projected at J$90 for 2022. This stock has been beaten down in the Jamaican market, but it is selling at a much higher price in Trinidad. It is a very good company but has never gotten the valuation that it deserves. They are expected to continue to show profit growth which may falter from time to time based on the nature of their asset base and income stream. The decision of the directors to hold foolishly to the limited number of issued shares is hurting the price badly but they will learn that it is not in the best interest of investors to continue to do so. At that time the stocks will perform better.
JMMB Group – Earnings per share is projected at $7 for the year to March 2023. It is one of the more undervalued stocks on the market, the price is about 6 times earnings. The company has a great deal of room for above average growth in the future. The group’s exposure to doing business in the Dominican Republic is a huge market of 11 million relative to Jamaica, where it can expand in a major way, either by acquisitions or just expanding the current footprints. Historically, the stock tends to move sideways until early summer, if that holds there may be time to focus elsewhere and return to this one. Investors should think long about this one. The company gets permission to buy back shares and the directors set later in the second quarter this year to start doing that and it could mop a lot of selling pressure.

JMMB

Sygnus Credit Investment – Earnings per share is projected at $2.60 for the year to June 2023. At a PE ratio of 5.5 2023 earnings the stock is undervalued and is so based likely 2022 earnings of less than a PE of 10. It operates in a sector that is not well known to the investing public, but that is where above average gains can be made. Management is on target to extract optimal gains from the operations. An example of this is when they raise funds before listing, the planned rate of return was around 8 percent now in the range of 12 percent. The company announced the acquisition of a credit investment company in Puerto Rico that should close later in the year. This will help drive revenues and profit as it broadens its reach and be in a position to attract more capital to allow for greater expansion.
Sterling Investments – Earnings per share is projected at 45 cents for the year to December 2022. The stock is seriously undervalued but investors don’t care much about this one seeing it more as a dividend provider than one with capital growth potential. Earnings should approach 40 cents for 2021 and be higher in 2022. Revenues and profits will benefit from higher interest rates locally and overseas in 2022 that will enhance profitability.
In the year just ended, revenues totaled $185 million for the first nine months, 8.6 percent higher than the $170 million earned for the same period in 2020, driven primarily by increases in interest income and gains on the sale of debt securities. Total foreign exchange gains declined year on year, from $80 million for the 9 months ended September 2020 to $55 million for the nine months to September 2021 and seem set to reverse in the final quarter of the year. Net income totaled $105 million for the first months of 2021, higher by 10.9 percent than the $94 million for the same period in 2020.

Caribbean Producers traded 52 weeks’ high during the week following a near US$2 quarterly profit.

Caribbean Producers – Earnings per share is projected at J$2 for the year to June 2023. Cost cutting and a sharp rebound in the tourism sector with visitor arrivals just 20 percent down on November 2019 numbers augur very well for increased income and profit and the stock that was one of ICInsider.com’s 2021 picks with a 435 percent increase since the start of 2021. ICInsider.com puts the stock price at $40 for 2022 as the company reports record profits and completes the acquisition of an overseas business during the year. Investors should look to a big bounce in the December quarterly profits that should triple the US$1.6 million profit made in the September quarter as revenues for the last quarter of 2021 come in around US$35 million compared to US$25 million for the September quarter.
Caribbean Cement – Earnings per share is projected at $10 for 2022. The company was on target to earn around $8 per share last year but lower sales in the September quarter, due partly to the impact of several days when Jamaicans were not allowed to leave home and a very rainy period reduced sales volume. The stock was trading around the $115 range before the release of the third quarter results was knocked down to trade around the $100 level. The company announced a proposal for a management fee levy by Cemex at which time sellers pushed the price to the low $70 level. The selloff seems overdone, with the company having good prospects to go on to deliver good profits for investors as it benefits from the boom now taking place in the building industry.
This sector is set to continue to grow with government fiscal operations creating more space for the private sector thus taking pressure off interest rates and helping to keep them low to provide a continual stimulus for the sector and the wider economy.
VM Investments – Earnings per share is projected at 80 cents for 2022. The company had good results up to the September quarter, with revenues climbing a strong 33 percent for the September quarter and year to date and profit surging 82 percent in the third quarter and 69 percent year to date. One gather that many financial institutions had negative effects from the changes in interest rates during the December quarter as trading activities slowed thus generating less fee income than previously. The group is set to acquire a pool of mutual funds in the Eastern Caribbean with net assets around J$1.6 billion that will generate increased management fees as the company continues to look for growth going forward.

Audrey Tugwell Henry Scotia group’s CEO

Scotia Group -Earnings per share is projected at $3.65 for the year to October 2022. The group has been focusing on restructuring its operations to fit the new way of banking that relies less on physical branches than before. That has led to some branch closures and changes to services provided. This will result in reduced operating costs that will start to show in the current year.
The advent of Covid-19 in 2020 led to increased nonperforming loan provisions and a contraction in lending, with loans net of loan provisioning, falling from $221 billion in October 2020 to $209 billion in 2021 and declining from $216 billion at the end of July 2021. The fall in the loan growth should be reversed in 2022 with expansion in the local economy and continued buoyancy in the building market. Additionally, interest rates were kept to a minimum in the local economy that result in reduced interest income but with the Bank of Jamaica hike rates from half a percent to the range of 4 percent, the group will generate much increase in interest income. The increased rates could add around $9 billion to revenues in a full year and increase profit.
Investors should be focusing on the medium term prospects than on the recent past that was negatively affected by short term developments that won’t last.
PanJam Investment – Earnings per share is projected at $8 for the year. A diversified group, with focus on the property market commercial and more recently the hotel sector, liquid investments managed directly by themselves and through its 30 percent associate, Sagicor Group. Investment in the stock is likely to deliver good long term returns, but the stock seems undervalued currently with quite a bit of upside potential.
For the quarter ending September last year, profit attributable to shareholders amounted to $2.5 billion, up from $1.5 billion in 2020 and $4.8 billion for the nine months versus $2 billion in 2020, resulting in Earnings per stock unit for the quarter of $2.33 and $4.52 for the nine that should push the full year results around $7 placing the stock that traded at $66 at the end of December as undervalued at a PE of 9.6 compared to the market average of just over 16.

Christopher Williams, Proven Investments CEO.

Proven Investments – Earnings per share is projected at 0.28 US cents for the year to March 2023. Proven stock has not performed over the past year but it could do so this year as acquisitions made recently, starts to contribute to improvement in revenues and profit. Investors would recall that the company raised fresh capital in late 2020 amounting to US$29 million in addition to sums raised a year or two before that was not fully utilized to acquire new business that would deliver a rate of return on investment that was much greater than cash funds. During the last year, the company closed on some acquisitions that are set to contribute to increased profits and enhanced earnings per share. The company also plans to rationalize some of the geographically diverse holdings to generate economies of scale and thus improve profitability further.
Grace Kennedy – Earnings per share is projected at $12 for the year. Earnings of $12 may appear steep, but that is possible, with continued growth in the food division and recovery in the financial sector as well as strong economic recovery in the main markets it operates in. regardless the stock is currently undervalued and will be a good vehicle for long term growth.
QWI Investments – Earnings per share is projected at 88 cents for the year to September 2022. The numbers appear rich but ICInsider.com expects Access Financial Services to come into its own in the current year and drive its stock price well into the $50 region or more and along with other excellent holdings of QWI that are poised to deliver great returns during the year. The stock was one of the better performers on the Main Market last year with a rise of 14 percent and the NAV increasing 21.5 percent. Last year NCB Group had a block of shares on sale that pressured the price for months but those are taken out and the company may be in a position to buy back shares as such 2022 is likely to be a year of improving fortunes.

Christopher Levy – Jamaica Broilers President and Chief Executive.

Jamaica Broilers – Earnings per share is projected at $3 for the year to April 2023. The group has been expanding with a good degree of focus on the North American market.
For the year to October, last year’s group revenues for the six months amounted to $35.8 billion, 35 percent higher than the $26.5 billion achieved in the corresponding six months of the previous year. Gross profit for the six months increased less than the growth in revenues at 14 percent to $7.3 billion, Gross profit as a percentage of sales declined from 24 percent in the prior year to 20 percent. The decline is primarily attributable to increased input costs that were partially mitigated by the significant growth in the US business. For the six months ended 30 October 2021, the net profit after tax was $872 million, a 21 percent decrease versus the corresponding period in the prior year. The decrease is primarily due to foreign exchange gains of $290 million in the previous year, including in finance costs, compared to foreign exchange losses of $70 million in the current year. The prior year’s gains were mainly in the Haiti Operations where the Haitian Gourdes experienced significant revaluation against the US dollar. Operating profit of $1.7 billion was aligned with the prior year.

Junior Market investors having a blast

With just two weeks of the new year, Junior Market stocks are hot with the market index gaining just 1.2 percent year to date, but the index does not give a full picture of what is happening. In 2021 the market index rose just under 30 percent, already the gains in four stocks now exceed that performance.
AMG Packaging hits a 52 weeks intraday high of $3.90 last week is up a stunning 55 percent to the end of the week at $3.40. The company reported a 146 percent rise in profit for their first quarter and the price is expected to surge this week. KLE Group is up 42 percent with the price being driven by the expectation that the company will pull in a tidy sum by ICInsider.com estimate could be $50-100 million from their north coast joint venture development during the course of the year. Newly listed Spur Tree Spices is up 32 percent on its first day of listing. With demand for the stock around 150 million units on the bid above $1.30 to $1.32 on Friday just before the close, with very little supply up to $2, so far, investors can expect to see another big hike in this stock’s price. Caribbean Brokers is up 27 percent on top of the 27 percent rise in late 2021 following the release of a big jump in profits over 2020 for the nine months to September. Dolphin Cove is up 27 percent to Friday at $19.05 but the stock traded up to $23.50 in the past week and is expected to rise sharply higher in 2021 as revenues and profits recovery as the tourism trade bounces back strongly in 2021 to match 2019 numbers or close to them.

3 new ICTOP10 listings as Spur Tree exists

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The Junior Market ICTOP10 stocks have three new listings in a week that saw Spur Tree Spices trading for the first time on Friday with the price climbing to $1.32 for a rise of 32 percent since the Initial Public offer at the end of 2021, there are no new Main Market listings.
Other stocks that were in the spotlight this past week were ones that lasted off to record new all-time highs and include AMG Packaging, Caribbean Assurance Brokers, Caribbean Producers and Dolphin Cove a TOP10 contender up to the week ending December 2, also hit a 52 weeks’ high of $23.50 this past week to be up more than 100% since it came into the top flight in August last year at $9.86.
With the rise in the price of Spur Tree Spices, the stock is one of four to move out of the TOP10, followed by Medical Disposables that 16 percent for the week and Caribbean Cream that reported terrible third quarter results with a loss being made in the period as revenues climbed 14 percent in the quarter. Coming into the TOP10 are Lumber Depot, Fontana and General Accident.
Junior Market, AMG Packaging rose a strong 45 percent, ahead of the first quarter results to November that showed profit after tax jumping a big 146 percent over 2020. Investors can expect more gains to come this coming week as the stock traded up $3.90 last week. Caribbean Assurance Brokers climbed to a new 52 weeks’ high during the week and closed $3.12 up 26 percent, Access Financial Services continues to seesaw and recovered 17 percent to $20 this past week and Elite Diagnostic gained 8 percent to $3.18.
The sharp price movements in the Junior Market reduced the potential gains markedly, with the average gains projected for the TOP 10 Junior Market stocks now 122 percent versus 148 percent last week.
The top three stocks are Access Financial Services followed by Lasco Distributors and Caribbean Assurance Brokers can gain between 124 and 160 percent, sharply down from 182 and 204 percent, previously.
Major Main Market TOP10 moving stocks are Caribbean Producers up 7 percent, to $15.99 and Radio Jamaica rallying 7 percent to $3.45 as increased buying interest came in for the stock.
The potential gains for Main Market stocks moved from 146 percent to this weeks’ 144 percent this week, with top three Main Market stocks being Guardian Holdings followed by JMMB Group and Radio Jamaica all projected to gain between 161 and 257 percent up from 199 and 258 percent last week.
The Junior Market closed the week, with an average PE of 14.7 based on ICInsider.com’s 2021-22 earnings and is currently well below the target of 20 and the average of 17 at the end of March this year based on 2020 earnings. The TOP 10 stocks trade at a PE of a mere 9.1, with a 38 percent discount to that market’s average.
The Junior Market can gain 36 percent to March this year, based on an average PE of 20 and 16 percent based on an average PE of 17. Eleven stocks representing 26 percent of all Junior Market stocks with positive earnings are trading at or above this level averaging 25.
The average PE for the JSE Main Market is 16.4, just 16 percent less than the PE of 19 at the end of March and 22 percent below the target of 20 to March 2022. The Main Market TOP 10 average PE is 8.5 representing a 48 percent discount to the market and well below the potential of 20. A total of 14 stocks or 30 percent of the market trade at or above a PE of 19, with most over 20, for an average roundabout 25, suggesting that the accepted multiple is between 20 and 25 times the current year’s earnings.
ICTOP10 focuses on likely yearly winners, accordingly, the list may or may not include the best companies in the market. ICInsider.com ranks stocks based on projected earnings to highlight winners from the rest, allowing investors to focus on potential winning stocks and helping to remove emotional attachments to stocks that often result in costly mistakes.
IC TOP10 stocks are likely to deliver the best returns up to March 2022 and ranked in order of potential gains, based on the possible increase for each company, considering the earnings and PE ratios for the current fiscal year. Expected values will change as stock prices fluctuate and result in weekly movements in and out of the lists. 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.

30% gain for Spur Tree Spices

Shares in Spur Tree Spices started trading this morning at $1.30, with a mere 3 shares changing hands as the newly listed Junior Market stock attracts huge demand, with 389 bids posted ahead of the market’s opening, ranging from $1 to a high of $1.30, with demand totaling 6.46 million units at $1.30.
An indication of demand to buy below $1.30, is as follows; 527,000 units at $1.29, a total of 3.9 million shares at $1.25 and 3.6 million at $1.20. Sell orders start at $1.50 with 12,500 followed 1,500 units at $1.70, 26,000 at $1.80 56000 at $1.99 and 107,000 at $2 with other reasonable offers going up $3.20.
Under the stock exchange rules, trading in the stock is now frozen until 10.30 this morning and cannot trade at a higher price than $1.30 today. Following the reopening of the stocks for trading, after trading was frozen, bids have come in for more than 36 million units at $1.32, over 23 million at $1.31 and 38.46 million at $1.30.
The movement in the stock helped push the Junior Market Index over the 3,500 mark for the first time since early October 2019.

Profit drop at Elite but watch this stock

Revenue of $118 million for the first quarter in 2020 fell 7 percent to $110 million in the first quarter to September 2021, resulting in a loss of $10.3 million compared to a profit of $16.7 million the previous year for Elite Diagnostic.
Reduced revenues impacted profit margin with a decline to 61.4 percent from 66.25 percent in 2020 and from 63.3 percent for the fiscal year to June. Input cost climbed 6 percent to $42 million from $40 million and gross profit fell 14 percent to $67 million from $78 million.
On the surface, the last reported results for the company may drive fear into the minds of investors but that would lead to a miss of potentially profitable investment for the future. “Net profit was impacted by increased administrative expenses, depreciation and foreign exchange losses”, management advised shareholders in their commentary on the results.

Elite Diagnostics

The report to shareholders continued, “revenue was affected by Covid-19 with reduction of operating hours and reduced procedures. Currently, the company’s operational hours are back to normal. An unusually lengthy breakdown of the CT also impacted our revenues during the quarter. Along with our regular preventative maintenance of the machines, the company has invested in equipment and parts to reduce some of the downtimes of the machine breakdowns”.
“The St Ann location revenue is increasing month over month since all modalities became operational in the first quarter of 2020. The company is cautiously optimistic as the effects of Covid-19 more negatively impact the rural areas of the country. The company continues to see steady demand for imaging services at all locations.”
Administrative expenses rose 13.5 percent to $46 million in the quarter from $40 million and depreciation jumped 44 percent to $25 million from $17.4 million in 2020. Finance cost was steady at $10 million, while foreign exchange movement resulted in a $3 million swing from a surplus of $1 million in 2020 to a loss of $2 million in 2021.
In spite of the loss incurred in the quarter, gross cash flow was positive with inflows of $15 million, down from $28 million in 2020. Additions to fixed assets offset by loan inflows utilized just over $15 million as net cash outflow for the period ended at $503,581. At the end of September, shareholders’ equity stood at $449 million, long term loans at $209 million and short term loans at $10 million. Current assets ended at $679 million, including trade and other receivables of $44 million, cash and bank balances of $39 million. Current liabilities ended the period at just $20 million, with net current assets ending at $659 million.
The results ended with earnings per share being a loss of 3 cents for the quarter, down from 4 cents for the quarter in the prior year. Based on the latest results, most investors would be looking elsewhere for investment opportunities. In doing so, they could miss one of the biggest winners in 2022. IC Insider.com forecasts 30 cents per share for the fiscal year ending June 2022, with a PE of 10 times the current year’s earnings based on the price of $3.05 the stock traded at the Jamaica Stock Exchange Junior Market. The company has more room for revenue growth from the addition of new equipment, continued growth in the relatively new St Ann location and additional branches in the future.

Drax Hall branch of Elite.

The company paid a dividend of 9 cents in October this year 2021. Net asset value is $1.29, with the stock selling at just over 2.4 times book value.
Reporting to shareholders in the annual report for the year to June, the chairman, Steven Gooden, stated, “we have been fortunate to see an increased demand for imaging services and were prudent to have sought to capitalize on this demand – through the acquisition of new equipment. We will continue to pursue this growth strategy by installing a new MRI system at the Liguanea branch, which we anticipate will be operational beginning early 2022. This new machine, we expect, will serve to reduce the company’s operating hours and thereby its related expenses. Additionally, with the St Ann branch issues finally resolved, the location is now operating at the desired capacity. Looking ahead, the near to medium term holds the classic combination of challenge and opportunity.On the one hand, we see continued challenges in terms of rising prices, compounded by the depreciation of the local currency; the company pays all its rent and purchases equipment and supplies from overseas in US dollar, so any depreciation in the dollar will affect the bottom line. On the other hand, we also see our cash flows remaining stable, if not strong, amid the continued high demand for our services. The demand is so strong that, were it not for dealing with the issues associated with the Drax Hall branch, the company might well have advanced plans for another branch. We intend to approach growing the company’s footprint with alacrity and all seriousness in the coming year”.

Caribbean Cream stock for the main course in 2022

Sale revenues rose 16 percent for the half year, to August 2021 $1.03 billion from $891 million but rose a mere 5.4 percent for the August quarter, to $486 million from $461 million in 2020 at ice cream maker Caribbean Cream. Management attributed the poorer second quarter performance to the several no movement days imposed by the government during the quarter.
Profit melted in the quarter by 85 percent to just $7 million from $47 million in 2020 and fell 17 percent for the six months to August, to $61 million from $74 million in 2020.
The company has not had a consistent and predictable profit outcome for some years, still, the trajectory has generally been up. In 2019 the company posted $89 million after tax that fell to $55 million in 2020 and $101 in 2021. The 2022 fiscal year profit is poised to beat that of 2021, notwithstanding the setback in the second quarter.

Caribbean Cream posted significant gains in profit in Q1.

Improvement in profit margin in the first half of the year was consistent at 41 percent, with the prior year’s six months but has increased over the 37 percent achieved for the fiscal year to February 2021. But it fell from 50 percent in the 2020 august quarter to 44 percent in 2021. The effect, operating profit fell 6 percent in the quarter to $215 million from $230 million but increased 15 percent for the year to date, to $423 million from $369 million in 2020.
Administrative expenses excluding depreciation rose 25.4 percent to $134 million in the quarter and increased 32 percent in the six months to $249 million, from $188 million in 2020. Sales and distribution expenses increased 8 percent to $30.5 million from $28 million in 2020 for the half year and were virtually flat at $15.5 million for the second quarter. Depreciation charge rose from $59 million in 2020 to $62 million in 2021 for the six months. Finance cost rose in the quarter to $6.7 million from $6 million in 2020 and $9 million to $12 million for the six months.
Gross cash flow brought in $151 million versus $160 million in 2020. Working capital growth used up all but $13 million in 2021 versus $81 million used up in 2020. Additions to fixed assets consumed $83 million for the 2021 half year versus $62 million in 2020. Loan repayment and paying $26 million dividends resulted in outflows of $114 million. At the end of December, shareholders’ equity stood at $869 million, with long term borrowings at $303 million and short term loans at $13 million. Current assets ended the period at $408 million, including trade and other receivables of $65 million, cash and bank balances of $103 million. Current liabilities ended the period at $173 million. Net current assets ended the period at $235 million.
The results in the past few years being inconsistent does not mean that the future will continue in that vein. One focus is on taking a more significant share of the market for ice cream and related products while finding avenues to cut costs. The company announced earlier this year that in collaboration with Power Factor Technologies, a power engineering services company, they embarked on a major project to install a 630 kilowatt capacity Combined Heat & Power plant fueled by LNG at the company’s premises. This project is scheduled to come on stream at the start of 2022 and is expected to generate considerable cost savings and should have a positive impact on results for 2022 onwards.
The stock closed 2021 at $5.70 with a PE ratio of 9 much lower than the average for the market around 15 and below many Junior Market stocks trading around 20 times earnings.

Sharp rebound for Dolphin Cove


In March 2020, Jamaica closed its borders to incoming visitors by planes and ships as a result of the emergence of the deadly Covid-19 virus, thus bringing to a halt the important tourist industry and many others that relied on it.
The impact was immediate and devastating to the entertainment attraction entity, Dolphin Cove based in Ocho Rios, with locations on the north coast of the island. For the nine months to September 2020, the company posted revenues of just US$3.6 million and a loss of $864 million, with the September quarter generating revenues of just $320,000 and a loss of $590,000. By the third quarter last year, cruise shipping from which it generates a large portion of income had just 8,381 visitors in 2021 compared to 219,000 for the first nine months of 2019, but visitor arrivals by planes were back to 70 percent of the 2019 numbers for the third quarter and 54 percent in the June quarter and by November last year arrivals were down around 20 percent from the same month in 2019, an indication that the industry could well be nearly back on track in 2022 and provide a considerable boost to the company’s revenues.

Dolphin Cove closed at a 52 weeks’ high on Monday.

The company lost US$1.13 million for 2020, but chalked up a profit of $1 million in the 2021 third quarter, from $2.57 million in operating revenues, and a profit of $2.1 million for the nine months from operating revenues of $5.44 million. While revenues rose 51 percent in the nine months, expenses fell from $3.5 million to $2.9 million, with all categories of cost falling except for finance that rose from $96,000 to $215,000. Although operating revenues spiked 703 percent over the measly income for September 2020 quarter, direct expenses rose 61 percent to $258,000 and other operating expenses rose 139 percent from $548,000 to $1.31 million. The above numbers suggest that costs are down generally, it appears that some costs may have been fully trimmed from the system.
Gross cash flow brought in $2.5 million but growth in working capital, addition to fixed assets resulted in negative funds flow of $149,000 for the nine months. At the end of September, shareholders’ equity stood at US$29 million. Total long term borrowings amount to US$820,000 with bank overdraft at $1 million. Current assets ended the period at $6 million including trade and other receivables of $2.7 million, cash and bank balances of $2 million. Current liabilities ended the period at $2.6 million. Net current assets ended the period at $2.4 million.
At the end of December, the stock traded at $15 with a PE of 11 with the earnings per share of $1.35 and a PE of 5 with ICInsider.com projected earnings of $3 for the current year.

The Junior Market could gain 60% in 2022

The Junior Market continues to offer opportunities for supper stock performance in 2022 with an average PE for the market at 9 times 2022 earnings versus close to 15 at the end of 2021, and offering a potential gain of more than 60 percent to the end of 2022. There are 26 Junior Market stocks that can double in 2022.
The market is technically at a support level that is steering the market upwards, more importantly, it is caught in a triangular formation that is set to push the market sharply upwards once it breaks out, which is not far off. The market is also trading in a channel that goes back to May 2020 and is pointing to a record high of more than 4,000 points in a few months.
Last year finished with a number of stocks trading at or above 20 times earnings in the Junior Market if that level of valuation continues into 2022 then the gain in the market could exceed the above potential gains.
The market will continue to benefit from recovery of some of the companies that suffered major fallout due to the restrictions placed on operations as a result of the COVID19 epidemic in 2020 into 2021. Stocks that could benefit in a big way are, Access Financial, Main Event, Everything Fresh, Express Catering, Knutsford Express, Jetcon Corporation, Dolphin Cove and Stationery and Office Supplies.
Access FinancialEarnings per share are projected at $4.80 for the year to March 2023 and $2.60 for the 2022 fiscal year to March. The company showed signs of recovery from the beating taken in 2020 and 2021 as a result of steep provisioning for doubtful loans and a slowdown in lending. That situation started to reverse in 2021 up to September with loans net of doubtful loans up to $4.38 billion versus $3.9 at the end of September 2020. Revenues and profit in 2021 tripled the September 2020 quarter and the 2020 half year results. This trend is expected to gather pace in 2022 and beyond. See full article on the company recently published.
AMG Packaging – Earnings per share is projected at 35 cents for the year to August 2022 as new machinery facilitates cutting costs and creating more flexibility in the manufacturing operations. See full article on the company recently published.
Caribbean Brokers – Earnings per share is projected at 40 cents for 2022. The company reported strong earnings in the September quarter, with EPS at 41 cents for the quarter and 33 cents for the nine months. The company tends to get the bulk of its income in short periods with the other quarters reflecting relatively lower income that does not cover the cost. Unfortunately, the company failed to provide investors with appropriate information to fully glean what the results will mean for the full year and beyond. The end result is that the stock has suffered from investors’ interest when it really should have surged well over $4 per share, based on the latest results and what can be expected for the full year.
Elite Diagnostic – Earnings per share are projected at 80 cents for the year to June 2023. The stock is under pressure but that is due to investors not paying adequate attention to what the company is doing and the improvement in sales, quarter over quarter as well as the strong cash flow it’s generating. See full article on the company recently published.
Medical Disposables – Earnings per share are projected at $1.50 cents for the year to March 2023. Profit after taxation surged 455 percent to $21.5 million for the second quarter to September from a loss of $6 million in 2020. For the year to date, profit after tax spiked 458 percent to $47 million, up from a loss of $13 million in 2020. Income from sales jumped 49 percent to $936 million for the September quarter, up from $630 million in 2020 and climbed 42 percent for the six months ended September 2021 to $1.62 billion, from $1.14 billion in the prior year. The acquisition of majority ownership of Cornwall Enterprises along with new distributorships helped in fueling the sales surge. See full article on the company recently published
Caribbean Cream – Earnings per share is projected at $1.30 cents for the year February 2023 from 65 cents projected for the 2021 fiscal year. Management is building an enterprise that can go up against the competition successfully and deliver superior returns for shareholders. They have cut costs in the past two years and grew their market reach by setting up a distribution depot in the Ocho Rios region that helped to push sales. The implementation of their own power generating plant will lead to a reduction of energy and other utility costs. Excluding the slowdown in sales in the August quarter when the government introduced no movement days, sales increase is been robust and is expected to be on track again for the second half of the year into the 2023 fiscal year.
Dolphin Cove – Earnings per share is projected at $3 for this year and $1.35 for 2021.  This company is in a period of major recovery with profit surging and set to get even better with the tourism industry rebounding strongly and closing in on 2019 arrivals.  See full article on the company recently published.
Spur Tree Spices – Earnings per share is projected at 19 cents for this year.  A recent IPO, this stock is set to do extremely well over the next few years. Expect local sales to surge as a result of the publicity they received due to the IPO.  See full article on the company recently published.
Stationery and Office Supplies – Earnings per share is projected at 95 cents for the current year and reflect a full recovery from the fall out of the Covid19 disruption to sales.  The company has made major strides since 2020 when sales were badly affected by the shutdown of businesses and schools. That has changed and the company posted a 175 percent increase in pre-tax profit of $78 million versus $29 million for the nine months to September 2020, from a 13.5 percent rise in revenues. Earnings per share for the third Quarter of 2021 was 8 cents, compared to 3 cents in 2020. For the 9 months ended September 2021 earnings per share was up to 31 cents from 11 cents in 2020. reports are that the company had the best four quarter in its history and the performance seems to have carried over into 2022 and should continue to be robust with opening and expansion in the wider economy.
Lasco Distributors – Earnings per share is projected at 50 cents for the year to March 2023.  For the half year to September, revenues rose 15 percent to $11.6 billion and profit increased 6 percent to $615 million as margins were squeezed in the period from higher input cost, followed by delayed price increase. With price adjustments since implemented, margins should increase and result in higher profits. Revenues should pick up as tourist traffic rose sharply throughout the year and schools are now back in operations both activities will impact revenues positively.
With earnings per share of 14 cents for the half year, full year earnings should exceed 30 cents making the stock undervalued at $3.45 with a PE of 11, versus the market average of just over 14.
The company has no borrowed funds and possesses $2.8 billion in cash funds, with annual gross cash flows of over $1.2 billion.
Everything Fresh – Earnings per share is projected at 15 cents for the year. The company seems to have turned the corner with a small profit in the September quarter. Importantly, gross cash flow for the nine months to September was positive at $15 million despite a loss of $20 million. The hotel sector is enjoying a strong rise in visitor arrivals with December last year down 24 percent compared to 2019 compared to a fall of 45 percent for 2021 versus 2019 preliminary data shows, this is a very positive development for the company going forward. The current year should see an even greater number of visitors that should better the performance in December. This is good news for a company that markets the bulk of sales to that sector.
Lasco Financial – Earnings per share is projected at 45 cents for the year March 2023. Net Profit for the second quarter ended at $134 million compared with $30 million in the similar period of 2020. The second quarter suffered revenue reduction from $617 million in 2020 to $554 million in 2021, due to disruption in business during the period as a result of no movement days, while cost rose from $400 million to $424 million leaving profit after tax at $59 million from $136 million in 2020. Earnings per share ended September at 10.5 cents and that should climb sharply in the second half with the impact of the high volume Christmas period having a positive impact. The company has cash funds of $1.7 billion at the end of the period as they curtailed lending.
Lasco Manufacturing – Earnings per share is projected at 60 cents for the year March 2023. For the half year to September, revenues rose 13 percent over the $4.1 billion generated in 2020 to $4.65 billion and profit popped 6 percent to $782 million, but the second quarter saw profit falling 3.8 percent to $380 million from revenues that increased 2.7 percent to $2.34 billion. Earnings per share came in at 19 cents for the half year on target for around 40-45 cents for the full year as margins increase based on price adjustments.
Cash on hand stood at $1.8 billion with borrowings at $600 million.
General Accident – Earnings per share are projected at 80 cents for the year.

General Accident spreading wings

Net profit after tax of $351 million, was generated for the nine months to September up from $125 million in 2020, with earnings per share of 39 cents versus 14 cents in 2020. Profit in the third quarter was $177 million compared to just $12 million in 2020. Earnings per share in the September quarter was 19 cents.
The company is in an expansion mode, with the establishment of operations in Barbados and Trinidad and Tobago, with both operations expected to break even in 2022. Higher interest rates locally and the ability to increase investment in higher yielding assets are measures expected to boost investment income in 2022.
Jetcon Corporation – Earnings per share is projected at 15 cents for the year but don’t be surprised it ends as high as 25 cents, depending on how rapid sales increase becomes. On a recovery path from the pandemic slump in 2020, revenues to September 2021 was up 30 percent but and should end the year above that level based on what the company reported in the third quarter, that sales for the fourth quarter are strong, with units sold in November back at regular pre-pandemic levels and already exceeded sales for the third quarter, at $196 million with the upward swing continuing into December, and with increased bookings to date. The improved sales position in the final quarter should result in an increased gross profit margin and a better net position than in 2020.
The above developments augur well for 2022 that should see revenues climbing appreciably again, with growth of 50 percent not out of the picture. If that were to happen it could lift profit margins closer to 20 percent from much lower levels in 2020 and 2021.
Bonus Pick
Honey Bun is our bonus pick for the year. Earnings per share are projected at $1 for the year to September 2022, as revenues continue to climb at a healthy pace. Earnings may be too low for it to qualify for the TOP15, but the stock could double from its current price of $9.30 per share during the year.

ICTOP10 scaling new highs

Main Market TOP10 stock, Sagicor Group price fell to $52.31 to return to the TOP10 after closing the previous week at $58 and replaced by Scotia Group that slipped from $36 to $35.50 as both the Main and Junior Markets displayed some bullish signs in the past week, with Caribbean Producers hitting a record high of $15 and gained 436 percent in just over a year.

Sagicor Group back in ICTOP10.

Other big news for the week was the continued rise of  ICTOP10 Main Market stock, Caribbean Producers that closed the week with a gain of 15 percent at a record high of $15 and is now in the sixth spot with the potential to gain another 120 percent in months. Radio Jamaica rose 7 percent for the week to $3.23 and Guardian Holdings rose 5 percent.
Junior Market AMG Packaging rose 6 percent but could climb higher with the first quarter results to November, due this coming week and the company is also expected to announce a dividend. Lasco Financial put on 7 percent to land at $3.20, Elite Dynastic gained 4 percent to $2.95, Caribbean Assurance Brokers climbed as high as $2.75 during the week but closed down at $2.48 for a 3 percent gain, and Access Financial Services fell 10 percent to $17.08 and Lasco Distributors lost 6 percent to $3.20.
Elsewhere, investors in the Spur Tree Spices Initial Public offer will receive just over 11.76 percent of the shares they applied for in the heavily oversubscribed issue that is sure to drive the stock price with a big bang in the first week of trading which should be ahead of the end of January.
The top three Main Market stocks, this week are Guardian Holdings followed by JMMB Group and  Radio Jamaica all projected to gain between 199 and 258 percent up from 183 and 261 percent last week.
The Junior Market’s top three stocks for the week are Access Financial Services followed by AMG Packaging and Caribbean Assurance Brokers. All three can gain between 182 and 204 percent versus 174 and 218 percent, previously.
The average gains projected for the TOP 10 Junior Market stocks is 148 percent and Main Market stocks moved from 152 percent to this weeks’ 146 percent.
The Junior Market closed the week, with an average PE of 14.8 based on ICInsider.com’s 2021-22 earnings and is currently well below the target of 20 and the average of 17 at the end of March this year based on 2020 earnings. The TOP 10 stocks trade at a PE of just 8.2, with a 45 percent discount to that market’s average.
The Junior Market can gain 35 percent to March this year, based on an average PE of 20 and 15 percent based on an average PE of 17. Ten stocks representing 26 percent of all Junior Market stocks with positive earnings are trading at or above this level and averaging 25.
The average PE for the JSE Main Market is 16.4, just 16 percent less than the PE of 19 at the end of March and 22 percent below the target of 20 to March 2022. The Main Market TOP 10 average PE is 8.4 representing a 49 percent discount to the market and well below the potential of 20. A total of 14 stocks or 30 percent of the market trade at or above a PE of 19, with most over 20, for an average roundabout 25, suggesting that the accepted multiple is between 20 and 25 times the current year’s earnings.
ICTOP10 focuses on likely yearly winners, accordingly, the list may or may not include the best companies in the market. ICInsider.com ranks stocks based on projected earnings to highlight winners from the rest, allowing investors to focus on potential winning stocks and helping to remove emotional attachments to stocks that often result in costly mistakes.
IC TOP10 stocks are likely to deliver the best returns up to March 2022 and ranked in order of potential gains, based on the possible increase for each company, considering the earnings and PE ratios for the current fiscal year. Expected values will change as stock prices fluctuate and result in weekly movements in and out of the lists. 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.

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