In the July quarter, Scotia Group jacked-up expected credit loss provision by 344 percent from $582 million in the 2019 period to $2.6 billion due to the impact of the 2020 COVID 19 virus has on several businesses in Jamaica and, notably, the banking sector, resulting from lower business activity since March.
Scotia Group increased loan loss provision by 344% in the July quarter.
The big July quarter, the increase comes after the banking group hiked the provision by a hefty 264 percent to $1.77 billion in the April quarter, from $487 million in the April 2019 quarter and $895 million in the January 2020 period.
The Group’s total expected credit loss provision for loans in July 2020 amounts to $8.1 billion, while nonperforming loans amount to $4.9 billion compared to $3.8 billion last year and $5 billion at the end of April.
Loans advanced to customers stood at $221 billion at the end of July, a growth of 12 percent year over year, but declined modestly from $223 billion at the end of April, the result of the increased credit loss provisioning and no new net loans granted.
While the bank increased the provision for expected credit loss sharply in the quarter, the stabilization of nonperforming loans at the April levels may be an indication that there may be no need for heavy provisioning in the next few quarters. If the nonperforming loans hold around current levels, it could help in returning profit to more normal levels, compared to a profit after tax that declined sharply by 63 percent for the July quarter to $1.55 billion, from $4.2 billion in 2019.
At the close of trading on the Jamaica Stock Exchange, Main Market to stock gained 50 cents in ending at $50.50.
Retail loan grew 5 percent year over year, driven by strong mortgage growth of 16 percent. Total revenues, excluding expected credit losses for the nine months, ended July at $32.1 billion, a reduction of $1.7 billion or 5.1 percent, compared to 2019. For the July 2020 quarter, gross revenues fell from $12.4 billion to $11 billion, with non-interest income contributing $1.1 billion to the decline. Administrative and other expenses were essentially flat at $5.8 billion year over year, a $2 billion increase in provision for expected loan loss helped push profit down in the quarter, to $1.55 billion from $4.2 billion in 2019. Notably, while loans amounting to $221 billion at the end of July grew 12 percent year over year, loans declined modestly from $223 billion at the end of April, the result of the increased credit loss provisioning.
The targeted average PE ratio of the market is 20 based on the profits of companies reporting full year’s results, from now to the second quarter in 2021. Both the Junior and Main markets are currently trading well below this level, an indication of the potential gains ahead. The JSE Main Market ended the week, with an overall PE of 15.1 and the Junior Market 10.9, based on IC Insider.com’s projected 2020-21 earnings. The average PE ratio of the Junior Market has been slowly rising, with better profit opportunities than the Main Market and narrowing the gap. The PE ratio for the Junior Market Top 10 stocks average a mere 6 at just 55 percent to the average of the overall Junior Market. The Main Market TOP 10 stocks trade at a PE of 8.2 or 54 percent of the PE of the overall market.
The average projected gain for the Junior Market IC TOP 10 stocks is 279 percent, and 153 percent for the JSE Main Market, based on 2020-21 earnings, an indication of potentially, greater gains in the Junior Market than in the Main Market.
Stationery and Office Supplies and Jetcon Corporation dropped out of the Junior Market list, the former earning, was revised down for 2020, with the loss incurred in the June quarter while Jetcon price inched up, to be squeezed out of the top stocks.
The targeted average PE ratio of the market is 20 based on the profit of companies reporting full year’s results, from now to the second quarter in 2021. Both the Junior and Main markets are currently trading well below this level, an indication of the potential gains ahead. The JSE Main Market ended the week, with an overall PE of 15 and the Junior Market 10.8, based on IC Insider.com’s projected 2020-21 earnings. The average PE ratio of the Junior Market has been slowly rising, with better profit opportunities than the Main Market and narrowing the gap. 
The PE ratio for the Junior Market Top 10 stocks average a mere 6 at just 56 percent to the average of the overall Junior Market. The Main Market TOP 10 stocks trade at a PE of 8.1 or 54 percent of the PE of the overall market.
the best returns up to March 2021 and ranked in order of potential gains, based on likely gain for each company, taking into account the earnings and PE ratios for the current fiscal year. Expected values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Revisions to earnings per share are ongoing, based on receipt of new information.
During the past week, companies continued the release of midyear results, with little impact on the market. Jamaica Broilers released decent first-quarter results to the end of July, with a slight improvement in after-tax profit, with operating profit rising 25 percent on lower revenues. Wisynco Group full-year audited financials showed modest gains in profit while Blue Power profits jumped 41 percent. Of the three, only Jamaica Broilers is in the TOP 10. At the close of the week, Medical Disposables dropped out of the Junior Market listing and replaced by Jetcon Corporation. NCB Financial returns to TOP 10 and now sits at the bottom of the list, having replaced Eppley.
Caribbean Producers heads the list, followed by Lasco Financial and Elite Diagnostic, the focus on all three is on the 2021 fiscal year results, projected to show recovery from the 2020 financial year final numbers. The top three Main Market stocks, with expected gains of 205 to 264 percent, are Berger Paints followed by Radio Jamaica and JMMB Group, all three suffered declines during the week.
The average projected gain for the Junior Market IC TOP 10 stocks is 291 percent, and 161 percent for the JSE Main Market, based on 2020-21 earnings, an indication of potentially greater gains in the Junior Market than in the Main Market.
The fall elevating it back into the Junior Market TOP 10, with Lasco Distributors dropping out, while there was no change to the main market list.
The targeted average PE ratio of the market is 20 based on the profits of companies reporting full year’s results, from now to the second quarter in 2021. Both the Junior and Main markets are currently trading well below this level, an indication of the potential gains ahead. The JSE Main Market ended the week, with an overall PE of 15 and the Junior Market 10.6, based on IC Insider.com’s projected 2020-21 earnings. 
The average PE ratio of the Junior Market has been slowly rising, with better profit opportunities than the Main Market and narrowing the gap. The PE ratio for the Junior Market Top 10 stocks average a mere six at just 56 percent to the average of the overall Junior Market. The Main Market TOP 10 stocks trade at a PE of 8.1 or 54 percent of the PE of the overall market.
IC TOP 10 stocks are likely to deliver the best returns up to March 2021 and ranked in order of potential gains, based on possible gain for each company, taking into account the earnings and PE ratios for the current fiscal year. Expected values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Revisions to earnings per share are ongoing, based on receipt of new information.
This week’s focus: 138 Students Living reported a 44 percent increase in revenues to hit $334 million from $223 million in the June 2019 quarter and a 60 percent rise in the nine months to $1.09 billion. The company moved from a loss of $17 million in the 2019 third quarter to a profit of $132 million in 2020 and from a loss of $60 million in the nine months to June, to a profit of $402 million. Operating cost fell in both periods compared with the 2019 cost. The big problem is that the company continues the extremely poor practice of not showing operating and administrative expenses separately, making it impossible to see what gross margins are. The significant increase in profit is due to claims made on the University going back to 2019, which are booked in the current year that distorts earnings from ongoing operations. 
While earnings per share for the quarter is an attractive 32 cents and year to date 97 cents. Earnings from ongoing operations suggest that the full year’s results should be in the order of 40 cents after a regular tax charge.
The average projected gain for the Junior Market IC TOP 10 stocks is 278 percent, and 152 percent for the JSE Main Market, based on 2020-21 earnings, an indication of potentially more significant gains in the Junior Market than in the Main Market.
Caribbean Producers heads the list, followed by Lasco Financial and Stationery and Office Supplies.
The company declared a dividend of $2.216 per share payable on October 7, with an Ex-dividend date, of September 21.
The average projected gain for the IC TOP 10 stocks is 257 percent, for the Junior Market and 149 percent for the JSE Main Market, based on 2020-21 earnings, an indication that there is the potential to make greater gains in the Junior Market than in the Main Market.
There was no change in the Main Market TOP 10 list for the week that saw the Main Market remaining relatively stable for the past week, while the Junior Market rose 35 points for the week on top of gains in the previous week.
The stock price closed at 73 cents on the local market on Friday, at a steep discount of 41 percent to the net asset value.
The JSE Main Market ended the week, with an overall PE of 14.9 and the Junior Market at just 11.2, based on IC Insider.com’s projected 2020-21 earnings. The average PE ratio of the Junior Market has been slowly rising and narrowing the gap, with the Main Market as investors see better profit opportunities in this sector. The PE ratio for the Junior Market Top 10 stocks averages a mere 6.3 at just 56 percent to the average of the overall Junior Market. The Main Market TOP 10 stocks trade at a PE of 8.1 or 55 percent of the PE of the overall market.
an indication that there is the potential to make greater gains in the Junior Market than in the Main Market.
Profit from continuing operations grew at a slower pace at 38 percent for the second quarter and 41 percent for the half-year. Revenues increased 18 percent to $9.5 billion for the June quarter and 12 percent to $18.6 billion for the six months. The company shuttered its loss-making sugar operations last year and that is helping with the improvement in results.
IC Insider.com is projecting $4 per share earnings for the current year and it now trades at a PE ratio of 14, with limited upside potential in the short term.
The average projected gain for the IC TOP 10 stocks is 269 percent, for the Junior Market and 146 percent for the JSE Main Market, based on 2020-21 earnings, an indication that there is the potential to make greater gains in the Junior Market than in the Main Market.