GraceKennedy’s blowout quarter

May 15, 2020 by

GraceKennedy reported its best performance in years with substantial gains in revenues and profits for the first quarter ending March this year compared to the similar period in 2019. Still, not all segments of the group perform well in delivering increased profit.

Grace Kennedy new headquarters in downtown Kingston

Group revenues rose 11.3 percent to $28.85 billion, over $25.93 billion over the 2019 period. Profit before tax, jumped an astounding 50.6% for the period to $1.99 billion, while profit after tax attributable to shareholders of the group, rose 47 percent to $1.32 billion. Profit got a boost of $184 million goodwill gained on the acquisition of the majority shares in Key Insurance that was more than offset by impairment losses on financial assets amounting to $248 million.
Earnings per stock unit for the period was $1.33, up from 90 cents in 2019.
Revenues for the Food Trading segment rose 12 percent to $23.45 billion, while profit jumped a robust 60 percent to $1.2 billion from $752 million in 2019.  The improvement came from Jamaica and international sales, Grace indicated.
“Our Jamaican food distribution business experienced growth in both revenue and pre-tax profits, coupled with improved margins. GraceKennedy Foods (USA) LLC continues to show significantly improved performance for the three months when compared to the corresponding period of 2019. For the March quarter, sales for Grace Frozen Patties showed triple-digit growth, closing the first quarter of 2020 with a 68 percent increase in volumes compared to the corresponding period of 2019. Grace Foods UK and Grace Foods Canada also reported increased revenue for the three months when compared to the corresponding period of 2019.”
The banking and Investments segment reported modest growth in revenues to $1.54 billion from $1.49 billion in 2019 with profit falling from $163 million to just $48 million and the
The insurance segment reported an increase in revenue from $1.74 billion to $1.844 billion, with profit evaporating from $125 million to a loss of $858,000. GraceKennedy completed its acquisition of 65% of the issued shares of Key Insurance.
Money Services division saw profit rising 31 percent to $842 million from $644 million.
The company’s stock is trading on the Jamaica Stock Exchange at $58 at a PE ratio of 9.4 times 2020 earnings based on IC Insider.com forecast of $6.20 and well below the average PE of market of 13.6 times 2020 earnings. Grace declared a dividend of 25 cents per share payable 15th June 2020, down from 40 cents in 2019.

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

Profit jumps 71% at Mailpac

May 12, 2020 by

A big 33 percent surge in revenues, pushed profit at the late 2019 Junior Market listing, Mailpac Group, up an impressive 71 percent compared with what the business delivered in the March quarter last year. MailPac Group was formed late in 2019 and acquired Mailpac Services Limited and Mailpac Local Limited from Norbrook Equity Partners, majority shareholders, for the purpose of amalgamating both logistics platforms into one operating business.
For the March 2020 quarter, revenues hit $365 million, up from $274 million in 2019 while profit jumped to $102 million from $60 million in 2019. The revenue performance is stunning, having exceeded the $362 million generated in the busy fourth quarter last year with the usual strong Christmas demand.
Historically, the company enjoyed growth in revenues of 12.2 percent in 2017 and 25.7 percent in 2018. Revenues increased by 28.8 percent for the first half of 2019, with the full year rising 25 percent.
Before the acquisition, the businesses in 2018, revenues grew from $851 to $969 million in the first three-quarters of 2019. Net income for the periods was $213 million and $203 million, respectively.
Improvement in profit margin remains consistent at an attractive 50 percent in the March 2020 quarter.

Mailpac CEO Khary Robinson.

Administrative expenses declined from $71 million in 2019 to $67 million in the latest quarter. Marketing and sales expenses declined marginally from $10 million to $9.9 million, despite the sharp rise in revenues. Finance and depreciation charges were modest. The company added to the fleet of vehicles after the quarter and this will result in a pickup in depreciation charges for the rest of the year.
The company generated $92 million in cash inflows, lifting cash at the end of the period to $194 million. At the end of March, shareholders’ equity stands at $456 million, with borrowings at just $25 million. Net current assets ended the period at $165 million, well over Payables of $72 million.
“We have substantially expanded our delivery infrastructure and have employed various in-store strategies to limit person to person contact”, Khary Robinson, the Executive Chairman, stated in his report accompanying the quarterly.
Earnings per share came out at 4 cents for the quarter and IC Insider.com projecting earnings of approximately 25 cents per share at the end of the fiscal year to December. The stock traded at $1.69 on the Junior Market of the Jamaica Stock Exchange at a PE ratio of 7 times 2020 earnings, and is heading to the $3 region during 2020.

Filed Under: Buy Rated, Company News, Company Results

Just three IC TOP 10 changes

May 10, 2020 by

Investors seem to be shrugging off some of the recent negative developments in the Jamaica stock market, with their activity moving the Main Market higher by the close of the week and the Junior Market just a few points lower.
The market is moving into a period where prices tend to move slightly downward until early July when it usually, starts a slow recovery, in this regard, first quarter results are going to be important for the market’s direction for a few weeks. Information management presents current and future business developments that will be critical in informing investors.
Developments of note this past week are the reporting of new results, with Barita Investments reporting profit of $1 billion for earnings per share (EPS) of $1.24 for the half year to March, versus 68 cents in 2019. Jamaican Teas with negative EPS of 3 cents after gross profit climbed 33 percent over 2019 out turn. Pulse Investments EPS ended at 12 cents versus 5 cents in 2019 for the nine months to March and Wisynco Group generated EPS of 78 cents vs 61 cents for the nine months to March. General Accident released 2019 audited accounts that showed for the first time the impact of the acquisition of their 55 percent interest in the Trinidad based Motor One insurance company at $238 million.
The Junior and Main Market, IC Insider.com TOP 10 closed the week with Medical Disposables and Stationery and Office Supplies exiting the TOP 10, to be replaced by Access Financial Services and Caribbean Cream, after the latter fell to $2. Seprod replaced Victoria Mutual Investments in the Main Market listing.
The three top Junior Market stocks with the potential to gain between 362 to 726 percent by 2021 are Caribbean Producers leading, followed by KLE Group and Lasco Financial. In the Main Market, Radio Jamaica continues to lead, followed by Berger Paints and JMMB Group with projected gains of 173 to 213 percent.
This week’s focus: Seprod released first quarter results after trading closed on Friday, with ongoing operating profits more than doubling from $312 million to $632 million for the 2020 first quarter, with EPS of 86 cents. Revenues climbed 6 percent from continuing operations to $9.14 billion, an increase of $544 million. The big improvement arose from the closure of the sugar manufacturing operations and improvement in profit margin. The Sugar operations generated a loss of nearly $140 million in 2019 and just $15 million in the latest quarter while gross profit margin jumped to 30 percent from 26.6 percent in 2019.  The first quarter results are in line with ICInsider.com’s forecast of $4 per share earnings for this year and put the PE at just 11 times current year’s earnings.
The targeted average PE ratio of the market is 20 based on the profits of companies reporting full year’s results for the financial year ending after this year’s second quarter and up to the second quarter in 2021. Both the Junior and Main markets are currently trading well below this level. The JSE Main Market ended the week, with an overall PE of 13.3 and the Junior Market a mere 8.9, based on current 2020-21 earnings. The PE ratio for Junior Market Top 10 stocks averages a mere 5 with the Main Market at a much higher level of 8.5.
The TOP 10 stocks now trade at a discount of 44 percent of the average for Junior Market and Main Market stocks trade at a discount of 36 percent to the overall market. The average projected gain for the IC TOP 10 stocks is 338 percent, for the Junior Market and 139 percent for the JSE Main Market, based on 2020-21 earnings.
IC TOP 10 stocks are likely to deliver the best returns to March 2021. Forecasted earnings and PE ratio for the current fiscal year are in determining potential gains. The ranking of stocks is in order of likely increases, with the highest-ranked, being the most attractive. 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.

Persons who compiled this report may have an interest in securities commented on in this report.

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

Just two IC TOP 10 changes

May 3, 2020 by

The week just ended saw investors knocking bank stocks down following the surprise announcement by Bank of Jamaica to get banks to suspend the payment of dividends for the remainder of 2020 and that helped to push the market index sharply lower with some recovery on the last three days of the week.
Caribbean Cement and NCB Financial released first-quarter results in the past week with lower profit than the previous year’s March quarter. As if investors expected the outturn, the stock prices did not seem to react to them.
The Junior Market, after attempting to close higher for the past six days finally did so on Friday a sign that it could be heading higher in the days ahead as it traded as high as 2,478 points on Friday just below the close on April 16.
 The Junior and Main Market, IC Insider.com TOP 10 closed the week with one change each. Dropping from the list are Access Financial Services for the Junior Market and replaced by Stationery and Office Supplies, while Stanley Motta dropped from the Main Market listing and replaced by Victoria Mutual Investments.
The three top Junior Market stocks with the potential to gain between 344 to 660 percent by 2021 are Caribbean Producers leading, followed by Lasco Financial and KLE Group. In the Main Market, Radio Jamaica continues to lead, followed by Berger Paints and JMMB Group, with projected gains of 173 to 213 percent.
This week’s focus: Stationery and Office Supplies fell from a high of $16.35 last august is now trading at a discount of 61.5 percent to that price. The stock had moved from $6.85 in May last year to the high after revenues climbed by 23 percent for the half-year to $639 million to $519 million and profits rose 63 percent from $56 million to $92 million. The half years revenues compare favourably with the $702 million generated in the twelve months in 2016, the year before listing in 2017. Revenues grew around 12 percent from 2013 to 2016, then increased to 17.4 percent for 2018 and 14.5 percent for 2019. The company has an excellent management team that is growth-oriented as such investors can look forward to revenues growing in the 15-20 percent range going forward. In pursuit of this objective, the company is putting in place additional storage facilities to accommodate a robust expansion of sales. Investors should not rule out the possibility that they could expand from acquisitions as well as was the case with the addition of the business making the SEEK brand. While the disruption caused by the Coronavirus could derail the medium-term growth, it will only be a matter of time for management to pick up and return to the pre virus growth levels.
The targeted average PE ratio of the market is 20 based on the profits of companies reporting full year’s results for the financial year ending after this year’s second quarter and up to the second quarter in 2021. Both the Junior and Main markets are currently trading well below this level. The JSE Main Market ended the week, with an overall PE of 12.5 and the Junior Market a mere 9, based on current 2020-21 earnings. The PE ratio for Junior Market Top 10 stocks averages a mere 5.3 with the Main Market at a much higher level of 8.3.
The TOP 10 stocks now trade at a discount of 43 percent of the average for Junior Market and Main Market stocks trade at a discount of 34 percent to the overall market. The average projected gain for the IC TOP 10 stocks is 319 percent, for the Junior Market and 148 percent for the JSE Main Market, based on 2020-21 earnings.
IC TOP 10 stocks are likely to deliver the best returns to March 2021. Forecasted earnings and PE ratio for the current fiscal year are in determining potential gains. The ranking of stocks is in order of likely increases, with the highest-ranked, being the most attractive. 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. Earnings per share are revised on an ongoing basis when new information is received that can affect earnings significantly.

Persons who compiled this report may have an interest in securities commented on in this report.

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

Three IC TOP 10 changes

April 27, 2020 by

The Main and Junior Market of the Jamaica Stock Exchange lost more ground this past week as investors continued profit but left the vast majority of the IC Insider.com TOP 10 stocks holding on the lists.

General Accident is IC TOP 10 focus with an expected cut in MV claims.

The Main Market closed the week with two changes, resulting from down-grading of their earnings. Dropping from the list are PanJam Investment and Sagicor Group and replaced by Jamaica Broilers and Stanley Motta. Only Mailpac Group moved out of the Junior Market TOP 10 and replaced by Access Financial Services that fell to $24.01 on Friday.
The three top Junior Market stocks remain unchanged from last week with Caribbean Producers leading, followed by KLE Group and Lasco Financial with the potential to gain between 307 to 546 percent by 2021. In the Main Market, Radio Jamaica leads the pact, followed by Berger Paints and JMMB Group, with projected gains of 150 to 208 percent.
This week’s focus: General Accident is set to do very well. Last year’s earnings grew 48 percent from an increase of 22 percent in gross premium income and a 25 percent increase in net premium. The company acquired majority shares in the Trinidad based MotorOne Insurance that will add to revenues in 2020. One of the most critical development that investors seem to be ignoring is the likely sharp reduction in claims for motor vehicle accidents during the period of business disruption when there is far less traffic on the roads. Last year, claims amounted to $100 million per month. Historical trends show that the stock tends to remain fairly flat until the second half of a year.
Uncertainties exist in the economy and financial markets accordingly, and it is not possible to determine the exact impact on company earnings for the rest of the year. Actual earnings could vary materially from IC Insider.com’s forecast. Looking beyond the immediate fallout or benefits for companies can be useful in guiding investment decisions for above-average gains in the period ahead.
The targeted average PE ratio of the market is 20 based on the profits of companies reporting full year’s results for the financial year ending after this year’s second quarter, up to the second quarter in 2021. Both the Junior and Main markets are currently trading well below this level. The JSE Main Market ended the week, with an overall PE of 12.8 and the Junior Market a mere 9, based on current 2020-21 earnings. The PE ratio for Junior Market Top 10 stocks averages a just 5.3 with the Main Market at a much higher level of 8.5.
The TOP 10 stocks now trade at a discount of 41 percent of the average for Junior Market and Main Market stocks trade at a discount of 34 percent to the overall market. The average projected gain for the IC TOP 10 stocks is 298 percent, for the Junior Market and 140 percent for the JSE Main Market, based on 2020-21 earnings.
IC TOP 10 stocks are likely to deliver the best returns to March 2021. Forecasted earnings and PE ratio for the current fiscal year are in determining potential gains. The ranking of stocks is in order of likely increases, with the highest-ranked, being the most attractive. 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. Earnings per share are revised on an ongoing basis when new information is received that affects earnings significantly.

Persons who compiled this report may have an interest in securities commented on in this report.

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

Four changes to IC TOP 10

April 19, 2020 by

The Main and the Junior Market of the Jamaica Stock Exchange saw investors taking profit after a robust run since the second half of March, up to last Tuesday after reopening from the Easter holiday break. At the close of the week, IC Insider.com TOP 10 stocks had four changes to the lists.

Image courtesy of suphakit73/FreeDigitalPhotos.net

The Main Market closed the week with one change as Caribbean Cement climbed 14 percent to $48.50, from $42.50. The latest entrant is Eppley, with the price falling to $14.80 from $17 at the close of the prior week. The more volatile Junior Market ended with three changes. Moving on from the Junior Market TOP 10 are Caribbean Assurance Brokers that traded at a new high during the week, Lasco Distributor and Stationery and Office Supplies. New entrants to the list are Mailpac Group, Elite Diagnostic and Medical Disposables after the prices of all three fell at the end of the week.
The three top Junior Market stocks remain unchanged from last week with Caribbean Producers leading, followed by KLE Group and Lasco Financial with the potential to gain between 300 to 533 percent by 2021. In the Main Market, Berger Paints leads the pact, followed by Radio Jamaica and Sygnus Credit Investments with projected gains of 180 to 186 percent.
Significant uncertainties exist in the economy and the financial markets; accordingly, it is not possible to determine the exact impact on company earnings for the rest of the year. Actual earnings could vary materially from IC Insider.com’s forecast. Looking beyond the immediate fallout or benefits for companies can be useful in guiding investment decisions for above-average gains in the period ahead.
The targeted average PE ratio of the market is 20 based on the profits of companies reporting full year’s results for the financial year ending after this year’s second quarter and up to the second quarter in 2021. Both the Junior and Main markets are currently trading well below this level. The JSE Main Market ended the week, with an overall PE of 13 and the Junior Market a mere 9, based on current 2020/21 earnings. The PE ratio for Junior Market Top 10 stocks averages a just 5.4 with the Main Market at a much higher level of 8.2.
The TOP 10 stocks now trade at a discount of 40 percent of the average for Junior Market and Main Market stocks trade at a discount of 37 percent to the overall market. The average projected gain for the IC TOP 10 stocks is 296 percent from 278 percent last week, for the Junior Market and 146 percent from 139 percent last week for the JSE Main Market, based on 2020/21 earnings.
IC TOP 10 stocks are likely to deliver the best returns to March 2021. Forecasted earnings and PE ratio for the current fiscal year are in determining potential gains. The ranking of stocks is in order of likely increases, with the highest-ranked, being the most attractive. 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. Earnings per share are revised on an ongoing basis as new information is received that can result in changes in and out of the list.

Persons who compiled this report may have an interest in securities commented on in this report.

Filed Under: Buy Rated, JSE Combined, Stock Market Tagged With: , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Berger Paints set to surprise

April 13, 2020 by

Berger Paints is one of IC Insider.com’s top stocks for 2020.  It is may not the most popular company listed on the Jamaica Stock Exchange, but it seems set to surprise many investors with its performance in 2020.
It gained much attention with strong growth in profits in the financial year to March 2017, ahead of a switch in majority ownership in August 2017 to the Trinidad based ANSA McAL Group resulting in significant changes in directorship and management. In 2019, the company changed the General manager after a relatively short stint at the helm, a move that could augur well for the company going forward.
In 2019, raw materials accounted for 50 percent of the input into paint production. Most of the raw material used in paint production is petroleum-based, resulting in paint companies benefit when the petrochemical industry goes into a downswing and conversely, a hike in the price of petroleum products raises input costs. Titanium dioxide and crude derivatives form about 50 percent of the raw material cost of paints. In 2019 the average price of crude oil on the world market US$57 for WTI, for 2020 so far, it is at US$43 per barrel, with the current price around US$22 per barrel. If the current trend holds, it will result in lower input costs for Berger for 2020. Management in reporting to shareholders for the year to December stated, “year to date to February 2020, performance indicators are ahead of 2019 with signs of a positive trajectory”.
Between 2012 and 2017, profits increased at an outstanding rate, however, in 2018, the profit was relatively flat and declined in 2019. The company reported lower sales and sharply reduced profit for 2019. The company recorded a two percent reduction in revenues to $1.12 billion for the six months to June and a 6 percent reduction to $1.6 billion for the nine months to September 2019, versus $1.7 billion for the corresponding period in 2018. It ended the year down 7 percent at $2.5 billion. Adverse weather conditions experienced in the third and fourth quarters, negatively impacted revenues, the company told shareholders in a statement accompanying the third and fourth quarter reports. Also affecting sales was the extensive road works that disrupted their customers’ businesses.

Berger Paints is one of IC Insider’s TOP 10 stocks.

The company reported a loss in the final quarter of 2019, a period that generates by far the highest revenues and usually the highest profit. Berger ended with a profit of $29 million compared to the full year compared to $40 million at the end of September. While revenues fell in the fourth quarter to $892 million versus the 2018 period, it was the highest revenues in any quarter with the June quarter of $601 million being the closest. Yet, it recorded a loss when the June quarter recorded a profit of $28 million. Analysis of the reports shows that other operating expenses of $118 million in the September quarter jumped to $254 million for the December quarter. The 2019 fourth quarter also much higher than in the same period in 2018 at $136 million, suggesting there may be some one-off cost that was incurred in the period and distorted the results.
“The company implemented a new an Enterprise Resource Planning Software (ERP) system which provides a fully integrated manufacturing and financial platform and is providing the required details and analytics for the business, the management stated.” The company also introduced a new automotive line of paints to deepen BPJL’s reach into the automotive market.
IC Insider.com projects earnings per share amounting to $2 for the current year and it now trades at an attractive P/E of just over six times projected earnings.

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

2 weeks’ of robust gains for IC TOP 10

April 11, 2020 by

The IC Insider.com TOP 10 stocks have put substantial gains since the posting at the end of March. The selections based on projected 2020/21 earnings, included robust increases of 73 percent from Elite Diagnostic, followed by Lasco Manufacturing with a gain of 56 percent and Access Financial 55 percent.

Elite Diagnostics surged 73% on the Junior Market since the end of March.

Other outstanding Junior Market gains came from Caribbean Producers that enjoyed a rise of 33 percent in closing at $3 but traded up to $3.51 on Thursday, with an increase of 56 percent since the end of March. KLE Group rose 36 percent and Lasco Financial ended with a 30 percent increase. In the Main Market, Eppley leads with a 45 percent gain, Wisynco Group rose 43 percent and Radio Jamaica 24 percent.
The gains came from a strong recovery of stock prices on the Jamaica Stock Exchange after falling by record levels in March.
Following the rise in prices of TOP 10 stocks, there are five new entrants for the coming week.  These are General Accident, CAC 2000 and Stationery and Office Supplies in the Junior Market and in the Main Market, Sygnus Credit Investments and Caribbean Cement.
Stocks that dropped from the TOP 10 are Access Financial, Elite Diagnostic and Medical Disposables from the Junior Market and Eppley and Wisynco Group from the Main Market.
The current IC Insider.com TOP 10 list is based on the profit of companies reporting full year’s results for the financial year ending after 2020 second quarter and up to the second quarter in 2021.
Many local stocks made a strong recovery over the past two weeks, but major uncertainties still exist and it is not possible to determine the exact impact on company earnings. Actual earnings could vary materially from IC Insider.com’s forecast. Looking beyond the immediate fallout or benefits can provide a useful investment guide for above-average gains in the months ahead.
The three top Junior Market selections are Caribbean Producers, KLE Group and Lasco Financial with the potential to gain between 270 to 533 percent by 2021. In the Main Market, Berger Paints leads the pact followed by Radio Jamaica and then Carreras with projected gains of 146 to 170 percent.
The targeted average PE ratio of the market is 20. Both the Junior and Main markets are currently trading well below this level. The JSE Main Market ended the week, with an overall PE of 13.3 and the Junior Market a mere 9.7, based on current 2020/21 earnings. The PE ratio for Junior Market Top 10 stocks averages a just 5.7 with the Main Market at 8.8.
The TOP 10 stocks now trade at a discount of 41 percent of the average for Junior Market and Main Market stocks trade at a discount of 34 percent to the overall market. The average projected gain for the IC TOP 10 stocks is 278 percent from 312 percent last week and down from 377 percent at the close of the prior week for the Junior Market and 139 percent from 153 percent last week for the JSE Main Market, based on 2020/21 earnings.
IC TOP 10 stocks are likely to deliver the best returns to March 2021. Forecasted earnings and PE ratio for the current fiscal year are in determining potential gains. The ranking of stocks is in order of likely increases, with the highest-ranked, being the most attractive. 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. Earnings per share are revised on an ongoing basis as new information is received that can result in changes in and out of the list.

Persons who compiled this report may have an interest in securities commented on in this report.

 

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

Buy Caribbean Producers now for 2021

April 8, 2020 by

There are few opportunities in the stock market to generate significant gains than from a beaten-down stock that has strong credentials, dominating the sector it focuses on and has been growing. This is the case with the Montego Bay-based, Caribbean Producers that has seen good times and bad times in the recent past but was enjoying a strong rebound in the first two quarters of the 2020 fiscal year.

Caribbean Producers back in TOP 10

The company’s primary market is the tourist industry. With a virtual closure of the industry currently, sales have come under severe pressure and that will hit the bottom-line severely, even if for a few months. Until the adverse reaction of the market to the Coronavirus outbreak, technical indicators showed that the stock was consolidating with the possibility of a break out from the $5 level with six months results coming far better than the disappointed 2018 half-year results. All that has changed for now as the stock nosedived to $2 as heavy selling pressured the stock.
Expectations are that the company’s third and fourth-quarter results will show the negative impact of the closure of hotels on sales and profit. Investors should bear in mind that the fiscal year starting July may not be affected or not as severely as the second half of the current fiscal year. Importantly, revenues rose 11 percent in September and in the December quarters to US$32.4 from US$29.4 million. IC Insider.com forecast is for a small profit in the March quarter to add to the profit of US$89,000 reported for the 2019 half-year. The stock price collapsed from $5 it was trading at in February to a low of $2 recently. This fall is worse than when they lost US$1.2 million in the year to June 2019 when it still traded above $4. Admittedly, the company has US$39 million of borrowed funds that exposes it to a high degree of risk if the disruption in the business is prolonged. While interest-bearing debt climbed during the year, shareholders’ equity stood at US$22.5 million.
CPJ‘s profit declined 162 percent for the year ended June 2019 to a loss of US$1.17 million compared to a profit of US$1.88 million for the year ending June 2018, with operating revenue for the year amounting to US$94.6 million from US$93.3 million in 2018. The loss resulted from a decline in profit margin in the year and US$679,713 write-off of the cost of developing the inventory IT management system.
For six months to December 2019, gross profit rose faster that growth in revenues at 19 percent to US$8.5 from $7.1 million. Selling and administrative expenses slipped from US$5.8 million in 2018 to US$5.4 million to US$20 million. Finance costs increased in the year to US$791,818 from US$411,143 in 2018 and depreciation jumped from US$609,271 to US$1.4 million.
There are risks in investing in the stock current, but the low price makes it a compelling buy for a big pay off in 2021. IC Insider.com rates the stock a buy based on full or nearly full recovery, for the 2021 fiscal year.

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

6 IC TOP 10 stocks up 25-50% last week

April 6, 2020 by

Three of IC Insider.com TOP 10 stocks gained between 25 and 33 percent during the past week and dropped out of the TOP 10 as the Jamaica Stock Exchange recorded all-round gains after falling by record levels in March.
Stocks leaving the TOP are Lasco Manufacturing with a gain of 33 percent after the stock rose from $2.75 the previous week to close at $3.65. General Accident moved from $4.50 to $5.71 to record a 27 percent rise and Sygnus US dollar-based stock gained 25 percent to close at 15 US cents and left the main market TOP 10. Eppley rose 31 percent for the week in closing at $16 and Elite Diagnostic is up a stunning 50 percent but remains in the TOP 10. Access Financial closed the prior week at $18.35 and is now up 33 percent to $24.50.> Some of the gains in the market arose from oversold conditions as well as funds returning to investors last week from the refund of the Trans Jamaica Highway IPO.
Current IC Insider.com TOP 10 listings are based on profits of companies reporting full year’s results for the financial year ending after this year’s second quarter and up to the second quarter in 2021.
While local stocks make a strong recovery this past week, thanks no doubt to some of the IPO refund coming back into the market. Investors must not lose sight that significant uncertainties abound about the local and global economy and how each company may be affected. It is not possible to determine the exact fallout and benefits from the crisis and the impact on company earnings. Actual earnings could vary materially from IC Insider.com’s forecast.
Investors should be looking beyond just the immediate situation and identify companies that are financially strong to withstand the current cut in revenues but will make a strong recovery by 2021. There are, however, cases where companies will benefit from the crisis, with signs that some companies’ sales increased sharply.
The three top Junior Market selections are Caribbean Producers, KLE Group and Caribbean Assurance Brokers with the potential to gain between 268 to 600 percent by 2021. Caribbean Producers’ price was struck, with the stock falling to a low of $2 in March, but is now trading at $2.50, as the company was poised to have their best yearly results. Closure of hotels and restaurants derailed the trend. The company had the best performance to December last year, with sales rising 10.7 percent to US$59 million, with a profit of US$525,000 versus a loss of $1.2 million in 2018. The expectations are for the company to return to normality for the 2021 fiscal year that ends in June 2021 that will give buyers of the stock around current prices a big payday.
In the Main Market, Radio Jamaica leads the pact followed by Berger Paints then Carreras with projected gains of 205 to 253 percent. RJR had its best Nine months period last year since 2014, while Berger suffered from poor sales in the second half of the year, which management attribute to weather-related disruptions. The company stands to benefit from lower raw material prices with a fall in the price of oil on the world market as well as lower energy prices.
The Jamaica stock market suffered sustained pressure during March, leading to one of the most rapid falls in stock prices in the history of the market and leaving many stocks severely undervalued.
Some companies with early 2020 year-ends will not have experienced the same impact from the fall out of sales on reported results and stock prices, as will others.
With the tourism industry virtually closed, companies heavily dependent on the industry will have little or no sales for a while from March. The Group consists of Caribbean Producers, Dolphin Cove, Everything Fresh and Express Catering. Entertainment company Main Event and restaurant operator KLE Group will be hurt from patrons staying home as well as fewer tourists visiting Montego Bay and patronizing the restaurant in that town. Once this period of disruption has passed, KLE should benefit from economies of scale with the full ownership of the additional restaurant.
The results of some companies will be hit by falling stock and bond prices. The results for the 2020 first quarter will show the impact of the recent market decline locally and overseas. The latter includes JMMB Group, Proven, NCB Financial Group, Barita Investments, VMBS Investments, Jamaican Teas, QWI Investments and Sagicor Group. Banks may have to increase loan loss provisions as businesses encounter cash flow problems and defaulting on loan payments.
The targeted average PE ratio is 20, with both the Junior and Main markets currently trading well below this level. The JSE Main Market ended the week, with an overall PE of 12 and the Junior Market a mere 9.2, based on current 2020 earnings. The PE ratio for Junior Market Top 10 stocks averages 5.5 with the Main Market at 8.5.
The TOP 10 stocks now trade at a discount of 40 percent of the average for Junior Market and Main Market stocks trade at a discount of 29 percent to the overall market. The average projected gain for the IC TOP 10 stocks is 312 percent down from 377 percent last week for the Junior Market and 139 percent from 153 percent for the JSE Main Market, based mostly on 2020 earnings.
IC TOP 10 stocks are likely to deliver the best returns to March 2021. Forecasted earnings and PE ratio for the current fiscal year are in determining potential gains. The ranking of stocks is in order of likely increases, with the highest-ranked, being the most attractive. 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. Earnings per share are revised on an ongoing basis as new information is received that can result in changes in and out of the list.

Persons who compiled this report may have an interest in securities commented on in this report.

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