Minority owners disrupt NCB’s Guardian offer

NCB Financial Group has advised that the offer to acquire up to 62 percent of Guardian Holdings shares lapsed due to failure for condition 2.4.5 of the Offer.
The conditions in summary stipulates that the conclusion of the offer is subject to there being no action instituted or threatened or investigation by government or its bodies or legal action that may delay the completion of the offer or make it illegal.
At the end of Friday 23rd February, there are terms and conditions of the Offer which remain outstanding a release from NCB stated, as such and in accordance with the provisions of the Securities Industry (Take-Over) By-Laws, 2005 the Offer lapsed.
The latest tally of offers received showed 535 Guardian shareholders tendered approximately 91,743,975 shares which, together with the NCB existing shareholding, represents approximately 70.24% of the outstanding GHL Shares. No shares deposited have been taken up by the Offeror.
NCB future states that the Trinidad and Tobago Securities and Exchange Commission has decided to convene a hearing in accordance with the provisions of the Securities Act, 2012 in respect of the facts and circumstances surrounding the Offeror’s equity interest in GHL and the issuance of the Offer Circular.

Jamaica’s Q4 growth could hit 2%

Image courtesy of arztsamui/FreeDigitalPhotos.net

Bank of Jamaica (BOJ) estimates that the Jamaican economy grew, within the range of 1 to 2 percent for the December 2017 quarter. “With the exception of producers of Government Services, all sectors are estimated to have grown for the quarter,” BOJ said.
Both tradable and non-tradable industries are estimated to have expanded for the quarter with tradables estimated to have registered a faster pace of growth when compared to the non-tradables According to the central bank, the growth was also reflected in improved labour market conditions as unemployment continued to fall. Economic growth is forecast to be in the range chiefly reflective of expansions in Mining & Quarrying, Agriculture, Forestry & Fishing, Hotels & Restaurants, Construction, Manufacturing and Electricity & Water Supply. The central bank went on to state that for FY2018/19 and over the medium-term, economic activity is expected to expand within the ranges of 2 to 3 percent to 3.0 percent and 1.5 to 2.5 percent, respectively.

Bauxite mining

The central bank stated that “expansion in the economy was supported by the continued accommodative monetary policy stance. During November, the Bank reduced its signal interest rate, the interest rate payable on its overnight Certificate of Deposit by 25 bps to 3.25 percent on the assessment that inflation for the next four to eight quarters would remain within the target range of 4 to 6 percent. This accommodative monetary conditions continued to support growth in credit in the financial system with private sector financing by deposit taking institutions (DTIs) increasing by 9.1 percent for the calendar year to October 2017.”

Improved Q4 results at Productivity Business

Productivity Business Solutions reported a 21 percent reduction in loss for 2017 to US$1.7 million for the December quarter and an increase of 76 percent to US$4.9 million for the full year after taxation of US$1.17 million for the quarter and US$2 million for the year.
Revenues grew 9.25 percent to US$46.36 million in the quarter up from $42.43 in 2016 and for the full year it was up a mere 1 percent to US$172 million from US$171 in 2016.
Administrative expenses rose 7 percent to $18.55 million for the quarter and by 2 percent for the year to $68 million and finance cost 31 percent for the quarter and to $2.9 million and by 37 percent to $9.35 million for the year. Devaluation losses seem to have negatively affect finance cost in the December quarter and pushing the operations into a loss position before tax, for the year, expenses connected for refinancing and capital transactions relating to new business in Suriname and Columbia, helped in pushing cost up in this area.
Based on the fourth quarter results, with a small loss with increased foreign exchange losses, 2018 could turn out to be a profitable year.
The shares last traded on the US dollar market of the Jamaica Stock Exchange at 55 US cents.

39% jump in JMMB’s Q3 profit

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JMMB Group enjoyed a strong third quarter, with profit after tax jumping sharply by 39 percent, to $871 million from $628 million in 2016 and earnings per share of 53 cents, from a rise in revenues, net of interest cost of 24 percent to $4.5 billion.
Interest margins slipped in the quarter year over year, from 52 percent to 49 percent but was better than the year to date performance of 48 and 47 percent respectively. Fees and commission income jumped an impressive 71 percent to $512 million in the quarter and 53 percent in the nine months, over the similar period in 2016 with significant growth in managed funds and collective investment schemes across the Group. Gains on securities trading climbed 42 percent in the December quarter and just 5 percent for the year to date, over 2016. Foreign exchange gains were up 43 percent for the quarter but down 4 percent for the nine months.
The group posted net profit of $2.58 billion and earnings per share of $1.56 for the nine months to December, while generating 11 percent increase in net operating revenue to $12.28 billion, resulting from increases in net interest income, trading gains, fees and commission income.
Net interest income, grew 12 percent or $594 million to $5.66 billion, flowing from strong growth in the loan and investment portfolios. Financial and Related Services continued to be the leading contributor to net operating revenue with 67 percent at $8.23 billion which is 11 percent more than the $7.4 billion generated in the similar period in 2016. This improvement was due mainly to growth in trading gains, asset management fees as well as net interest income. The Banking performance of $3.86 billion reflected a 10 percent increase, up from $3.52 billion and resulted from strong growth in the loan book which translated into net interest income and fee income.
Administrative Expenses climbed 13 percent in the quarter and 14 percent year to date over 2016, slower than the growth in revenues for the quarter but faster than revenues year to date.
“Jamaica’s focus remained on operationalizing our commercial bank and maximizing our cross-selling efforts across the Group. Accordingly, growth in both the loan book and our off balance sheet offerings continued to improve.” Archibald Campbell, Chairman and Keith P. Duncan, Group Chief Executive Officer stated in their comments on the quarterly.
At the end of the reporting period, the JMMB Group’s asset base totalled $271 billion, up $19 billion or 8 percent relative to the start of the financial year. This was mainly on account of higher cash holdings as well as larger loan and investment portfolios. The investment portfolio increased by $9.6 billion or 6 percent to J$182 billion, while net loans and advances grew by $6.57 billion or 14 percent to $53.7 billion. The total invested in off-balance sheet products as at the end of December 2017 stood at $117.9 billion compared to $107.64 billion as at end of December 2016.
IC Insider.com projects earnings of $2.75 for the full year. The stock last traded on the Jamaica Stock Exchange at $25 for a PE of 9.

Solid buy – Stationery and Office Supplies

Stationary and Office Supplies – Montego Bay offices.

Stationery and Office Supplies stock is under pressure, having traded around the $5 level for some time, dropped to $4 in trading during last week with minimal demand for the stock currently.
But investors should probably be taking a different approach to the stock and piling into it for a big rally down the road as the fundamentals are strong and getting better.
Revenues climbed 23.7 percent in the June quarter to $212 million and 22 percent to $432 million for the half year, by the September quarter the growth climbed to 37 percent to $233 million, pushing revenues for the year to September to an increase of 27 percent to $665 million. Based on the bounce in revenues that some companies received after listing, the strong growth in revenues seen in the third quarter is said to have continued for the December quarter. Full year results are expected, by the first week in March and should be in the range of $100 million based on IC Insider.com projections. Reports are that the full year results for 2017 exceeded expectations which was around $70 million at the time the IPO was offered and adjusted internally upwards based on third quarter results. At the end of September profit before tax reached $69 million well ahead of the $48 million recorded at the same time in 2016 and vastly more than the $53 million reported for all of 2016. The 2017 results are not likely to show any weakness as occurred in 2016.
SOS had acquired a building which was converted to a warehouse to allow for expansion of It’s offerings, this is now in use with some 6,000 square feet occupied. According to reports there are “lots of plans and expectations going forward for good business growth”. IC Indsider.com gathers that the December quarter that is normally the worse quarter for them due to the holidays, but the 2017 last quarter was the best quarter in the company’s history.
IC Insider.com projects earnings before tax at 50 cents per share for 2017 based on the average number of shares issued for the year, up from 40 cents when the shares were offered for sale and 75 cents for 2018 based on projection for continued strong growth in revenues.
At a last traded price of $4.50 on the Junior Market of the Jamaica Stock Exchange, the stock remains a buy as it will benefit from strong growth in 2017 and future growth in 2018 and beyond. Investors should take advantage of the current softness in the stock price and wait for the inevitable strong gains ahead.

Caribbean Creams buying market share

Caribbean Cream outlook.

Caribbean Creams strategy of going for market share seems to be paying off with strong rise in revenues in the third quarter but at a steep cost with profits falling sharply in the quarter.
Profit at the sole producer of ice cream listed on the Junior Market of the Jamaica Stock Exchange was disappointing as shown by their latest quarterly report recently. The disappointment is not due to under performance of the company though but from what appears to a strategy to boost market share.
Profit slid 97 percent to just $653,000 in the November quarter, from $19 million in the similar period in 2016. For the nine months to November, profit slid 48 percent to $71 million from $137 million in 2016.
Input cost has risen sharply during the period but management strategy seems clear go for market share by keeping prices stable and low and revenues will eventually deliver bottom line gains.
Revenues climbed 18 percent for the quarter, to $319 million from $271 million in 2016 and rose at a slower 12 percent to $992 million from $886 million in 2016 for the nine month period.
Profit margin, declined for both the quarter and year to date period, in the November quarter to 27 percent from 33 percent in the 2016 and for the nine months to 31 percent from 39 percent in the 2016 period, as input cost climbed 29 percent in the quarter, compared to 27 percent for the year to date period. The effect, gross operating profit declined just 4 percent in the quarter to $85 million from $89 million and fell 11 percent for the year to date, to $305 million from $344 billion in 2016.
Direct operating cost was not the only area to experience steep cost rise. Administrative expenses rose 25 percent to $68 million in the quarter and increased by 15 percent in the nine months to $193 million. Finance cost jumped 58 percent in the quarter, to $6 million over 2016 and 41 percent from $8.7 million to $12 million for the nine months period.
Earnings per share came out at 19 cents for the nine months and is expected to rise with the important final quarter covering the Christmas period to impact revenues.
Gross cash flow brought in $130 million but addition to fixed assets, loan payments and paying $23 million dividends, brought cash funds at November, to $145 million. At the end of November, shareholders’ equity stood at $640 million with borrowings at just $86 million. Net current assets ended the period at $214 million well over Payables of $77 million. Amounts invested in inventories dropped from $161 million at the end of February to $96 million.
The stock traded at $5.70 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 10 times estimated 2018 earnings and with IC Insider.com forecasting 80 cents per share for PE of 7.5 times earnings.

Write offs at Carib Cement hit profit

Caribbean Cement

Profit at Caribbean Cement before exceptional charges rose 31 percent from $1.85 billion to $2.43 billion from sale revenues rose that grew by just 4.64 percent for the quarter to $16.5 billion, from $15.78 billion in 2016.
Gross profit increased 7 percent or $656 million excluding labour cost and the margin increased modestly to 62 percent from 61 percent in 2016. The company wrote off inventories amounting to $458 million and incurred redundancy and other manpower restructuring cost of $417 million, reducing the profit for the year by 12 percent to $1.22 billion.
Wages and related cost declined 6 percent to $1.94 billion while Administrative expenses were virtually flat at $4.49 billion, but depreciation rose 7 percent to $532 million flowing from additions to fixed assets and transport, marketing and selling expenses rose 22 percent.
Importantly, while revenues rose just under 5 percent for the year, in the final quarter it increased by 12 percent to $4.25 billion and helped to lift profit before exceptional cost from a loss of $225 million in 2016, to a profit of $367 million. The net position for the quarter is well down on the $748 million reported in the September quarter from revenues of $4.18 billion.

Carib Cement 2017 operating profit rose.

Analysis of the figures raises question about the costing for raw material used in production. It was reported as just $323 million in the September quarter and $520 million in the final quarter, unadjusted for inventories for finished goods sold in the period but coming from the prior period. Direct cost jumped sharply over the September quarter and is out of line with prior period. Charge for corporate taxation rose from just $49 million in 2016 to $411 million.
Gross cash flow brought in $3.2 billion but addition to fixed assets absorbed $2.2 billion with cash funds ending at $1.67 billion at the end of December. Shareholders’ equity improved to $8.96 billion with accumulated losses of $3.25 billion, roughly $700 million worse than the $2.59 billion at the end of September. There are no noted borrowings on the financial statement but the company has a long standing lease arrangement with its parent company. Usually reliable sources indicate that the arrangement with Trinidad Cement will be refinanced shortly in Jamaica and will result in significant cost savings for the company which could be as high as $2 per share. Net current assets ended the period $790 million with third party Payables of $2.58 billion.
Earnings per share came out at $1.35 cents for the year but without the one off charges would have been in region of $2.10. The stock traded at $33.05 on the Jamaica Stock Exchange with a PE ratio of 16 times 2017 adjusted ongoing earnings. With the new fiscal year normal earnings should increase with the growth taking place in the construction sector and the lowering of cost in a number of areas. IC Insider.com is projecting earnings of $5.50 per share for the year based on savings already effected in its operations, increased demand for cement and savings to flow from a new financing arrangement, for a PE ratio of 6. Investors interested in buying into the potential for may want to wait to see if there is a sell off before picking them up.

Cargo Handlers Q1 profit falls

Overvalued Cargo Handlers.

Montego Bay’s based, Cargo Handlers suffered a 13 percent dip in profit, for the December quarter to $40 million from $46.2 million in 2016 from flat operating revenues of $86.57 million compared to $86.99 million in 2016 and resulted in earning per share 11 cents.
Gross profit margin declined in the quarter to 59 percent from 61 percent in the 2016, as wages increased ahead of income, leading to Other Operating Expenses rising 7 percent to $35.75 million. Other income fell 84 percent to $544,786 from $3.42 million and interest income declined by 36 percent to $470,000. Revaluation of the Jamaican dollar would have had a negative impact on other income. Administrative expenses rose 20 percent to $5.4 million and finance cost climbed by 35 percent, to $336,038. Taxation payable on the profit fell from $6.66 million in 2016 to $5.76 million.
Gross cash flow, brought in $58 million but increased working capital needs reduced cash inflows to $27 million and raising cash funds to $272 million.
At the end of December, shareholders’ equity stands at $390 million with borrowings at just $0.9 million. Net current assets ended the period at $331 million well above payables of just $17 million.
The stock that traded at a high of $30 in early 2017, last traded at $10.50 on the Junior Market of the Jamaica Stock Exchange, with a PE ratio of 21 times IC Insider.com projected earnings of 50 cents for 2018. The average PE for the market is now 10, suggesting that Cargo Handlers stock price could slip back or remain around the present level for a prolonged period.

Q3 profit jumps 73% at Lasco Manufacturing

Lasco Manufacturing products.

Lasco Manufacturing profit, jumped 73 percent in the December quarter, to $195 million from $113 million in 2016. For the nine months to December, profit fell 24 percent to $533 million from $700 million in 2016.
Sale revenues rose 22 percent for the quarter, to $1.78 billion from $1.46 billion but fell 3 percent for the year to date, to $5.28 billion from $5.42 billion in 2016.
Improvement in profit margin in the first half of the year, declined in the December quarter to 32 percent from 34 percent in the 2016, for both the quarter and year to date period, as input cost climbed 27 percent, compared to just 1 percent for the year to date period. The effect, operating profit rose just 12 percent in the quarter to $561 million from $503 million but fell 9 percent for the year to date, to $1.66 billion from $1.83 billion in 2016.
Other operating expenses fell 10 percent to $301 million in the quarter but rose 5 percent in the nine months period to $698 million. Finance cost declined in the quarter, to $34 million from $42 million in 2016 and from $126 million to $99 million for the nine months period.
Earnings per share came out at 5 cents for the quarter and 13 cents for the nine months and should end the fiscal year ending to March around 20 cents.

Bottle heating machine at Lasco Manufacturing.

Revenues and profits were impacted earlier in the year, by a number of factors including phasing down production in April and May, and additional marketing and brand building investments to support the brands and distribution discounts to support sales. The phasing down of production allowed for critical plant upgrades necessary for sustained improvements in output, cost efficiencies and quality. The expected improvements have materialized’ the Managing Director, James Rawle, stated in his report accompanying the quarterly.
Gross cash flow brought in $694 million but growth in receivables, inventories, addition to fixed assets offset by loan inflows and increased payables and paying $143 million dividends net overdrawn position ended at $518 million. At the end of December, shareholders’ equity stands at $4.84 billion with borrowings at just $1.75 million. Net current assets ended the period $1.52 billion well over Payables of $1.05 billion.
The company rolled out new juice drink in the December quarter and plan to launch carbonated beverages and an energy drink in the March quarter.
The stock traded at $4.40 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 22 times 2018 earnings. The company will go into a new year, come April, that should result in a lowering of the PE with IC Insider.com forecasting 30 cents per share for PE of 15 times earnings.

Access Financial Q3 profit up 12%

Access Financial reports profit of $158 million in the December quarter, up 12 percent from $142 million in 2016, from trading revenues that grew 18 percent to $423 million from $358 million net of interest cost.
Net profit rose to $505 million, for the nine months over 2016, an increase of just $10.6 million, a mere 3 percent over the similar period in 2016, with provision for loan losses doubling.
Total trading income for the nine months to December, grew 23 percent to $1.22 billion, an increase of $225 million over 2016 and for the December quarter the increase was $65 million to $423 million from $358 million for an increase of 18 percent.
Loans income, rose $97 million or 10 percent to $1.04 billion for the nine months and by 21 percent to $379 million for the December quarter. Net fees and commission income jumped by 91 percent for the nine months to $270 million but by just 5 percent to $73 million in the December quarter.
Amounts set aside for loan losses increased just 12 percent in the quarter to $63 million and a sharp increase of 99 percent for the nine months, to $186 million, with the latter being well ahead of the increase in income for the period. Staff cost rose 24 percent for the December quarter to $99 million and by 42 percent to $277 million for the year to date period.

Access has a long history of consistent growth in income & profits

Total operating expenses for the nine months, increased by 33 percent to $698 million over 2016 and by just 10 percent to $238 million for the last quarter.
Total assets climbed to $3.43 billion at the end of December, from $2.96 billion in the prior year with the loan portfolio rising to $2.87 billion from $2.65 billion at the end of 2016 and $2.62 billion as of March 2017. Shareholders’ equity rose to just over $2 billion.
Earnings per share for the December quarter came in at 58 cents and for the year to date period to $1.84 and should end the full year around $2.60 for the full year for a PE of 17 times. IC Insider.com is forecasting earnings of $4.50 for the 2019 fiscal year for a PE of 10 times projected earnings. The stock last traded on the Junior Market of the Jamaica Stock Exchange at $45.15.