Profit after taxation surged 455 percent to $21.5 million for the second quarter to September from a loss of $6 million in 2020 at Medical Disposables. 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 increase in sales in the second quarter “is due to increased business activity as well as the consolidation of the operations of the new subsidiary Cornwall Enterprises Limited. There has been a significant improvement in the movement of pharmaceutical and medical disposable items, especially with fewer lock-down periods when compared to last year,” Kurt Boothe, Chief Executive Officer, reported to shareholders in the report accompanying the financials.
Gross profit after selling and distribution expenses jumped 74 percent in the quarter to $184 million, up from $106 million in 2020 and climbed 85 percent for the half year to $303 million from $164 million in the prior year. The period’s gross profit percentage rose to 25 percent compared to 23 percent in 2020 for the six months and from 24 percent in 2020 to 25 percent for the September quarter.
Finance and other income added $8 million to profit in the September 2021 quarter versus $1.5 million in 2020 and for the half year $10 million versus $3 million in 2020.
Selling and promotional expenses increased 26 percent from $46 million in the 2020 second quarter to $59 million and rose 14 percent from $103 million in 2020 to $117 million for the six month period.
Medical Disposables.
Administrative expenses jumped 80 percent from $63 million in the 2020 second quarter to $112 million and surged 55 percent from $113 million in 2020 to $175 million for the six months. Depreciation charge moved 90 percent from $7 million for the September 2020 quarter to $13 million in 2021 and rose 45 percent for the half year from $14 million to $20 million.
Finance cost fell 26 percent from $38 million to $28 million in the quarter and dipped 9 percent to $45 million $50 million for the half year. Foreign exchange losses amount to $1.75 million in the latest quarter from $4 million in 2020 and $5.4 million for the year to date versus a slight loss of $76,823 in 2020.
Gross cash flow generated $75 million for the six months, but growth in working capital drove it down to a negative $119 million versus negative $190 million in 2020. The cash flow deficit was financed by net loan inflows of $225 million. The company paid a dividend of $18.4 million during the half year. At the end of the quarter, Current assets ended with $1.79 billion, including cash of $95 million, inventories of $944 million and receivables of $745 million. Current Liabilities amounts to $1.24 billion and includes Payables of $741 million and short term loans of $486 million. Net current assets ended the period $549 million. Shareholders’ equity stands at $1.05 million, with long term borrowings at just $284 million.
Earnings per share came out at 8 cents for the quarter and 18 cents for the half year. ICInsider.com forecasts earnings of 70 cents per share for the current year and $1.50 per share for 2023. The stock traded at $5.62 on the Jamaica Stock Exchange Junior Market on Wednesday with a PE ratio of 8 times, current earnings well below the average of 14.5 currently for the Junior Market. The stock gets the coveted ICInsider.com BUY RATED seal.
For the three months to September, profit before tax rose 30 percent to $81 million from $62 million in 2020 and after an increased charge of 488 percent in profit tax, profit ended 23 percent lower than in 2020, at $43 million.
Gross cash flow brought in $356 million, but growth in working capital, purchase of fixed assets of $101 million, increased investments of $34 million and paying $59.4 million dividends reduced to gross intake to $104 million. At the end of September, shareholders’ equity stood at $1 billion, with long term borrowings at a mere $16 million and short term at $6 million. Current assets ended the period at $637 million, including trade and other receivables of $108 million, up from $723 million in 2020, with cash and bank balances of $404 million. Investments in stocks amount to $96 million, up from $61 million in 2020. Current liabilities ended the period at S230 million. Net current assets ended the period at $407 billion, but the company could draw down on the investment in shares that would swell net current assets.
General Accident inched from $6.60 last week to $6.70 this week, but earnings were revised downwards to 65 cents for the year, helping it exit the TOP10. New to this week’s ICTOP10 are the Junior Market’s Medical Disposables, with the price falling 23 percent to $5.20 from $6.78 last week and Caribbean Cream. Sygnus Credit Investments dropped out of the TOP10 the previous week and returns with the price dropping 17 percent from $18.90 down to $15.66 this past week, while Proven Investments also returns.
The top three Main Market stocks are Caribbean Producers, Guardian Holdings and JMMB Group, which are projected to gain between 212 to 283 percent expected versus last weeks’ 227 to 261 percent.
The average gains projected for the TOP 10 Junior Market stocks moved from 185 percent last week to 145 percent and Main Market stocks remains unchanged at 163 percent.
The average PE for the JSE Main Market is 15.5, which is 23 percent less than the PE of 19 at the end of March and 29 percent below the target of 20 to March 2022. The Main Market TOP 10 average PE is 8, representing a 52 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 PE of 25.5, suggesting that the accepted multiple maybe around 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.
Gross profit margin in the quarter declined to 34 percent from 35 percent in 2020 and 38 percent for the fiscal year 2021 and resulted in gross profit rising 11.7 percent as the cost of sales jumped 20.4 percent to $865 million from $719 million in the 2020 quarter. The Christmas quarter is the best for the company, providing increased margins and much higher sales than the other quarters.
During the past week, Caribbean Brokers jumped 30 percent to close at $2.32 after hitting $2.96 on Thursday, following the company’s surprise to the market with outstanding results for the nine months to September. Elite Diagnostic rose 15 percent ahead of the release of the first quarter results that show increased sales over the June quarter and ended with a loss of $500,000 in the quarter versus a $10million loss in 2020, but the company generated cash inflows of $27 million for the quarter, slightly more than the dividend they recently paid. General Accident rose 8 percent ahead of quarterly results, Stationery & Office Supplies gained 7 percent, following improved nine months results. In the Main Market, Caribbean Producers jumped 24 percent following a big spike in September quarterly profit, but the stock has much more to do with earnings upgraded to J$1.65 per share for the year. Proven rose 6 percent, the rest were mostly downhill with a 10 percent fall for Guardian Holdings, VM Investments fell 7 percent and Radio Jamaica slipped 8 percent as investors reacted hurriedly to half year results that show the company is on track to reach ICInsider.com forecast of 45 cents per share.
The top three Main Market stocks are Guardian Holdings, Berger Paints and Caribbean Producers. These stocks are projected to gain between 227 to 261 percent expected versus last weeks’ 220 to 230 percent.
The latest results show that there are many undervalued stocks, but investors should focus on these stocks that could deliver good earnings growth in 2022.
The average PE for the JSE Main Market is 15.5, which is 23 percent less than the PE of 19 at the end of March and 29 percent below the target of 20 to March 2022. The Main Market TOP 10 average PE is 8, representing a 51 percent discount to the market and well below the potential of 20. A total of 12 stocks or 25 percent of the market trade at or above a PE of 19, with most over 20, for an average PE of 25.5, suggesting that the accepted multiple maybe around 25 times the current year’s earnings.
This week’s focus: QWI investments, one of ICInsdier.com TOP15 stocks for 2021, now boast a Net Asset Value of $1.43 at the end of the past week, the highest value since it was listed in 2019, but the stock is selling at 92 cents on the Main Market at a huge 36 percent discount to NAV, even as the composition of the portfolio suggests further increase in value is likely before the end of 2021. The NAV is up 23 percent from $1.16 at the end of December last year, just below the Junior Market gains for the year to date and well ahead of the Composite index rise. The stock price has increased by 19.4 percent from 77 cents at the end of 2020 to Friday. It seems that investors don’t buy into the concept of buying stocks when blood is in the streets.
Investors’ focus should now be on 2022 for the local stocks and the current year’s values to determine the appropriate values of each stock for a hold or fold decision.
The Junior Market can gain 52 percent to March next year, based on an average PE of 20 and 25 percent based on an average PE of 17. Seven stocks representing 15 percent of all Junior Market stocks with positive earnings are trading at or above this level, down from nine last week, indicating that many others will rise above the 17 mark in the weeks ahead.
ICTOP10 focuses on potential 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.
For the six months to September, profit after tax jumped 192 percent to $180 million from just $62 million for the similar period in 2020, while profit before tax jumped 192 percent to $241 million from $82 million.
Sygnus Credit Investment gave back the 5 percent increase last week to end at $17.80. Berger Paints and Proven Investments both gave up 3 percent during the week, while Junior Market Lasco Financial gave up six percent at the end of the week in closing at $3.05 and Caribbean Assurance Brokers lost three percent, from $1.79 to $1.74 as Medical Disposables rose four percent to $4.95 after hitting an intraday high of $5.80 on Friday and Lumber Depot rose four percent to $2.97.
The company will be paying a hefty dividend of 32 cents per share. Lasco Manufacturing and Lasco Distributor reported second quarter results. The former enjoyed a 13 percent increase in revenues to $4.65 billion and a 6 percent rise in profit to $782 million after increased taxation in the period versus a lower rate in 2020. The distributing company enjoyed a 15 percent rise in revenues to $11.6 billion and a 14 percent fall in after tax profit to $197 million.
The Junior Market closed the week with an average PE 13.2 based on ICInsider.com’s 2021-22 earnings and is currently well below the target of 20 and the historical average of 17 for the period to March this year, based on 2020 earnings. The TOP 10 stocks trade at a PE of a mere 6.8, with a 52 percent discount to that market’s PE.
TOP 10 average PE is 7.8, representing a 50 percent discount to the market and well below the potential of 20. A total of 12 stocks or 25 percent of the market trade at or above a PE of 19, with most over 20, for an average PE of 25.5, suggesting that the accepted multiple maybe around 25 times the current year’s earnings.
Most of the top 2021 stocks will not make the top 10 in 2022. The IC 80/20 rule, with a long 40 year history, shows an average of only two of the top ten stocks in a year repeat in the following one, while 4 out of 10 of the worst performing stocks will end up as TOP 10 winners in the succeeding year. The top seven stocks so far, with gains of 52 to 231 percent and three others gaining more than 100 percent are; Future Energy, Jamaican Teas, Fosrich, ISP Finance, Lumber Depot, Express Catering and Honey Bun. In the Main market, Caribbean Producers is 136 percent to date and is expected to deliver much more gains into 2022, Salada Foods rose 107 percent, Radio Jamaica has an increase of 103 percent, but investors can expect much more from this one but a lot is expected after the release of the September quarter results, Caribbean Cement is scheduled to release third quarter results next weekend, with the stock price up 88 percent for the year to date and Grace up 55 percent.
Elsewhere, Supreme Ventures released nine months results with 22 percent increased sales to $19.3 billion for the nine months but virtually flat third quarter sales of $6.3 billion with nine months profit slipping marginally from $1.55 billion to $1.54 billion and the third quarter falling from $596 million down to $311 million. Earnings per share ended at 57.7 cents and 11.8 cents for the quarter. AMG Packaging released full year results, with profits of $62.6 million, up from $56 million in 2020 with earnings per share of 12 cents. The quarterly profit was $20 after tax and, in 2020, $18.4 million after a tax credit. Construction of the new facility is complete, and machinery and equipment are ordered and is expected to be installed during the November quarter.
The top three stocks in the Junior Market are Elite Diagnostic, followed by Access Financial and Medical Disposables. All three have the potential to gain between 238 and 287 percent, from 220 percent and 300 percent previously.
50 percent discount to the market and well below the potential of 20. A total of 10 stocks or 22 percent of the market trade at or above a PE of 19, with most over 20, for an average PE of 25.5, suggesting that the accepted multiple maybe around 25 times the current year’s earnings.
Caribbean Cream half year’s results saw a modest 5 percent increase in sales in the second quarter, well below the first quarter increase of 28 percent, but cost rose above that of 2020, leaving a small profit of $7 million for the August quarter. The company’s management attributed the performance primarily to the no-movement days in operation during the quarter that curtailed sales. Knutsford Express returned to profit in the quarter of $9.2 million, from a loss in 2020 for the August quarter on improved revenues of $233 million from $122 million in 2020 but well off the $325 million in 2019. Paramount Trading had marginal movement in revenues for the August quarter of $369 million from $362 million in 2020, with a profit of $19 million versus $15 million in 2020.
The 80/20 rule of trading stocks should be ever present as the long 40 year history of the local market shows that only two out of each of the top ten stocks in a year repeat in the following while 4 out of 10 of the worst performing stocks end up as winners in the succeeding year. The lesson is that many of the top stocks for 2021 will not make it in 2022.
The top three Main Market stocks are 
The average gains projected for the TOP 10 Junior Market stocks moved from 210 percent to 200 percent and Main Market stocks from 170 percent to 173 percent.
ICTOP10 is not intended to select the best stocks in the market but ones that are most likely to be the largest winners within a fifteen month period. ICInsider.com ranks stocks to highlight the winners from the rest, allowing investors to focus on potential winners, helping to remove emotional attachments to stocks that often result in costly mistakes.
