Paramount’s profit leaps 163% in Q2

One of the branded product distributed by Paramount Trading

One of the branded product distributed by Paramount Trading

Profit after tax at Paramount Trading jumped 108 percent in the May quarter, on a pretax basis, and was up 73 percent after corporation tax in 2013, jumped 79 percent to $34 million, for the August quarter and leaped 163 percent in the November quarter to hit $49 million. The latest results raised the half years profit to $154 million over the similar period in 2013.
The improved results for the latest quarter, came from a 39 percent climb in revenues over the similar period in 2013, with revenues of $231 million versus $166 million in 2013. The latest quarter’s revenues are the highest the company has had, since listing in 2013. Gross profit margin jumped from 46 percent in the August quarter to 58 percent in November and from 49 percent in the same quarter in the 2013. For the six months to November 2014 the profit margin increased to 53 percent from 49 percent in 2013.
The company launched a new line of lubricants during the August quarter but sales are in their infancy at the time. According to a company executive in commenting on the August results, the increased sales was mostly from new customers added as well as increased sales of a product to an existing customer, who was not supplied with that product last year.
Administrative, selling and distribution cost, which fell in the August quarter came out at $33 million from last year’s $31 million. For the six months period these expenses amounted to $64 million versus $66 million in 2013. With the release of the August figures IC had projected profit to come in around $152 million in the current fiscal year or around $1.15 per share, the latest figures suggest that earnings per share will probably be closer to $1.40. At the current price of $2.80 the stock would be priced at a PE of only 2.2 making it a very good buy, bearing in mind that that many junior listings have been valued around 8 times earnings in the recent past, and around 6 times now, with the latter PE, the price should potentially get to $8.40 at the low end and $11 at a PE of 8. The company seems poised to raise its next fiscal year earnings to a much higher level than the above forecast (IC forecast $2 per share for 2016) so there seems to be much room for the stock to deliver high returns to investors. These figures do not reflect income or profit that should flow from the company’s acquisition of the Tradewell chemical line which they purchased from the Lasccelles group or any other acquisition that they may undertake in the near term. It also assumes that revenues which include some new customers will repeat going forward.
PTL chrt 11-14Financials| The profit to-date provided a strong 44 percent annualized return on average equity. Borrowed funds amounted to only $38 million, compared to the level of equity. Cash is up from $65 million but dividends of $23 million was paid out in December. Receivables which was at $178 million in August from $172 million at May, is down slightly to $172 in November, and represents an improvement considering the strong sales increase. Inventories at $203 million at the end of August and May, this year, jumped to $275 million in November but payables moved up moderately to $136 million from $128 million at the end of May.
The performance of the company during the quarter and for the 2014 justifies IC elevating the stock to BUY RATED status in mid-October last year.

Caribbean Cream’s Q3 profit up 19%

Kremi ice cream container

Kremi ice cream container

Caribbean Cream is reporting a subdued 19 percent increase in third quarter profit to November, well down from the 79 percent increase for the May quarter, but better than the drop from $7.9 million to only $1.3 million for the August quarter.
Based on the first quarter IC insider forecasted earnings to climb to 40 cents for the fiscal year and to rise to 70 cents in 2016. For the year to February in 2014, earnings came out at only 11 cents per shares, which was up from 5 cents the year before. IC Insider has revised the 2015 fiscal year results, to 22 cents and the 2016 to 60 cents. The reduction is partially due to a 64 percent jump in marketing and administrative cost in the August quarter compared with a 20 percent increase in sales revenues and a 28.5 percent increase in gross profit. For the period to November marketing, administrative and finance cost jumped by 56 percent to $173 million. The sharp increased marketing and administrative cost, looks like settling off, after the company revved up expenditure in these areas to better align management and operations with increasing business activity.
Last year, Management indicated that cost associated with the JMA Expo and development cost for the new Kremi advertising campaign, launched at the end of June, helped push cost in marketing and advertising. The new packaging for the retail products was launched in May, the company reported.
Sales revenues climbed 26 percent in November and is up from 20 percent in the prior periods and is up 22 percent for the nine months to hit $741 million. Growth in sales has slowed and is well down on the growth rate for the February and April quarters, at 48 percent each and 27 percent for the July quarter of 2013. Improvement in the plant and new packaging, should help in moving sales to a higher level, than the slower pace over the last three quarters.
Gross profit margin jumped to 47 percent in the latest quarter from 37 percent in the 2013 period but for the year to November the margin is at 38 percent up from 0 percent for the nine months period in 2013. Going forward margin should improve even more with the blast freezer installed in November which management says will cut utility cost with less usage and create capacity for greater production to enhance sales volumes. With the installation, Manager indicates they will be able to meet the increased demand for the 2014 Christmas period. The management report was released in January, accordingly, the information on demand would most likely be based on actual sales. The company increased prices ahead of the Christmas period but the increase may well have slowed down sales volume growth.
CCrm sum -11-14.docxKremi paid over $63 million in electricity cost in 2014 fiscal year with the last quarter at $18 million. The company will benefit from less usages with the more efficient freezer going forward as well as from the reduction in electricity cost with the fall in the price of oil and the pass through effect on JPS bills, to their customers.
During the year to November, capital expenditure amounted to $56 million spent on the blast freezer and was geared to improving efficiency in the factory. Equity capital stands at $261 million and borrowed funds at $155 million of which $12 million is due to be repaid in a year’s times.
The stock last traded at 80 cents each but with our forecast for the 2015 fiscal year that ends in February the PE works out at 3.6. The company is in the business of production and sale of ice cream and is listed on the junior stock exchange market.

Jamaican Teas 2014 profit drops

JamT dr signJamaican Teas reported sharply lower profit, last year to September, of $52.7 million versus $93 million in 2013, with earnings per share of 31 cents. The figures were reported in the group’s audited financial statements release last week.
The results emanated from sale revenues of $1.14 billion down from $1.23 billion in 2013. There was approximately $50 million coffee sales included in the 2013 results with none in 2014. In 2013 the real estate segment contributed $185 million in revenues compared to only $26 million in 2014 with most coming in the September 2013 quarter.
Gross profit margin shrank slightly from 21.89 percent to 21 percent for the year, helping to cut gross profit by $17 million. Other operating income climbed to $24.7 million from $12.9 million in 2013, partially due to losses on sale of, and impairment of investments incurred in 2013, amounting to $13.5 million, but did not occur in 2014.

The Orchid property being developed that should add to Jamaican Teas' profits in 2015 & 2016.

The Orchid property being developed that should add to Jamaican Teas’ profits in 2015 & 2016.

The company increased marketing spend by 50 percent for the year, in the local and overseas markets, to maintain or increase market share, while administrative expenses climbed 25 percent for the year and finance cost rose by 108 percent. The acquisition of the factory at Bell Road, is partially funded by loans, contributing to the increase. There was also duplication of some cost while the factory was being refurbished for occupation. In the final quarter, adjustments to cost and some asset values helped to depress the profit for the year and is not an indication that the group has moved into a longer-term lossmaking period.
Changes in our distributorship in the Florida at the start of the fiscal year resulted in some short-term fall out in sales and increased marketing cost. A new distributor was appointed in the US market that will provide wider distribution in some key cities within that country. Revenues are expected to benefit from this development starting with the December quarter. The 2015 revenues, should also benefit from the completion of sales of 16 units in the first phase of the real estate development in St Thomas. The supermarket in Savanna-la-Mar was close to a break even by year-end and while the one in Kingston remained profitable. The Montego Bay supermarket reported losses in line with what was incurred in the prior year.
JTS tab 9-14There was approximately $50 million increased borrowed funds at the end of the year, putting borrowings at $304 million. The profile of the debt changed markedly, with long-term loans accounting for two thirds of the debt at the end of the fiscal year compared with just 2 percent in 2013. The portfolio of investments including equities, stood at $123 million at the year-end and shareholders’ equity of $635 million.
The company imports of black and green tea in bulk for packaging and the distribution local and overseas. it also packages and distributes herbal teas and distributes other bottled water, coconut milk and other pre-packaged food items. the group operates supermarkets and is involved in the rental of residential properties and the development of real estate for resale.The stock is listed on the Jamaica Stock Exchange and last traded at $2.50.

Cargo Handlers’ Q4 profit doubles

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CargoHandlersLiquidBulkCarriersProfit for the September quarter at Cargo Handlers is up 117 percent over the 2013 results to $49.7 million from revenues that climbed a very strong 77 percent. Profit rose by a smaller 55 percent, for the nine months ending September this year, to $131.7 million or $3.52 per share from revenues for the nine months of $220 million.
Other income, mainly foreign exchange gains, fell 13 percent in the quarter and was flat for the year, at $16 million. During the year the company earned $13.6 million from leasing and $8.9 million from management fees charged to a related party – Bulk Liquid Carrier and Petroleum Transport Ltd.
Administrative expenses dropped 31 percent in the quarter and 9 percent for the year but operat9ing expenses climbed 37 percent for the quarter and 22 percent for the year well below the increase in revenues. The company paid a dividend of $1.80 per share during the year for a yield in excess of 13 percent based on the stock price of $13.50 at the start of 2014.
CHL 9-14Looking forward the foreign exchange gains earned in the last two years is unlikely to repeat in 2015 as the Jamaican dollar is unlikely to slip to the same degree it did in the recent past, so earnings will need to exclude most of these gains which amounts to just over 40 cents per share. Investors could be looking at earnings per share around $4.80 in 2015. At a price of $16 the stock is undervalued but they are difficult to come by.
Equity capital stood at $200 million and net book value at $5.33 per share. There is virtually no borrowings and cash of $93 million.
The company is involved in primarily in stevedoring services and is in the process of acquiring a petroleum haulage company which it now manages pending completion of the sale. The stock is listed on the Jamaican Stock Exchange.

NCB 2014 profit trumps 2013 by a KM

NCB hqtrNational Commercial Bank net profit for 2014 hit $11.6 billion, a big jump from the NDX affected $8.58 billion in 2013. Earnings per share for the year ended at $4.73 just below IC Insider forecast of $4.80.
The 2013 profit was negatively affected by a huge $1.5 billion charge, from losses picked up when they exchanged high yielding government bonds for lower yielding ones and $680 million written off relating to the attempt to list on the New York Stock Exchange. The group is reporting net profit of $2.87 billion, for the September quarter compared to $1.8 billion in 2013, the latter was affected by a number of one off charges.
The 2013 full year was also negatively impacted by a $281 million hit from receivership expenses, an increase over the amount spent in 2012 of $172 million and a healthy rise in Technical, consultancy and professional fees of $1.09 billion compared with $846 million in 2012.
This year results benefited from a few one off items as well. Gain on acquisition of subsidiary contributed $301 million and gain on sales of shares in Kingston Wharves added $349 million but this is in lieu booking their share of profits for the quarter had they not sold. The group suffered a loss of $200 million on securities impairment and critically, although loan loss provision is up $200 million, the large increase in the final quarter is $700 million more than at the same time in 2013. For the full year, loan losses amount to $2.2 billion versus $2.1 billion for the previous year.
Salaries allowances and benefits cost was down in the quarter to $2.6 billion from $2.9 in the similar quarter, and for the year to $11.5 billion versus $11.2 billion in 2013. Other operating cost was up to $10.4 billion for the full year, from $9.4 billion in 2013 and for the quarter $3.1 billion from $2.8 billion.
Growth| For 2014, loans grew pretty strongly by 12 percent, moving from $143.6 billion to $157 billion and customer deposits of $202 billion, increased by $23.8 billion, or 13 percent, resulting in net interest income being steady, in the September quarter, for both years, as well as in the June quarter at roughly $6 billion each. Net interest income was up $1 billion for the year over 2013 to reach $24.66 billion from $23.56 billion. Fees and commission income moved up to $10.6 billion net, compared to $9.7 billion in 2013. Premium income grew to $7 billion from $5 billion in 2013. Gains on sale of debt securities and foreign exchange trading gains jumped to $2.6 billion versus $1 billion in 2013.
Segment| Segment results were mixed with strong increases in some, while other areas fell below the 2013 performance. Retail & SME, reported improved profits for 2014 of $1.56 billion versus $793 million in 2013. Payment Services climbed down from $2.1 billion to $1.57 billion in 2014, Corporate Banking ended 2014 with $500 million versus $850 million previously, Treasury & Correspondent Banking jumped from $1.87 billion in 2013 to $3.7 billion in the latest year. Wealth, Asset Management and Investment Banking moved down from $3.88 billion to $3.6 billion, Life Insurance and Pension Fund Management climbed from $2.17 billion to $2.9 billion and General Insurance income of $557 million in 2013 jumped to $1.28 billion.
NCB hiked their final dividend for the year to 96 cents per shares. IC Insider’s forecast for the 2015 earnings is $5.75 per share and with the current price at just over $18 per share the stock is severely undervalued with significant upside potential.

JMMB makes strong recovery in Q2

JMMBProfit for September quarter at Jamaica Money Market Brokers (JMMB) made a spirited recovery from the fall of 27 percent, in the June quarter to a more moderate 7 percent decline to reach $651 million from $697 million in September 2013. For the year to date, the decline is down to 17 percent to $1.2 billion.
Two main issues led to this performance, the main income generator, Interest income grew 20 percent in the quarter and 18 percent year to date but net interest income grew much more slowly at 14 percent and 12 percent respectively. Other revenues rose 37 percent in the September quarter and 33 percent for the six months but expenses jumped 45 percent in the quarter and 49 percent for the six months ending September this year, to $3.5 million. JMMB made some progress in cutting cost in the quarter but much more will be needed in the months ahead if the pace of increased cost is to be kept in line with or below the growth rate of income. “Expenses associated with the expansion of the Group through the acquisition of IBL accounted for $715 million (63 percent) of this increase and the remaining $421 (37 percent) is explained by costs associated with integration, growth in subsidiaries in the regional markets, increase in asset tax and normal inflationary increases,” Management states.
JMMB sum 9-14The banking segment had improved the results from $125 million in 2013 to $269 million in 2014, partially due to the acquisition of the Intercommercial Bank in October 2013, while financial and related services moved from $1.69 billion down to $1.25 billion.
Total assets grew from $172 billion in September last year to $224 billion in September, this year. The growth in asset is 10 percent or annualised at 20 percent since the fiscal year end in March. Equity stood at $20 billion at the end of September. The growth in assets is pretty strong and should result in strong increase in profits going forward.
JMMB stock last traded on the Jamaica Stock Exchange at $7 and on the Trinidad Stock Exchange at TT 45 cents.