The company seems poised to hit earnings of 65 cents per share for the June 2015 financial year, making it attractive for some short-term gains with the current price of $2.09 at a PE ratio of 3 times earnings, having earned 19 cents per share for the quarter and 43 cents for the nine months, to March 2015.
Caribbean Flavours & Fragrances enjoyed a moderate increase of 16 percent in profit for the March 2015 quarter over the similar period in 2014. The increase was helped by an improvement in gross profit margin that moved from 39.6 percent to 44 percent. Profit came in at $17.3 million for the quarter versus $15 million in the similar period in 2014. For the nine months to March, profit declined slightly from $39.7 million in 2014 to $38.9 million.
Sales were up moderately in the quarter from $62.8 million in 2014 to $67 million. For the nine months to March sales grew 11.7 percent to $210.6 million from $188.6 million but cost of sales rose faster than the growth in revenues from $111.7 million to $133.5 million in the nine months or 18.75 percent. Administrative cost increased 21 percent in the quarter, and just 2 percent for the nine months, vastly better than the high double-digit increase in the prior year. The return on average equity an attractive 33.5 percent per annum. The negative is that for its small size there is limited growth from existing operations.
The balance sheet is in a healthy state with equity of $195 million or $2.17 per share. There are no borrowed funds while current assets is $210 million versus payables of only $16 million.
The principal activity of the company is the manufacture of and distribution of flavours mainly for the beverage, baking and confectionery industries. The company also sells food colouring and fragrances.The stock is listed on the Jamaica Stock Exchange junior market and is recommended as a buy by IC Insider.
Undervalued Caribbean Flavours
Profit may not be far off at C&W
Cable & Wireless HQ
During the financial year Cable & Wireless added more than 107,000 mobile subscribers bringing the total to 820,500, according to the annual report of CW Communications (CWC) the parent company of Cable & Wireless. The cellular customer base has just about doubled since March 2012. At the end of December last year, C&W stated then that the cell customer base grew 18 percent, year to date to 813,000. C&W is said to have grown the cell customers by approximately 80,000 for the year to March 2013 and for the 12 months to March 2014 by 165,000.
Growth in cell customers increased mobile market share to 28 percent, based on customer who used their handset within the last three months according to the parent company, and probably more, based on all their customers with credit balances on handsets. The subscriber base of its main rival Digicel Jamaica, is said to hover around two million, but in all possibility, the number is under 2 million with the growth in C&W numbers over the last four years.
The increased subscriber base rocketed the mobile segment to incontrovertibly become the leading segment for the company. Mobile revenues earned $8.7 billion up 30 percent year on year; fixed voice remained flat at $6.5 billion, managed services at $3.6 billion was 25 percent higher than in 2014 and broadband & video at $2.7 billion compares to $2.3 billion or 17 percent increase year on year.
Some $4.5 billion of the exceptional charge relates directly to the flow acquisition. How much income will flow into C&W Jamaica from that operation is unknown at this time, but it should mean at least reduced cost for C&W from its existing operation. Revenues should continue to grow with the mobile customers added last year, generating income for the full year rather than part thereof, as occurred in the years of acquisition. The company should continue to add more customers in the current year as it goes after increased market share, particularly in the cellular market. The numbers suggest that the company could well return to profitability this year, based on the above savings and potential growth in revenues.
Big pay day for JSE shareholders
The Jamaica Stock Exchange (JSE) will pay out $74.33 million in the form of a dividend in July. The company listed 140.250 million ordinary shares on the exchange in 2013 is making its first dividend payment since listing.
JSE board of directors met on Monday and declared the payment of a dividend of fifty-three cents (53 cents) per share unit, payable on July 10 to shareholders on record as at June 26, 2015. The stock will trade ex dividend on June 24, 2015.
The share closed 2014 at $1.57 and gained 237.58 since the start of 2015, helped considerably by a jump in profit in the first quarter from a loss of $2 million to $87 million. A pick up in stock market activities also helped in driving demand for the stock as investors saw higher income and profit flowing in future quarters. The JSE reported a very small profit of $3 million for the year ended December last year. The dividend enjoys a yield of 33.75 percent based on the price at the end of last year and 10.5 percent based on the price last Friday and 9.2 percent based on Tuesday’s closing price of $5.75.
Buy Rated blooming
Hardware & Lumber with its Rapid True Value retail arm gained 291% since place on BUY RATED list
Trinidadian stocks have hardly gone anywhere the Jamaican ones are soaring after a long period of drought. There are three triple winners in the main Jamaican market including Hardware and lumber that is up 291 percent since we selected it as Buy Rated. Interestingly, they are no losing stocks in this market. The junior stocks have erased most of the losses suffered earlier and now only two stocks record any losses. Technical indicators are pointing to
the Jamaican rally continuing for the rest of the year with lower inflation and interest rates coupled with continued strong profit gains. Trinidad stocks will continue to be under pressure but there are a few severely undervalued ones in that market that could post decent gains in the months ahead.Access still has further to go as the future looks good for growth in profits but the price of the stock could be trading around current levels for some time but there is limited volumes available, this one becomes a longer term buy with the price where is currently lies. Caribbean Cream and Paramount seems to have quite some gains to deliver in the months ahead as improving results encourage investors to buy into the growth prospects. Lasco Financial could be going anywhere with Mayberry buying 20 percent and buying more in the market of a stock with limited float and Medical Disposables has good potential to deliver a decent gain.
The main market may have had lots of gains so far but there is much more to come from even some of the top performers such as Jamaica Stock Exchange, National Commercial Bank, Caribbean Cement and Carreras to name a few. Over in Trinidad, Guardian Holdings is undervalued but National Flour is severely undervalued, Trinidad Cement is a huge buy with much upside potential especially with debt restructuring leading to lower interest cost and lower energy cost in Jamaica and Barbados.
Caribbean Cream profit upgrade
Caribbean Creams profit upgraded to show a 62 percent increase to $56.8 million or 15 cents per share above the 2014 earnings, according the audited financial statements compiled by KPMG, the company’s new auditors.
The comparative 2014 results were $35 million after a small tax expense. The interim report had profit for the year at $49 million on slightly higher sales than the audit report showed. The major area of change was lower administrative cost of $12 million in the audited accounts versus the preliminary figures. Caribbean Cream enjoyed an increase of 305 percent in profit in the final quarter to reach $25.7 million up from $6.4 million in 2014 quarter, according to the data in the audited accounts and third quarter interim results.
IC Insider is forecasting profit of 244 million for the 2016 fiscal year or 65 cents per share from increased sales revenues that will flow mainly from a 15 percent price increase effected just before the Christmas season.
The stock which was listed on the junior market of the Jamaica Stock Exchange in 2013 at an IPO price of $1, traded at $1.10 on Thursday and has moved up from 65 cents just before the release of the interim results.
Teas could have a good year
Jamaican Teas enjoyed good exports sales for the second quarter to March continuing the appreciable growth in the first quarter. Exports moved by 26.6 percent from $64 million to $81 million for the latest quarter and year-to-date $118 million moving to $184 million for an increase of 56 percent.
The strength in exports contributed to the overall increase in sales which moved from $259.2 million to $292.5 million, an increase of 12.8% in the quarter, helping to push profit to $20 million in the March quarter, a 19.8% increase from the comparable period in the prior year. Profit for the six months to March was $43 million, an increase of 16.2% compared to the related period in 2014.
Earnings per share is up to 26 cents for the six months and 12 cents for the quarter, with the expected completion of sale of units in the development property earnings could end up around 80 cents per share for the fiscal year, this could change depending on whether the company disposes of some of the equities it is holding. Sales for the six months to March 2015, are up 14.4 percent to $611 million from $534 million in the prior year.
Exports were helped considerably by the coming on board of a new distributor in the eastern cost of the United States which will see the company products being sold in Wall Mart stores during 2015. Exports were also helped by restoration of sales in the Florida area that was disrupted in the previous financial year from modification in distributorship in that area. Local sales in the manufacturing operations are ahead of the prior year but are not a buoyant as could be expected.
The Orchid property being developed that should add to Jamaican Teas’ profits in 2015 & 2016.
The company’s investment portfolio showed encouraging increase in value, with gains of $12 million during the quarter and $14 million year to March, subsequently it has increased further with the growth in the local stock market.
Jamaican Teas borrowings are at $397 million at March, $310 million is long term, the group equity of $691 million, investments at March amounting to $126 million with cash funds of $27 million. On completion of sales of units in the development property there will be a sharp reduction in loans outstanding and or a build-up in cash.
Jamaican Teas is involved primarily in the production of ingredients for hot beverages, but also sells water and other ready to prepare food products as well as operators supermarkets and in the real estate development. The company is listed on the Jamaica Stock Exchange junior market and last traded at $3.
Barita reports big profit jump
Brokerage house Barita Investments released half-year results showing profit of $130 million or 29 cents per share versus $105 million in 2014, the improvement came in the second quarter with profit of $84 million, or 19 cents per share, up from $48 million, fuelled by a big jump in investment gains, mostly from disposal of government of Jamaica securities.
Net interest income fell in the quarter as interest cost declined more slowly than the fall in income. For the quarter revenues climbed to 398 million from only $333 million in 2014 while operating expenses rose from $115 million to $128 million or 11 percent. Interest cost fell from $171 million to $151 million but interest income fell faster from $260 million down to $204 million, for a fall of $55 million thus squeezing net interest income from $88 million to $53 million.
Karl Lewin at the launch of Barita’s newest unit trust funds
Revenues from our non-interest income for the six months were above prior year with $309 million compared to $141 million with fees and commission income being 88 percent above prior year at $79 million with significant improvements coming from the revenues of the Barita Unit Trusts Management Company. Additionally, trading gains improved by 813 percent at $179 million compared to $21 million in the prior year, due to gains from sales of government of Jamaica bonds that enjoyed gains as Jamaican bonds started to attract renewed interest. Depreciation of the Jamaican Dollar and trading gains amounted to $42 million year to date down from $72 million in 2014.
“Operational costs for the 6 months period to March increased by 14 percent when compared to the same period last year. Over the same period, staff costs increased by 12 percent, triggered primarily by additional human resources and remuneration adjustments,” the company reported.
Administrative costs were 16 percent higher for the same period last year; the main contributors being our financial support of the Education Foundation and client support expenses.
Looking forward, earnings look set to reach at least 50 cents per share for the year and could be more, depending on the continued buoyancy in the stock market that should help lift commission income from trading for clients, increased stock market prices will increase the asset base of the equity lined unity trusts and generate more fee income. The revaluation in the Jamaican dollar in to March has been reversed thus restoring gains in this area. The decline experienced in interest rate spread may slow but that is unclear at this stage with rates on BOJ Certificate of deposits having fallen and Treasury bill rates continuing to decline.
The quarter ended with equity of $1.86 billion and total assets of $13.37 billion. The stock which is listed on the Jamaica Stock Exchange and last traded at $2.50 up from $1.95 prior to the release of the results.
Cargo Handlers a nice income generator
Cargo Handlers stock has passed the $22 mark but could well go higher based on the earnings being generated. For the six months to March the Montego Bay based company racked up profit of $78.6 million, 52 percent higher than in 2014 and $38.47 million, up by 48.4 percent over the similar quarter of 2014.
The good net income came from operating revenues that were up 29.8 percent in the quarter to 62.7 million and 126.2 million in the six months an increase of 29.5 percent. Expenses were kept well below revenues growth at $26.16 for the quarter versus $22.5 million and for the year to date $49.3 million compared with $48 million.
Earnings per share for the quarter is 92 cents and $1.89 for the six months, the company is well on its way to rake in $4 per share for the year ending September.
The company had cash funds of $138 million at the end of March owes very little to creditors with an equity base of $231 million.
The company is primarily involved in stevedoring services and haulage of fuel and the shares trade on the junior market of the Jamaica Stock Exchange and has gained 39 percent since the start of the year.
The company paid an interim dividend per share of $1.25 on March 11, 2015 and $1.30 on September 16, 2014.
ANSA Merchant Bank profit up 70%
ANSA Merchant Bank and its subsidiaries reported a 70 percent increase in profit for the first quarter to March this year, compared to the first quarter of 2014. The quarter ended with consolidated operating profit of $53.8 million versus $31.6 million for the similar 2014 quarter and resulted in earnings of 50 cents per share, up from 26 cents in 2014. In 2014 the group reported earnings of $2.43 per share for the twelve months but should exceed that level in 2015.
The stock is listed on the Trinidad & Tobago Stock Exchange and last traded at $38.91, with a PE of 16 based on 2014 results and less, based on what the latest numbers are suggesting, in terms of full year profit for 2015. Examination of the 2013 and 2014 results, show no clear pattern of consistency quarter over quarter for earnings, but the last quarter of the year appears to be one in which profit tends to exceed $1.20 per shares, accordingly, the 2015 earnings could be around $3 per share and if achieved would result in a PE of 13.
The Banking segment produced earnings before tax of $33 million for the first quarter representing a 5 percent increase over the first quarter of 2014. Mutual Funds performed better in the reported quarter compared to 2014 with a small profit of $949,000 versus an $8 million loss, in 2014. The general insurance business produced net earnings of $22.7 million in the quarter, a 47 percent increase over the prior year. The life insurance business experienced a loss in of $2.2 million but an improvement over the loss of $7.2 million in the similar quarter of 2014.
Revenues climbed 21.3 percent to reach $172 million while expenses rose by a more sedate 7.3 percent to hit $118.3 million and helping to push up the profits
The equity capital stood at $1.9 billion at the end of March and total assets of $6.7 billion. ANSA McAl a Trinidad Company owns 82.48 percent of ANSA Marchant Bank group.
JSE profit surged – 2016 could be big
Jamaica Stock Exchange reported a huge jump in first quarter earnings showing profit of $87 million or 62 cents, up from a loss of $3 in 2014, after tax. Revenues jumped from $82 million to $253 million, on the back of 10 fold increase in cess, due to primarily to the transfer of ownership of the controlling interest in Scotia Group, from the Canadian parent, to one set up to own the Caribbean entities directly.
Total cess income jumped to $161 million compared to only $15 million. Access Financial managing director switched ownership of his shares to a company, resulted in a transaction over the exchange of $1 billion and Pan Jamaican Investments had a $1.3 billion transaction in March. While the latter two unusual transactions would have increased the cess around $12 million, the cess for Scotia Group is estimated by IC Insider at around $120 million, leaving around $40 million as cess from normal ongoing operational activities. Trading values grew by 27 percent in the first quarter, including the two transactions in March. Fee income which rose by 67 percent would have been partially impacted by the big one off transactions, but increased value traded and a slight increase in listing fees would also have helped.
In the second quarter to mid May trading has increased 333 percent to $2.6 billion, the amount is equal to the total value traded for the entire second in 2014. The increased value of trading will lead to increased fees. In the 2014 second quarter, income from cess was only $10 million and fee income $45.5 million. Not only will the cess rake in more funds from the increased volume of trading now on the way but also from an increase in the rate charged for cess over the 2014 level.
While the increased trading activity so far will lead to increased fees for the second quarter, the potential income will be no more than around $100-120 million and will be sufficient to produce a profit for the quarter and help in lifting profit for the full year beyond $1 per share.
Looking forward, with more unit trust schemes being set up there will be more demand for stocks to satisfy the demand of equity funds. The Stock Exchange is poised to take over repo trading and acting as the registrar for them and result in additional fee income is going in the not too distant future, also of great import is that rising stock values increases the base for listing fees to be levied in 2016.
The exchange has cash and investments of $500 million with a working capital ratio of 2:1 and equity of $650 million. The stock remains IC Insider BUY RATED and is now available at $3.50 which it traded at on Friday, but won’t remain that way forever and investors should be buying this one for big long-term gains.
