Improved tourist arrivals boost CPJ earnings

Caribbean Producers transformed itself following the pressures posed by the closure of the hotel sector it primarily serves in 2020 and the relatively prolonged period taken to get back to normal levels.

Caribbean Producers

Notably, revenues are rising again and delivering record profits even for a period when tourism numbers were 28 percent down for the March 2022 quarter from 2019. The June quarter could see 30 percent higher arrivals than the March quarter resulting in more revenues for the June quarter compared with that for the March quarter.
The above data portends more positive revenue growth for the coming fiscal year that starts in July. There will be a significant revenue hike in the first three quarters of the 2023 fiscal year, compared to the current fiscal year, with the tourism sector back to normal as indicated by preliminary June quarter arrivals. There should also be improved performance in the June quarter of 2023 compared to 2022, which enjoyed much recovery but was still not at full capacity.
According to Mark Hart and Tom Tyler, directors of the company, “the group remains optimistic for the fourth quarter of the financial year due to strong hotel bookings reported by our customers.”
The group is diversifying their revenue stream, making more investments in stores and adding new product lines for local consumption.
Revenues for the March quarter surged 123 percent to US$28.36 million over 2021 with just $12.7 million with the nine months to March delivering revenues of $86.44 million, up 133 percent above the $37.11 million generated in 2021. Interest and other income generated $89,700 for the quarter, down from $182,000 in 2021 and $652,000 for the nine months to date, up 93 percent over 339,000 in 2021. Profit margin slipped to 31 percent in the quarter but rose to 32 percent for the year to date, with gross profit of $8.9 million from $3.5 million in 2021 and $27.6 million for the nine months to March versus $9.9 million in 2021.
Depreciation cost was steady at just over 1 million for the quarter in both years and $3.2 million for the year to date but Administrative and selling expenses jumped 63 percent in the quarter to $5.2 million from $3.19 million in 2021 and rose 57 percent to $14.7 million for the nine months from $9.4 million in 2021. Finance cost rose 80 percent to $794,810 from $441,626 for the quarter and 71 percent to $2,290,676 from $1,336,016 for the nine months.
Gross cash flow brought in $10.2 million, but growth in receivables, inventories and addition to fixed assets resulted in outflows of $2.4 million, but net loan inflows amounting to $2.4 million resulted in a slight dip in cash funds on hand at the end of the quarter. At the end of March, Current assets amounted to $53.5 million, including Inventories of $30 million, receivables of $19.3 million and cash and bank balances of $4.2million. Current liabilities ended at $25.3 million, resulting in net current assets of $28.2 million. Heavy debt is a major concern at US$43 million in borrowings with equity of just $22 million.
Earnings per share came out at 0.14 of one US cent for the quarter and 0.62 of a US cent for the nine months. IC Insider.com forecasts J$1.65 per share for the fiscal year ending June 2022, with a PE of 8.55 times the current year’s earnings based on the price of $14.11, the stock traded on the Jamaica Stock Exchange Main Market and EPS of $2.60 for 2023 with a PE of a mere 5.4 and putting the stock price in the $50 range by 2023. Net asset value is $3.14, with the stock selling at 3.5 times book value.
All currency is the US dollar unless otherwise stated.

Stock split to lift Fosrich to 3rd largest

Fosrich proposed 10 to 1 stock split will lift the issued shares to the third highest in Jamaica with 5 billion shares and make by far the company with the largest number of issued shares on Junior Market if shareholders approve the split as proposed.
Only Wigton Windfarm with 11 billion issued shares and Transjamaican Highway with 12.5 billion will be ahead of Fosrich. The next closes will be Sagicor Group with 3.9 billion issued shares.
Shareholders of Fosrich at the Annual General Meeting scheduled to be held on June 21 will consider increasing the authorised share capital of the company from 512,821,000 to 15 billion by the creation of an additional 14,487,179,000 ordinary shares.
The shareholders are asked to approve the splitting of issued shares into 10 units with effect from the close of business on July 6. If approved will result in the total issued shares being increased to 5,022,755,550 ordinary shares of no par value.”
The Company is requesting authorisation to issue up to 126 million shares by way of a Rights Issue to existing stockholders and or the public, on terms to be decided by the directors.
The company expanded into the manufacturing of PVC pipes and the repairs of transformers, resulting in a big surge in revenues and profits that helped in fueling the stock price to a high of $38 this year from just $7.20 a year ago.
Or the quarter to March this year revenues jumped a solid 64 percent to $900 million and profit surged 314 percent to $159 million, with earnings per share of 32 cents.

First quarter profits surge 44%

With just 11 percent of listed companies left to report first quarter earnings, preliminary results show a major surge in profits with an increase of 44 percent over the 2021 first quarter, from a 20 percent increase in revenues. Excluding results for the two Trinidad based, Guardian Holdings and Massy Holdings, profits would rise by 55 percent for the rest, from a 26 percent rise in revenues.
Profits exclude exceptional one off items and do not include other comprehensive income. NCB Financial Group, JMMB Group and Scotia Group suffered major unrealized losses in their investment portfolio as a result of increased interest rates. These losses are shown in other comprehensive income that when included reduces the strong operating profit substantially.
Contributing to the strong rise in overall profits are companies that suffered losses or sharply reduced profits in the 2021 period and were recovering in 2022, from the economy that was mired in restrictions on trade within the local economy.
The results to date show that the educational sector grew by 1,880 percent but only two companies are on the list with a mere $12 million in profit. Medical & Pharmaceutical revenues rose a strong 35 percent to $1.33 billion with profits surging 463 percent to $113 million. Restaurants profit rose 118 percent to $26 million, up from a loss of $143 million in 2021. Banking profit is up 104 percent to $12.5 billion, from a 33 percent rise in revenues to $116 billion, with all the gains in profit flowing from NCB.
The most outstanding segment based on size and the large number of companies is the Financial Services, with 18 out of the 20 companies reporting so far, enjoying a rise of 65 percent in after tax profit while revenues rose 26 percent to $53 billion. Distribution revenues climbed 30 percent to $33.2 billion and profit rose 53 percent to $2.24 billion from just $1.5 billion last year.
Conglomerates were disappointing, with no growth in profits of $5.8 billion from a 13 percent rise in revenues to $113 billion and Manufacturing was only able to squeeze out a 13 percent rise in profit to $3.8 billion from a 22 percent increase in revenues to $34 billion, but eight of the 13 companies reporting enjoying double digit profit gains of 24 percent and six above 45 percent.

8 Junior Market stocks that should split

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Stock splits and bonuses are two tools companies have in their tool kit to deliver value to their shareholders if used appropriately. Interestingly while the Scotia Group has used these tools repeatedly for the past several decades, Directors at NCB Group have frowned on the practice seeing no value to the group.
The critical point is that directors run a company for the benefit of shareholders not solely for the benefit of the company. Shareholders are kings and queens of the companies they own shares in and directors should not lose sight of that factor.
Some companies have split their stocks and investors love the results of these splits as they see where the values have mostly gone up, before and after the split. Some companies like the Lasco group have handled the split badly by overdoing it and creating too much liquidity that kills the value of the stock for years. The split is also an indication that a company’s profit is likely to grow short term which would cause the stock to struggle as the price gets more expensive without the split.
A look at the Junior Market shows 27 of the 45 companies listed trading below four dollars, with seven priced at more than twice $4. The price differential between the two groups suggests that a stock split is warranted if management is serious about the minority shareholders as well as creating the liquidity in the stock to maximize publicity from listing.
The seven companies are Access Financial, with only 270 million issued shares, with a stock split well overdue that will result in improved liquidity and build interest in it. Cargo Handlers at $11.50 has limited liquidity and needs a split to build back excitement into trading it. Dolphin Cove is the third one with the price at $15.25 and recently much higher, but the majority owner may not be so inclined to go the route of a split, but one never knows as local shareholders could well prevail on them to do so. Fosrich now trading around $27, is proposing a 10 to 1 stock split at the Annual General Meeting (AGM) this month. Honey Bun trading at $8.50 has the potential to move up to the $20 region later this year or early in 2023 and warrants a second split, having done one a few years ago.

Fosrich to vote on a 10 to 1 stock split at the coming AGM this month.

Back in 2020, management of ISP Finance had indicated that a split was on the cards, but even with the stock at more than $22 and highly illiquid with less than 3 percent of shares freely available for regular trading action to split the stock is nowhere in sight. Main Event is just at the borderline at $8.20 so a split may be in the future when it has fully recovered from the loss in business, with the advent of the covid-19 pandemic. There are 300 million shares issued with the top 10 holdings accounting for 93.5 percent. Stationery and Offer Supplies hinted at a past AGM that they had looked at it but felt the time was not right. The time may well be very close with the price trading recently around the $12 region with record profits expected this year a split could well happen with the AGM coming up later this year. The company has only 250 million shares issued of which 90 percent are held by the Top10 shareholders. Medical Disposables trades at $7-8 region, with the price not yelling for a split just yet but if management is smart they would split the stock with only 263 million shares issued, a two for one basis as rising profit this fiscal year will probably put the price to around $5 after such a split when all is said and done.

Barita to pay $666M in dividend

Barita Investments will be paying an interim dividend of 54.6 cents per stock unit on June 30, 2022, the company advised.

The company’s Board of Directors approved a Resolution on June 9, 2022, for the payment to shareholders on record at the close of business on June 23, 2022, and will cost $666.3 million.  The stock will trade ex-dividend on June 22, 2022. The company last paid a dividend of $3.029 per stock unit on October 7, last year, to shareholders on record at the close of business on September 23, 2021.

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Elsewhere, Scotia Group reported financial results with a net income of $4.4 billion for the six months ending April 2022, down from $4.48 billion in 2021 for the same period.
The Directors of Scotia Group approved a dividend of 35 cents per stock unit in respect of the second quarter, payable on July 20, to stockholders on record on June 28. The dividend amounts to $1.09 billion amounting to 42 percent of the profit on 83 cents per share in the April quarter.

SOS buys printing press, set for record profits

Stationery & Office Supplies announced the acquisition of assets of D&K’s Printing and Office Supplies including 10 additional book manufacturing machines effective, Monday, June 6, 2022.

Stationery & Office Supplies is back in the TOP 10 but could fall in prive this week before moving higher.

The purchase will diversify the product range and increase the manufacturing capacity of the range of products produced by SEEK. Seek which was acquired in April 2018 produces exercise and hardcover books steno books and binder refills. The acquisition will allow them to print books with working in them such as receipts books, invoice books, graph paper and notebooks. In short, it expands the range of products that it can now print, some of which it currently sells which will improve profit margins.
The acquisition which is expected to contribute some 20-25 percent to Seek’s revenues, ICInsder.com gleaned and continues the process of acquiring strategic assets or businesses to accelerate business growth and will add 12 employees to the printing operation.
In 2021 revenues from the book manufacturing were $48 million and in 2019, some $62 million which is expected to hit around $80 million in 2022 and should reach into the $100 million range in 2023.
Revenues seem to be back to normal with January 2019 generating revenues of $344 million that were overtaken this year and June 2019 being $295 million which seems set to be exceeded in the June quarter as well. Based on the acquisition which will add to revenues and profit and the expected continuation of the robust first quarter revenue growth of 36 percent. Revenues for the rest of the year could accelerate, with the economy opening up since the first quarter.
The company gave a glimpse of what the rest of the year could be like, with SOS setting a new record for monthly sales, of $140 million in February, with sales reaching $173 million in March, 25 percent higher than February. If the trend continues into the second quarter, revenues could reach $480 million and may well continue the acceleration to the end of the year.
ICIinsider.com has upgraded earnings to $1.70 excluding the $23 million gain on the sale of property in the first quarter and that would put the stock at a PE well under 10 times this year’s earnings, assuming no major negative developments that could impair revenues and profits.

Abysmal reporting continues at MPC for Q1

MPC Caribbean Clean Energy’s financial wellbeing continues to be clouded in secrecy, with investors not being provided with a full set of financial reports showing the full financial status of the company and the group.

Wigton closed at anew high of $1

The last year’s interim reports for the first three quarters and the first quarter this year, defiles logic. Those reports show the group operating at a break even for four quarters, three in 2021 and one in 2022. The fourth quarter results ends up with a profit from unrealized investment gains of US$1.347 million. The same situation occurred in 2020. How is this possible, when the directors’ report shows varying levels of  EBITDA per quarter?
The directors reported to shareholders that “In the first quarter of the year, the commercial and technical development of the Company’s underlying assets were within the expected range. The weather conditions have had a negative impact on revenues due to lower electrical energy production than initially forecasted, which has been reflected in the financial results. Technically, there was a high system availability.”
The report also shows that in the quarter EBITDA was US$2,206,018. In 2021 first quarter EBITDA was US$1.81 million. The first quarter statements show no income but from its three projects, it is invested in similar to 2021.
There are questions that need answering. Is the valuation that results in a fourth quarter surplus done quarterly or not for the subsidiary that holds the direct investments in the energy projects and if not why not?  Regardless, what is the net position for each quarter and why is it not included in the quarterly report to the Jamaica Stock Exchange so that shareholders can see what is happening to their investment?
Investors in publicly listed companies should expect full disclosure as to what is happening to their investments. This is not the case with MPC Caribbean Clean Energy Fund LLC and there is no good reason for it.
Some investors may recall the story of Enron that went busted but shareholders were unaware of the true status of the group as financial statements of some subsidiaries were not included in the group report. Unfortunately, MPC reporting is akin to Enron as the quarterly results fail to meet the minimum standards for continued listing. When will the Jamaica Stock Exchange and the Financial Services Commission take action to protect investors in this company?

 

Caribbean Cement and poor management

Investors entrust capital to public companies with the expectation that their interests will be properly protected, but that does not appear to be the case with local investors at Caribbean Cement Company. Last year against to outcry of local investors the company rammed through fees for royalty to be paid in addition to management fees already be paid to Cemex, the ultimate parent company.

Caribbean Cement proposed a $1.50 dividend per share in August

Last month, the company proposed a meeting to consider the payment of a dividend that was not managed appropriately by the company, neither before nor after the meeting.
The Board of Directors Caribbean Cement Company advised shareholders that a meeting of the board that was held on May 26, 2022, recommended presenting an ordinary resolution to shareholders to declare a final dividend of $1.5032 per share payable on August 15, 2022. 
That is a great development, considering the company last paid a dividend in 2004, but the wider public was deprived of such price sensitive information. To compound the problem, the company haled the meeting and kept the information for a week before communicating the decision to the exchange, even though the rules require immediate release of the decision immediately after the meeting.
In an article reporting the decision of the board, the company through its secretarial department took issue with the article stating that they seem to have breached the JSE rules that require that any meeting to consider the payment of a dividend must be communicated to the JSE at least 7 days ahead of the meeting. So far no such notification was posted on the Stock Exchange’s website up to Tuesday evening.
The company provides the evidence of two letters addressed to the Jamaica Stock Exchange notifying that a meeting would be held initially on May 23 another dated May 20 indicates a change in the date to May 26. None of these letters are yet on the Jamaica Stock Exchange’s website.
A spokesperson at the JSE confirms that the letters were in fact received but that it is the responsibility of the respective companies to ensure that the notice is uploaded to the JSE portal from which the relevant staff would approve the same to be uploaded to the website.
While the JSE was informed by letter technically, the company is in breach as they did not follow up to ensure the information was received and in fact posted to the website what was very sensitive information considering this is the first time that the company would be considering a dividend payment since 2004 when they last paid one amounting to 7 cents per share amounting to $60 million.
Based on the price movement in the market last week it appears that the information was already in the market.
While Caribbean Cement cannot escape responsibility for the matter not being communicated to its shareholders on a timely basis, The JSE cannot escape some blame either. Once the letters were received they should have followed up with the company since it was not on the portal.
No one seems to be following up on electronic communication in this modern era. The handling above, epitomizes, what seems like today’s communication practice that assumes once an email is sent, the other party must have read it, and therefore there is no need to follow up.
Cement traded at $67 on the 16 of May, the next day the last price fell to $64.80 and then to $61.50 on the 18, bouncing to $63 on May 19, but back to $60.51 on the May 24. On the 26 and the 27, the price moved up to $63 and moved to $69.70 on the first of June and traded at $66 on June 6, and jumped to $74 on the 7th.

Big dividend payout by Caribbean Cement

Caribbean Cement Company is set to make a sizable dividend payment in August. The Board of Directors advised that a meeting of the board that was held on May 26, 2022, recommended to present an ordinary resolution to shareholders to declare a final dividend of $1.5032 per share payable on August 15, 2022. 
The proposed payment represents 29.475 percent of the profit of $5.10 per share for 2021. The proposed record date is August 4, 2022, with an ex-dividend date of August 3rd. The recommendation will be made to shareholders at the Company’s next Annual General Meeting.
The company seems to have breached the JSE rules that require that any meeting to consider the payment of a dividend must be communicated to the JSE at least 7 days ahead of the meeting. So far no such notification was posted on the Stock Exchange website.
The payment if approved would amount to $1.28 billion and would represent the first such payout since 2004 when 7 cents per share was paid amounting to $60 million.

Results push Junior Market to record 4,613

The release of results for Junior Market companies since Friday’s market close helped to push the Junior Market to a new record of 4,613.27 points after the market opened on Monday, surpassing the record close of 4,537.15 on Friday, with the index crossing over into the 4,600 mark for the first time.
Spur Tree Spices generated revenues of $237 millionin their first quarter to March, an increase of 40.7 percent over the $168 million in 2021, helped by the newly acquired subsidiary, Exotic Products generated revenues of $73 million for the quarter, with only $2.18M is included in the consolidated revenue of $237 million. Profit before tax was $51 million, an improvement of $28.6M or 128 percent above the $22.4 million for the 2021 quarter. Investors traded 9 million shares for $36 million up to $4.30.

Dolphin Cove reported US$2.3 million in revenue in quarter Q1 2022, up from just US$374,000 in 2021, as visitors to the parks bounced sharply in the quarter to reach 58 percent of the attendance in the first quarter of 2019. Profitability was enhanced by the strict management of costs, with the quarter incurring only US$1.5 million of expenses, a decline of almost US$1 million compared to the first quarter of 2019, reflecting permanent efficiencies that were put in place. Net profit amounted to US$795,000, compared to a loss of US$154,000 in 2021. The stock traded up to $23.25 before settling at $22.51 after trading 131,329 shares.

Fosrich traded 368,000 shares early Monday.

Fontana grew revenues by 24 percent to $1.52 billion, over the $1.22 billion for the 2021 first quarter, with net profits popping by 43.4 percent, to $105 million from $72.9 million in the first quarter last year. Investors traded the stock at $11.18 after an exchange of 158,512 shares.
Fosrich posted blowout results with a 64 percent surge in revenues to $900 million from$549 million in 2021 and profits surging 314 percent to $159 million in the March Quarter from just $38 million in 2021. The investors responded instantly to the news by trading 368,361 shares up to $36.22.