Seprod distributing cash and kind

The Jamaica Stock Exchange-listed Seprod Limited will be paying shares a dividend split between cash and shares in Eppley Caribbean Property Fund in October.  
The Board of Directors of Seprod decided at a meeting held on September 17 at which an interim dividend on the capital of the Company will be payable on October 19, to Shareholders on record on September 30. The ex-dividend date is September 29, 2020. The dividend will comprise Cash of 30 cents per share. In addition, 15,447,465 shares recently purchased in the Eppley Caribbean Property Fund – Value Fund will also be distributed at a ratio of 0.02171 CPFV Shares for every Seprod share held. The Company last paid a dividend of fifty cents per share on January 31 this year.
Seprod shareholders owning less than 20,000 shares will receive cash instead of CPFV Shares in proportion to their holdings. Cash payments in place of CPFV Shares will be based on the closing price of CPFV Shares on the Jamaica Stock Exchange on September 17, 2020, of $57.48.
On September 8, Eppley Caribbean Property Fund – Value Fund advised the JSE that they completed the acquisition of 105-107 Marcus Garvey Drive, a 3.4-acre parcel of land located in New Port West containing two buildings, including a cold storage facility, totaling over 86,000 square feet. ECPF’s acquisition was structured to have the effect of purchasing the property using 15,447,465 newly issued shares as consideration at a price equivalent to its NAV per share. The property is fully tenanted.
The move will broaden the number of shareholders in the Eppley Caribbean Property Fund but will most likely increase the supply on the market as several investors try to offload the stock they get.

Q3 profit jumps 43% for the Lab

Profit jumps 43 percent before tax at Limners and Bard trading as the Lab, with revenues up 41 percent for the third quarter. Aftertax, profit climbed 66 percent from $12.7 million to $21 million for the July quarter.
Nine months profit, rose 41 percent to $68.6 million, from $486 million, while profit rose 17 percent from $88.6 million before tax in 2019, to $107.8 million. In 2019, the Company incurred a tax charge of $19 million for the nine months. Profit for the nine months equals the 2019 full year pretax profit of $107.5 million.
The cost incurred in generating operating revenue grew faster than incomes with an increase of 46 percent for the nine months to $459 million and 48 percent for the quarter to $154 million.
Administration expenses and other costs rose 47 percent to $119 million for the nine months and by 31 percent for the quarter to $40 million. In a report accompanying the results, the chairman, Steven Gooden and Kimala Bennett, Chief Executive Officer, stated, “these included a systemization initiative and training to assist inefficiencies linked to our growth drivers and a pay-out of 50 percent of our 2019 employee profit share.

Kimala Bennett, Chief Executive Officer of The Lab.

The Company earned 2 cents per share in the quarter and 11 cents for the nine months. IC projects the full-year earnings ta 16 cents per share, with expenses traditionally lower in the final quarter. The Company generated cash flows from operating of $116 million, up from $77 million in 2019.
Shareholders’ equity climbed to $45 million from $332 million at the end of July 2019. Current assets stand at $529 million including Cash and cash equivalents of $384 million, up from $213 million in July 2019. Current liabilities amounted to $134 million leaving strong net current assets at the end of the period. Borrowings stood at just $66 million.
The stock last traded at $2.80 on the Junior Market of the Jamaica Stock Exchange on Monday for a PE ratio of 17.5. With the current year ending a little over a month from now and IC projecting 28 cents earnings per share for fiscal 2021, the stock can be considered appropriately priced.

IPOs are back the Tropical issue

Just when investors thought COVID 19 had killed off IPOs for this year, suddenly pops up, Tropical Battery‘s long-promised initial public offer. The prospectus for the issue is now available to the public.
The issue for 325 million ordinary shares at $1 each of with up to 187.5 million units reserved for priority applications, opens September 22 and is scheduled for closing on September 30, subject to the right of the Company to close it earlier.
The Company intends to apply for the shares to be listed on the Junior Market of the Jamaica Stock Exchange, subject for at least $260 million being raised, by way of this invitation.
The total issued shares following the offer will be 1.3 billion units, with the parent company owning 75 percent. That will allow enough shares to be in the public hands to facilitate adequate liquidity in the stocks for some time.
The Company generated profit before tax of $87 million from revenues of $1.74 billion in 2019, a decent increase of 18.6 percent higher than in 2019 and a pretax profit of $45 million from revenues of $1.47 billion in the prior year, to September or 8.6 percent above the 2018 sales.
Gross operating revenue for the nine months to June this year increased nine percent to $1.36 billion from $1.25 billion in 2019, with profit before taxation falling from $67.6 million to $62 million.
Future growth, the Company says, “will come primarily from the addition of new product lines, i.e., Renewable Energy Batteries, Oils and Lubricants, Tyres, etc., organic growth of existing products, expansion and the renovation of our retail stores.”
The proceeds of IPO will be split equally between the selling shareholder and the Company, resulting in $162.5 million going to each, net of cost.
The Company plans to use the amount collected for expansion and working capital purposes, including but not limited to new product lines, expansion and renovation of retail stores, including an expansion of the parking area at the retail store at Grove Road in St Andrew. Completion of the buildout of and relocating to the new warehouse, head office and retail store at Ferry, Acquiring and install information technology systems for greater efficiency and improve customer experience and expansion of Mobile delivery fleet of vehicles.
Total shareholders’ equity at the end of June stands at $593 million, while our long term liabilities fell by to $315 million with the total interest-bearing debt of $415 million. The Company is owed $190 million by a related party and is interest-free, but payable on demand.
With earnings per share around 7.7 cents, the stock is priced around a PE ratio of 13 times 2020 earnings, leaving little or no room for short term gains.
NCB Capital Markets are the brokers for the offer. Unfortunately, for investors, there are no forecasted earnings included in the prospectus to help to guide them. This practice leaves a lot to be desired and it is fulltime, the authorities step up to the plate and ensure that all prospectuses include forecasted data for a least three years. That is not asking too much in the drive to build a developed capital market.

Scotia jacks up credit loss by 344%

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In the July quarter, Scotia Group jacked-up expected credit loss provision by 344 percent from $582 million in the 2019 period to $2.6 billion due to the impact of the 2020 COVID 19 virus has on several businesses in Jamaica and, notably, the banking sector, resulting from lower business activity since March.  

Scotia Group increased loan loss provision by 344% in the July quarter.

The big July quarter, the increase comes after the banking group hiked the provision by a hefty 264 percent to $1.77 billion in the April quarter, from $487 million in the April 2019 quarter and $895 million in the January 2020 period.
The Group’s total expected credit loss provision for loans in July 2020 amounts to $8.1 billion, while nonperforming loans amount to $4.9 billion compared to $3.8 billion last year and $5 billion at the end of April.
Loans advanced to customers stood at $221 billion at the end of July, a growth of 12 percent year over year, but declined modestly from $223 billion at the end of April, the result of the increased credit loss provisioning and no new net loans granted.
While the bank increased the provision for expected credit loss sharply in the quarter, the stabilization of nonperforming loans at the April levels may be an indication that there may be no need for heavy provisioning in the next few quarters. If the nonperforming loans hold around current levels, it could help in returning profit to more normal levels, compared to a profit after tax that declined sharply by 63 percent for the July quarter to $1.55 billion, from $4.2 billion in 2019.
At the close of trading on the Jamaica Stock Exchange, Main Market to stock gained 50 cents in ending at $50.50.

Profit up at Jamaica Broilers

Revenues dipped 5 percent at Jamaica Broilers in the July quarter to $12.6 billion from $13.26 billion in the prior year. At the same time, operating profit rose 25 percent to $851 million from $679 million in the preceding year, with profit after taxes rising moderately by 6 percent from $361 million to $383 million.

Jamaica Broilers announced a new acquisition last week

Distribution costs rose to $467 million from $445 million in the 2019 first quarter. A significant fall in administration and other expenses was the main contributor to the improved profit performance by adding $375 million to the results with a decline in cost from $2.28 billion to $1.9 billion while other income added nearly $200 million to the increase as well after gross profit had declined by $377 million to hit $2.95 billion. The fall in gross profit resulted in a gross profit margin slipping to 23.43 percent from 25.07 percent in 2019.
Provision made for corporate taxes doubled from $55 million to $112 million. Other comprehensive income net of taxes rose from $112 million to $246 million resulting from exchange differences in translating foreign operations and resulted in total Comprehensive Income Attributable to Stockholders of the company amounting to $629 million versus $473 million in 2019.
In commenting on the results, Robert Levy, Chairman and Christopher Levy, Group President & CEO, informed shareholders, “We are seeing improved corporate results due to early decision-making, aggressive cost reductions and improved FX positions. There has been a refocussing on the absolute basics to keep the company running profitably due to the challenges brought on by COVID-19. This has translated to a better and deeper foundation for the company.”

Christopher Levy – Jamaica Broilers President and Chief Executive.

Segment results show the Jamaican operation losing $1.38 billion in revenues to end at $7 billion in the July quarter, with segment result of $730 million compared to $764 million in 2019. The US segment kept up well with revenues of $5 billion, an increase of $660 million and segment results of $316 million, down slightly from $334 million in 2019. Haiti delivered $483 million in revenues, moderately down on the $530 million produced in 2019, with segment results of $11.5 million versus $19 million in 2019, while other Caribbean Operations brought in a profit of only $27 million, down sharply from $536 million in 2019.
Cash flow from operating activities netted $860 million, but it fell with a significant reduction in payables of $1.74 billion and the purchase of fixed assets amounting to $840 million. At the close of the quarter, the company utilized $480 million of the funds held at the end of April. There was a major increase in inventories and biological assets to reach $17.7 billion from $13.3 billion in 2019. The company seems to have worked off some of its excess inventory in the quarter, built up resulting from lower demand, following the outbreak of the Coronavirus that stood at $18.6 billion at the end of April. Shareholders’ equity stood at $16.6 billion, with total borrowings at $18.5 billion comprising current portions at $9.5 billion and the long-term amount at $9 million. Current assets ended the period at $27.7 billion inclusive of trade and other receivables of $4.2 billion, cash and bank balances of $5.7 billion. In comparison, current liabilities stood at $17.5 billion, resulting in net current assets of $10 billion.
Earnings per share rose to 41 cents for the quarter. The stock traded at $24 on the Main Market of the Jamaica Stock Exchange. IC forecasts earnings of $2.80 per share for the full year to April 2021, putting the PE at 8.6 times 2021 earnings, providing the basis for the stock price to rally higher in the periods ahead.


10 to 1 stock split for Caribbean Flavours

Caribbean Flavours and Fragrances (CFF) is set to split their stock, subject to the approval of shareholders at a meeting to be held to consider the matter.
The company will hold a special board meeting on August 27, to consider the approval of resolutions to increase the authorized share capital and approve Stock Split.

Caribbean Flavours a Derrimon’s subsidiary

Based on the release from the company, the approval by shareholders will result in the authorised share capital moving from just 91.452 million shares to 2,6 billion, by the creation of an additional 2.509 billion shares. Each existing issued share will be subdivided into 10 ordinary shares with effect from the close of business on September 23. The split will result in the total issued shares increasing from 89,920,033 shares to 899,200,330 shares.
The company should consider increasing the authorized share capital to an unlimited amount that will not cost them any more funds in doing so and would give them greater flexibility. CFF recently released quarterly results with revenues rising 42 percent in the June quarter to $161 million, with profit before tax rising 18 percent to $30 and revenues rose 37 percent for the six months to $311 million, with pre-tax profit rising by 23 percent to $49 million.
The stock closed trading on Friday at $14.95 with just two lots of stocks on offer at the close.

Profit up 21% for Lasco Manufacturing

Profit after taxation rose 21 percent from $282 million in the first quarter of 2019 to $342 million in 2020 at Lasco Manufacturing as revenue rose 4 percent from $1.78 billion to $1.84 billion.

Lasco Manufacturing products.

Other income fell 114 percent, from $17 million to a loss of $2 million and administrative and other operating expenses came in 6 percent lower than the comparative period in 2019 at $311 million.
Gross profit increased 8 percent from $668 million to $720 million as direct costs moved from $1.1 billion in 2019 to $1.2 billion in 2020 and gross profit margin improved by 2 percentage points to 39 percent from 37 percent.
Operating profit before finance charges rose 15 percent in the quarter to $407 million from $355 million. Finance cost declined in the quarter, to $16 million from $32 million in 2018 as the company continues to pay down loans that used in financing a major expansion to the plant.
Cash flow from operating activities netted $78 million, down 84 percent from the first quarter in June 2019, reflecting a major increase in inventories and payables.

Lasco Manufacturing checkered annual profit performance, but the 2021 fiscal year could be a record.

At the end of June 2020, shareholders’ equity stood at $7 billion with the current portion of long-term loans at $496 million and long-term loans at $506 million. Current assets ended the period at $4.8 billion inclusive of trade and other receivables of $2 billion, cash and bank balances of $1.2 billion, while current liabilities stood at $1.6 billion.
The stock traded at $3.90 on the Junior Market of the Jamaica Stock Exchange. Earnings per share came out at 8 cents for the quarter. IC is forecasting EPS of 35 cents per share for the full year that puts the PE at 11.4 times 2021 earnings.
The company paid a dividend of 6 cents per share totaling $250 million on July 24.

Profit jumps 69% at Lasco Distributors

Profit at Lasco Distributors before tax soared by 69 percent to $317 million from a combination of higher revenues and lower administrative and other costs, but with a lower profit margin.
The company reported $187 million in profit before tax for the 2019 quarter. After-tax profit increased 57 percent from $164 million in 2019 to $258, from sales revenues that rose 8.44 percent to $4.7 billion.
Direct costs moved 10 percent from $3.5 billion to $3.8 billion and gross profit rose only 4 percent from $865 million to $896 million.
Other income jumped to $73 million from $53 million, while operating expenses fell 10 percent to $651 million from $725 million.
“During the period, there was an increase in our canned food products flagship – Lasco food, drink and pharmaceutical products. However, there has been a significant reduction in sales of beverage products due to closures of schools, hotels and social gatherings,” the Chairman, Lascelles Chin, noted in his report to shareholders.
Cash from operating activities was up to $1.2 billion from $26 million in 2019, contributing to the sharp improvement was a reduction in inventories, receivables and increased payables. At the end of June 2020,

Lasco’s ICool drinks.

shareholders’ equity stood at $5.8 billion compared to $5.4 billion in June 2019 and $5.7 billion at the end of the fiscal year ending March 2020. Total current assets stand at $7.5 billion inclusive of cash funds of $2.5 billion, receivables of $2.5 billion and inventories of $2.4 billion, while Current liabilities stood at $3.96 billion. The company has long-term borrowings of $9 million, with short term debt being a mere $76 million.
The company’s shares were listed on the Junior Market in October 2010, resulting in a tax concession of 10 years, which expires during the current fiscal year.
Earnings per share came out at 7 cents for the quarter and IC is forecasting 40 cents per share for PE of 7.6 times earnings with the stock trading on the Junior Market of the Jamaica Stock Exchange at $3.05.

NCB releases Q3 results next week

NCB Financial Group advises that its board meeting to consider and approve the release of the nine-month unaudited financial statements at a board meeting scheduled for August 4, 2020.

NCB Financial Head Office

The company stated that further releases issued in April and May this year, they are confirming that a dividend is not likely to be declared at the meeting.
The group enjoyed a 41 percent increase in profit in its first quarter, but that fell in the second quarter, with a net profit of $13.4 billion for the first six months of the 2020 financial year. Net profit attributable to our stockholders was $9.6 billion, a 23 percent or $2.9 billion decline from the prior year. The preceding year’s results included a one off-gain of $3.3 billion from the disposal of our interest in an associate company. Excluding this gain, net profit would have increased by $408 million or 4 percent over the prior year.

34% surge in Derrimon Q1 profit

Profit jumped 34 percent at Derrimon Trading in the first quarter of the current financial year, to reach $99 million up from $74 million in 2019, following a 5.5 percent increase in revenue to $3.3 billion from $3.15 billion in the March 2019 quarter.

The significant improvement in the bottom-line compared to the slimmer revenue growth is driven by an increase that was more than twice the growth in revenues in the gross profit margin of 11 percent from 2019, resulting in gross profit rising to $613 million up. Direct expenses rose 4 percent, from $2.6 billion in March 2019 to $2.7 billion in March 2020.
The Group also recorded other income of $22.6 million compared to $5 million in 2019 that helped in driving profit for the quarter. Excluding the increase in other income net profit would have climbed by only 10 percent and much closer to the increase in sales. Other income includes gains from the disposal of plant, property rental and other inflows. Administrative expenses rose a strong 16 percent to $373 million, from $321 million in 2019, while selling and distribution expenses grew by a much more moderate 7 percent to $100 million and resulted in total operating costs of $473 million, a 13 percent increase over March 2019 of $414 million. The group provision for taxation on profit amounts to $7.6 million versus $5.5 million in 2019.

Caribbean Flavours a Derrimon’s subsidiary

The group generated cash inflows from operating activities of $153 million, working capital needs plunged the group into a negative cash position of $208 million. At the same time, loan repayment pushed the cash burn, down to $271 million, leaving cash funds at $239 million, down from $510 million at the end of December 2019. The group, however, has $246 million in investments as well.  Net current assets ended the period at $2.2 billion. Current assets increased sharply by 17 percent from $3.39 billion to $3.9 billion, with inventories rising stunning 70 percent from $1.16 billion at the end of March 2019, but down slightly from the December 2019 position, to end the 2020 first quarter at $2 billion. Receivables were down 15 percent to $1.4 billion compared to March 2019. Current liabilities were down by 20 percent to $1.7 Billion, with Payables the largest component, down 18 percent to $1.1 billion. At the end of March, shareholders’ equity stood at $1.4 billion, an 11 percent increase over March 2019, but the group continues to use a high degree of leveraging in funding its operations. Loans amounted to $2.3 billion at the end of March, with lease financing standing at $1 billion.
Earnings per share came out at 3.4 cents for the quarter and IC forecast is for 22 cents per share for PE of 10.2 times 2020 earnings at the closing stock of $2.25 on the Junior Market of the Jamaica Stock Exchange.