Profit drop at Elite but watch this stock

January 12, 2022 by

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”.

Filed Under: Buy Rated, Company News, Company Results, Investment 2024 Tagged With: , , , , ,

Caribbean Cream stock for the main course in 2022

January 12, 2022 by

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.

Filed Under: Buy Rated, Company News, Company Results, Investment 2024 Tagged With: , , , , , ,

Sharp rebound for Dolphin Cove

January 11, 2022 by


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.

Filed Under: Buy Rated, Investment 2024 Tagged With: , , , ,

The Junior Market could gain 60% in 2022

January 11, 2022 by

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 index 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 the 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 Financial – Earnings 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.

Technical indicators for the Junior Market are pointing to a record high of more than 4,000 points in a few months.

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 operation 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 if 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 were 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.

Filed Under: Buy Rated, Feature Stories, Investment 2024, JSE Junior Market, Stock Market Tagged With: , , , , , , , , , , , , , ,

ICTOP10 scaling new highs

January 9, 2022 by

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.

Coming soon reports

Filed Under: Buy Rated Tagged With: , , , , , , , , , , , , , , , , , , , , , , ,

64% gains for ICTOP10 picks in 2021

January 3, 2022 by

The 2021 calendar year ended on Friday, with the Junior Market rising a near 30 percent and the Main Market just holding above the close of the prior year. Against this backdrop ICInsider.com TOP 15 stocks at the start of the year had a 53 percent average gain in the Junior Market but 64 percent when Honey Bun that was reported on in December 2020 and Future Energy Sources (Fesco) that was Buy Rated when the IPO hit the market was up and impressive 64 percent.

IC Buy Rated Caribbean Producers was by far the best performing stock on the JSE for 2021.

Only three Junior Market stocks declined amongst our selection with Elite being the worse with a loss of 11 percent.
TOP10 MM stock did not do as well as the JM but that was told to readers at the start of the year. The average gain for the TOP15 Main Market stocks was 10 percent that excludes Caribbean Producers. The highest gaining stock from the list was Radio Jamaica up 61 percent and Grace Kennedy 58 percent, the two worse performers were Berger Paints and Scotia Group down 12 percent each.
The big news for the market for the past week continues to be the Initial Public offer of Spur Tree Spices priced at $1 per share that was heavily oversubscribed.
Medical Disposables rose 7 percent for the week to $6.49 and dropped out of the TOP10 and was replaced by General Accident that comes in at $6. In the Main Market TOP10, Sagicor Group rose 9 percent for the week to close at $58 and was replaced by Scotia Group at $36.
During the week AMG Packaging rose 4 percent to $2.20, Access Financial Services lost 9 percent to $19, Lasco Distributors rose 6 percent to $3.47, Elite Diagnostic rose 5 percent to $2.85 and Honey Bun gained 8 percent to $9.25. In the Main Market, Caribbean Producers popped 9 percent to $13, JMMB Group and PanJam Investment rose 3 percent, while losses were suffered by Radio Jamaica down 5 percent and Sterling Investments with a fall of 7 percent
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 top three stocks changed a bit during the week, with AMG Packaging leading, followed by Caribbean Assurance Brokers and Access Financial Services. All three can gain between 174 and 218 percent versus 158 and 230 percent, previously.
The average gains projected for the TOP 10 Junior Market stocks remained unchanged at 149 percent and Main Market stocks moved from 154 percent to this weeks’ 152 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 a mere 8.2, with a 45 percent discount to that market’s average.
The Junior Market can gain 35 percent to March next year, based on an average PE of 20 and 15 percent based on an average PE of 17.
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 8.2 representing a 50 percent discount to the market and well below the potential of 20. A total of 13 stocks or 28 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.

Filed Under: Buy Rated Tagged With: , , , , , , , , , , , , , , , , , , , , , , , , , ,

Spur Tree Spices joins ICTOP10

December 27, 2021 by

The big news for the market for the past week was the release of the prospectus of the long-awaited Initial Public offer of Spur Tree Spices priced at $1 per share at PE of 8.7 based on earnings before tax and propelling the stock in this week’s Junior Market ICTOP10. Investors should also see the prospectus release for Jamaica Fibreglass Products this week or next.
Spur Tree pushed Jetcon Corporation out of the TOP10, with the latter enjoying a 9 percent price rise to 99 cents. Over in the Main Market TOP10, Sagicor Group rose just 2 percent to close at $53.
During the week, AMG Packaging rose 3 percent to $2.12, Access Financial Services climbed 7 percent to $20.95, Lasco Distributors rose 6 percent to $3.47, but Elite Diagnostic and Honey Bun both fell 10 percent to $2.71 and $8.55, respectively and Caribbean Cream fell 4 percent to $5.70.
The public offer for Spur Tree Spices shares opens on Wednesday this week and should be heavily oversubscribed, with closure likely by the end of the week.
This week, the top three Main Market stocks are Guardian Holdings, followed by JMMB Group and  Radio Jamaica, all projected to gain between 183 and 261 percent, up from 178 and 257 percent last week.
The Junior Market top three stocks changed a bit during the week, with AMG Packaging leading, followed by Caribbean Assurance Brokers, with Access Financial Services moving from the second spot to the third position. All three can gain between 158 and 230 percent versus 167 and 240 percent previously.
The average gains projected for the TOP 10 Junior Market stocks moved from 149 percent last week to 151 percent and Main Market stocks moved from 155 percent to this weeks’ 154 percent.
The Junior Market closed the week with an average PE of 14.4 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 8.1, with a 44 percent discount to that market’s average.
The Junior Market can gain 39 percent to March next year, based on an average PE of 20 and 18 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, similar to last week, indicating that many others will rise towards the 17 mark in the months ahead.
The average PE for the JSE Main Market is 16.1, some 18 percent less than the PE of 19 at the end of March and 24 percent below the target of 20 to March 2022. The Main Market TOP 10 average PE is 8.1, representing a 51 percent discount to the market and well below the potential of 20. A total of 13 stocks or 28 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.

Filed Under: Buy Rated Tagged With: , , , , , , , , , , , , , , , , , , , , , , ,

IC Buy Rated Spur Tree IPO a big buy

December 22, 2021 by

Spur Tree Spices Jamaica’s prospectus for its Initial Public of 335,391,848 ordinary shares at $1 each is now released to the public for subscription with the opening date of December 29, with just about 180 million units available for subscription by the general public.
Overall 335 million shares are being sold in the offer but 135 million are reserved. Proceeds will be used to pay the Invitation and listing expenses and the remainder to go to the Company to be used for the repayment of debts and to facilitate business expansion. The total Invitation and Listing Expenses should not exceed $25 million. The total debt to be repaid from the proceeds raised is $169 million, broken down as a payment of $157 million to GK Investments and $12.5 million to reduce Directors’ Loans.
Shares will be issued on a first come basis. If the Invitation is oversubscribed, the Company reserves the right to allot shares to applicants on a basis to be determined by it in its sole discretion, including on a pro rata basis. In the event the Invitation is oversubscribed, the Company in consultation with the arranger and lead broker reserves the right to make adjustments to the basis of allocation to ensure fair and equitable allocation.
The company is in operation for 15 years in Jamaica and operates out of a 20,000 square feet manufacturing facility at Garmex, on Marcus Garvey Drive in Kingston. The company specialises in production, distribution and the sale of Jamaican seasonings and sauces, for retail and foodservice markets.
Revenue grew 22 percent over the prior year to $701 million and at a compounded annual growth rate of 25 percent from $290 million in 2016. The increase in 2020 came from improved product placement and the expansion to new markets, with approximately 95 percent from the export markets the company stated.
The gross profit margin improved from 25.1 percent in 2019 to 26.7 percent in 2020. For the nine months to September, this year’s gross profit margin ended at 28.8 percent. During the 2016 to 2020 period, gross profit margin exceeded 25 percent, with a range of 25 to 38 percent.
Profit before tax rose 52 percent to $82 million, from $54 million in the prior year. In each of the 5 years under review, the Company increased its profit before tax each year from $21 million in 2016 to $82 million in 2020, a five-year compounded annual growth rate of 40 percent.
Results to September 2021 show a profit of $116 million from revenues of $834 million suggesting that the full year should see a pretax profit of $155 million. Gross cash flow amounts to $115 million for 2020 up from $57 in 2019.
Return on average equity at the end of the 2020 financial year was a rich 47 percent after tax and seem set to rise in 2021.
The company’s products are available in Jamaica, the United States, Canada, the United Kingdom, Cayman Island, Costa Rica and Australia through several distributor outlets. While the Company is active in the local market through its various distribution channels, its major focus from inception has been and continues to be the export market. There are more Jamaicans, and persons of Jamaican descent, residing outside the country, who value that special connection with home whether through music, food, or other forms of cultural authenticity.

“Our export sales and marketing strategies are geared to satisfying the needs of the Jamaican diaspora who now make up our largest customer base. However, in recent years, there has been an expansion of the demand for Spur Tree products in the overseas space to include non Jamaicans of all different races and ethnicities seeking an authentic Caribbean food experience. Our products are sold in supermarket chains such as Shoprite, Food Bazaar, Food World, Western Beef, Presidente and Extra among others in the United States, as well as in the largest foodservice cash and carry store in the United States, Restaurant Depot/Jetro. Our products are also prominently showcased in major chains in Canada such as Loblaw’s and Sobeys,” the company stated in the prospectus.
“Spur Tree recently completed the purchase of Exotic Products Jamaica (Succs.) Limited (“Exotic”), an ackee factory in St. Thomas. Ackee is a highly demanded strategic product in our export markets and the Company plans to rationalize the operations of this newly acquired entity to double production over the next two years. This, combined with our plans to expand and grow the current Spur Tree product range, while expanding current markets both locally and overseas and accessing new markets should significantly improve our sales and profit performance in the coming years”, the company stated.
Issued shares at the date of this Prospectus total 1,341,567,396 and after the IPO the issued shares should climb to 1,676,959,244 and the total equity capital will rise to around $600 million from $275 million at the end of September. Current assets amounted to $357 million and current liabilities at $221 million and cash on hand of $56 million.
Earnings per share should end the year at 11.5 cents before taxation and puts the PE at an attractive 8.7 times earnings and below the market average of 14.4 currently. IC Insider.com projects 18.5 cents earning for 2022 from a profit of $300 million at a PE of 5.4 times 2022 profit, which means lost of profitable trades are baked in barring any major negative development.

Filed Under: Buy Rated, Initial Public Offers Tagged With: , , , , , ,

ICTOP10 winner up 369% to date

December 20, 2021 by

Caribbean Producers (CPJ) stock jumped 17 percent to close the week at a record high of $12.15 and now sits at fourth position in the Main Market TOP 10 with a lot more ground to cover before peaking.

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

CPJ started the year in the Junior Market TOP 15 at $2.89 in the number three spot, with a price target of $13, is now up by 369 percent since the start of the year based on projected earnings of 65 cents, since then ICInsider.com upgraded earnings to $1.65 for the current year with a new price target between March and July next year of $33.
Barring some unusual events, CPJ now the leading stock on the overall Jamaica Stock Exchange will most likely end the year way out front and well above Future Energy, another ICTOP10 winner with gains of 254 percent to date.
Lumber Depot dropped out of the Junior Market top 10 and Jetcon Corporation returned to the TOP10. There were no additions to the Main market TOP10 for the week.
Other notable TOP10 movers this week are; Lasco Distributors that rose 9 percent in closing at $3.28 and Honey Bun up 5 percent to $9.50, but Caribbean Assurance Brokers slipped 8 percent to $2.40 from $2.60 at the close of the previous week. In the Main Market, other than Caribbean Producers, Sygnus and Pan Jam Investment fell 4 percent.
For the week ahead investors should watch for a possible move higher, CPJ that could hit $15 with dwindling supply now on offer below $14.50 when the market closed on Friday. RJR is another worth watching with a limited supply under $3.50 during Friday there is relatively only moderate selling overall, but buying remains tepid.
The top three Main Market stocks, this week with CPJ dropping to number four are Guardian Holdings still in the lead followed by Radio Jamaica that returned in second spot and JMMB Group in the third spot with all projected to gain between 178 and 257 percent from 213 to 253 percent last week.
The Junior Market top three stocks changed a bit during the week, with AMG Packaging leading, followed by Caribbean Assurance Brokers, with Access Financial Services moving from the second spot to the third position. All three can gain between 167 and 240 versus 167 and 238 percent, previously.
This week’s focus: Why Lumber Depot is a stock to watch for the future? After posting outlandish first quarter results that were boosted by inventory profit, the company reported what appear to be normal profit in the second quarter of 5 cents per share and raised the half years earnings to 15 cents. While first quarter revenues grew 16 percent, the second quarter was flat, suggesting that full year results should end up around 25 cents or a little above that. On this basis, the stock may be considered a bit undervalued. With Paul Scott’s Stony Hill Capital Limited taking a controlling interest in it, what could be in it for them. There is good scope for expansion and growth, first within Kingston, Portmore, Spanish Town and nationally. Other factors include the fact that the Musson Group has large holdings of real estate owned directly by the group or indirectly in the investment companies that can purchase materials for repairs or expansion through them.
The average gains projected for the TOP 10 Junior Market stocks slipped from 150 percent last week to 149 percent and Main Market stocks moved from 159 percent to this weeks’ 155 percent.
The Junior Market closed the week, with an average PE of 14.3 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 8.1, with a 42 percent discount to that market’s average.
The Junior Market can gain 40 percent to March next year, based on an average PE of 20 and 19 percent based on an average PE of 17. Seven stocks representing 17 percent of all Junior Market stocks with positive earnings are trading at or above this level, similar to last week, indicating that many others will rise towards the 17 mark in the months ahead.
The average PE for the JSE Main Market is 16.2, some 17 percent less than the PE of 19 at the end of March and 23 percent below the target of 20 to March 2022. The Main Market TOP 10 average PE is 8, representing a 50 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.

Filed Under: Buy Rated Tagged With: , , , , , , , , , , , , , , , , , , , , , , , ,

Honey Bun in General Accident exits ICTOP10

December 13, 2021 by

General Accident rose 7 percent to close at $6.40 and slipped out of the TOP 10 while Honey Bun jumped into the Junior Market top 10, while Main Market stocks were pretty steady with movements not exceeding 2 percent for the week in a week when Main Market indices closed the week higher than it started with the Junior Market slipping from the start of the week.
Notable TOP10 movers this week are; AMG Packaging rose 9 percent in closing at $2.07 from $1.90 at the previous week’s close and Lumber Depot rose 18 percent to $3.25. Medical Disposables lost 5 percent of its value to close the week at $6 and Caribbean Assurance Brokers dived 13 percent to $2.60.
The top three Main Market stocks remained unchanged at the close of the week, with Guardian Holdings still in the lead, followed by Caribbean Producers and JMMB Group, projected to gain between 213 to 253 percent, as was the case last week.
The Junior Market top three stocks changed a bit during the week, with AMG Packaging leading, followed by Caribbean Assurance Brokers, with Access Financial Services moving from second spot to third position. All three can gain between 167 and 238 versus 162 percent and 268 percent previously.
The average gains projected for the TOP 10 Junior Market stocks moved from 142 percent last week to 150 percent and Main Market stocks moved from 157 percent to this weeks’ 159 percent.
The Junior Market closed the week with an average PE of 14.1 based on ICInsider.com’s 2021-22 earnings and 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 8.1, with a 42 percent discount to that market’s average PE.
The Junior Market can gain 42 percent to March next year, based on an average PE of 20 and 21 percent based on an average PE of 17. Ten stocks representing 25 percent of all Junior Market stocks with positive earnings are trading at or above this level, down from seven last week, indicating that many others will rise towards the 17 mark in the weeks ahead.
The average PE for the JSE Main Market is 15.8, which is 20 percent less than the PE of 19 at the end of March and 27 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 17 stocks or 36 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.

Filed Under: Buy Rated Tagged With: , , , , , , , , , , , , , , , , , , , , , , ,