Indies Pharma Q3 sales jump 45%

The financial news out of Indies Pharma for its third quarter to July were mixed at best as sale revenues jumped a strong 45 percent to $215 million from $148 million in the 2018 period but profit inched just 9 percent higher to $34 million from $31 million in 2018.
Sale revenues for the nine months to July increased 28 percent to $576 million from $449 million in 2018 but profit soared 41 percent to $113 million from $80 million after-tax liability of $24 million in the similar 2018 period but profit before tax, rose just 8 percent. While many investors are guided by the bottom-line growth, others see great virtue in the growth of the business hence the strong sales increase is viewed as a positive indicator for future hikes in profit.
The less than spectacular growth in profits started in the second quarter ending April when the company posted $33 million before tax after tax compared to $38 million in the same quarter of 2018.
Gross profit margin in the third quarter declined to 63 percent from 68 percent in the 2018 period, but for the year to date, gross profit margin improved to 67 percent from 64 percent in the nine-month period in 2018. Cost of sales rose 68 percent to $79 million from $47 million for the quarter and increased by 18 percent to $189 million from $161 million in 2018 for the year to date. The effect, operating profit fell just 3 percent in the quarter from $35 million from $34 million but increased 4 percent year to date to $113 million from $109 million in 2018.
Administrative expenses rose stunning 51 percent to $104 million in the quarter from $69 million in 2018 and increased 52 percent in the nine months period to $276 million compared to $181 million in 2018.

Vishnu Muppuri – Executive director of Indies.

The spike in administrative expenses resulted from “significant increases incurred for rent, lease and set-up costs for the new facility in Montego Bay Freeport”, Vishnu Muppuri the company’s Executive director, reported. Finance cost declined in the quarter to $85,000 from $3 million in 2018 and from $4 million in 2018 to $281,000 for the nine-month period.
Gross cash flow from operating activities brought in $126 million but changes in working capital including increases to directors and related companies reduced the net inflows to $98 million, after paying dividends of $107 million in February, cash funds ended up at $71 million, down from $101 million at the start of the financial year. Net current assets ended the period at $660 million inclusive of receivables of $197 million, related parties and directors’ receivables of $201 million. Current liabilities stood at just $62 million. The company has no debt as all loans were retired in the 2018 fiscal year. At the end of July, shareholders’ equity stood at $680 million.
The stock traded at $3.25 on the Junior Market of the Jamaica Stock Exchange. Earnings per share came out at 3 cents for the quarter and 9 cents for the nine months and should end around 12 cents for the full year for PE of 27 times earnings. While the stock appears over-priced, the strong growth in revenues for 2019, if it continues, should see 2020 earnings hitting 25 cents per share that would reduce the PE to 13 times in the new fiscal year that starts in November.

Acquisitions boost Derrimon’s profit

The acquisition of Woodcats International and the assumption of distributorship of the Trinidad based SM Jaleel and Company’s beverages helped to ratchet up performance for 2019 at Derrimon Trading.
Profit before tax grew 56 percent to $102 million for the June quarter and 52 percent for the half-year to $186 million. After-tax, quarterly profit was up 35 percent to $88 million and rose 32 percent for the six months to $162 million.
Sale revenues grew 49 percent in the June quarter to $3.1 billion and by 56 percent for the six month period to $6.3 billion. Cost of sales rose 51 percent in the quarter, resulting in reduced gross profit margin of 17 percent versus 18 percent in 2018 and for the half-year margins are the same as the second quarter in both years but with gross profit rising 50 percent to $1.1 billion.
Revenues from the distribution segment amounted to $3.5 billion compared to $1.7 billion in the prior year, while revenues from the retail segment climbed to $2.3 billion from $2.1 billion. Other operations accounted for $556 million for the half-year, up from $209 million in 2018.
The group’s operating profit rose 44 percent for the half-year, to $282 million from $196 million and 39 percent for the quarter to $139 million. Selling and distribution expenses soared 158 percent to $193 million for the six months and by 146 percent for the quarter to $100 million. Administrative cost rose 22 percent for the June quarter to $310 million and by 30 percent to $631 million for the half-year.  moved 30 percent from $73 million to $96 million for the half-year and by 7 percent to $37 for the latest quarter. “The major factors for the increase were due to utilities, distribution costs inclusive of trucking cost, marketing, advertising and staff costs in addition to the full refinancing of short-term debt facilities,” management advised shareholders in their comments on the interim results.

Caribbean Flavours Derrimon’s subsidiary

The group’s gross cash flow brought in $182 million but receivables jumped a sharp $427 million and inventories climbed $95 million to wipe out the cash inflows. New loan funding accounted for $208 million and helped in filling the gap, but the company still ended with negative overall cash flows of $279 million, leaving it with cash funds of $116 million at the end of the period. At the end of June, receivables ballooned to $1.6 billion with payables of $1.17 billion. Shareholders’ equity stood at $1.4 billion but borrowings dwarfed it by climbing to $1.8 billion. Current assets stood at $3.3 billion and current liabilities $2 billion.
The group’s earnings per share for the half-year was 5.9 cents compared to 4.5 cents in the prior year. IC Insider.com forecasts 15 cents per share for the full year for PE of 17 times earnings.
Derrimon Trading business includes distribution of household products, beverages, detergents and bulk foods, wholesale and trading outlets and supermarket, the manufacturing of flavours and fragrances and pallets.

Q1 profit falls 13% at JBG

Profit at Jamaica Broilers Group fell 13 percent in the July quarter to $361 million from $413 million in 2018 but IC Insider.com computations point to strong gains in profit for the year that ends in April 2020 as revenues rise and costs are contained below inflation.
At the same time, profit attributable to shareholders dropped 8 percent to $368 million from $399 million in 2018 even as gross profit increased slightly over 2018 from $3.18 billion to $3.32 billion as sale revenues rose 9 percent to $13 billion, from $12 billion in the corresponding quarter in 2018.
Cost of sales increased 11 percent for the quarter, to $10 billion from $9 billion in 2018 resulting in gross profit margin in the quarter declining to 25 percent from 26 percent in 2018. Distribution cost rose just 2 percent to $445 million from $436 million in the corresponding quarter in 2018. Operating profit increased by 2 percent to $679 million from $665 million in 2018. Finance income fell sharply by 88 percent to $36 million from $300 million in the corresponding period in 2018.

Jamaica Broilers chicken


Administrative expenses remained flat at $2.3 billion, but Finance cost, declined by 7 percent to $299 million from $324 million in 2018 and corporate taxes fell a sharp 76 percent to $55 million.
The group’s segment results were mixed, with foreign exchange losses and political and economic volatility in Haiti negatively impacting the results. The Jamaica segment produced $8.4 billion in revenues, but just slightly above the $8.24 billion generated in 2018 profit resulting in a 9 percent fall in segment profit of $764 million. Operations in Haiti produced $19 million in profit compared to $60 million in the previous year from a fall in revenues from $595 million down to $530 million. Profit from the US operations climbed by 11 percent to $333 million from $ 300 million in 2018 as revenues climbed to $4.34 billion from $3.3 billion in 2018.
Gross cash flows from brought in $650 million but after a dividend payment in the quarter amounted to $212 million and other long term liabilities of $720 million, cash inflows ended at $316 million and that pushed cash and equivalent to $3.65 billion. At the end of July, shareholders’ equity stood at $15 billion with borrowings at just $7 billion. Current assets ended the period at $22 billion inclusive of receivables of $4 billion and inventories of $7 billion, cash and bank balances of $4 billion and current liabilities of $13 billion.
Earnings per share came out at 35.81 cents for the quarter. IC Insider.com is forecasting $3.50 per share for PE of 10 times the current year’s earnings and earnings of $5 for the 2021 fiscal year.

Sygnus Credit a stock to watch

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Sygnus Credit Investment a relatively new player in the financial market saw a 171 percent jump in interest income from US$1 million in 2018 to US$3 million for the financial year to June 2019.
Established in 2017, Sygnus is a credit investment company that provides credit financing to medium size business in the Caribbean
The impact on profit was not as dramatic as the gains in revenues, with profit rising 44 percent to US$2 million from US$1.4 million in 2018. The major reason for profit lagging revenue is three major items.  Fair value gains on investment fell from $644,000 in 2018 to just $135,000 in 2019 while the Management fee rose 288  percent from US$182,368 in 2018 to US$707,175 and net foreign exchange loss moved from US$50,000 in 2018 to US$219,000. Management fees were lower in the preceding financial year as the investment management waived them manager in the first half of that year.
The near-full deployment of US$20 million of funds on hand at the start of the year, into higher-yielding investments in the form of loans, was the major contributing factor to the growth in interest income.
Other operating and administrative expenses rose 214 percent to US$1.3 million in the year from US$415,000. Accounting expenses increased by 79 percent to US$37,323. The results for the final quarter were affected negatively by major turn about-turn in foreign exchange movements with a gain of $856,000 in the third quarter moving to a loss of $219,000 in the fourth quarter. Additionally, while interest income for the third quarter was $979,000 it slipped to just $728,000 in the final quarter, most likely due to change in the value of the Jamaican dollar. The effect of those changes is that a $1 million profit for the third quarter was not reproduced in the final quarter, even with more funds deployed in higher income-generating assets than the securities they were in before. The profit for the final quarter came out at just $124,000, well off from the fourth-quarter profit.  Going forward, the company will be using borrowed funds to supplement its resources that will help in boosting revenues, profit and allowed for growth in its business.
Sygnus paid US$954,000 in dividends leaving shareholders’ equity at US$37.6 million, $34 million was lent to customers and $3 million was held in liquid assets that were available for lending. Earnings per share came out at 0.59 US cents for the financial year-end compared to 0.85 US cents for the 2018 financial year.
IC Insider.com forecasts earnings of 15 US cents or J$2 per share. The stock traded at $23.70 on the main market of the Jamaica Stock Exchange with a PE ratio of 12 times 2020 earnings making it a good buy.

Huge surge in profit at Eppley

Profit at the former junior market listed financing and property management company Eppley, surged 193 percent in the June quarter to $70 million inclusive of $1.66 million tax credit, compared to a profit of $24 million in the 2018 quarter.
Eppley took over the running of Eppley Caribbean Property Fund with management fees reflected in other income. Profit jumped 71 percent in the six-month period, from $45 million in 2018 to $76 million in the current period.
Interest income rose 15.44 percent for the quarter to $88 million from $76 million and increased 20 percent for the half-year from $150 million in the 2018 period to $180 million.
Interest expense climbed 32 percent in the June quarter to $50 million from $38 million 2018 and rose just 15 percent for the half-year to $95 million.  Net interest income was flat at $38 million for the quarter but rose 27 percent for the year to June to $85 million from $67 million in 2018. Net interest income to gross interest income improved to 47 percent in the half-year from 45 percent in 2018 but dipped in the quarter to 43 percent from 50 percent in the prior year’s quarter. Other operating income increased significantly by 305 percent to $76 million for the quarter and 117 percent for the half-year ending to $74 million, inclusive of $17 million for foreign exchange gains.
Administrative expenses rose 34 percent to $47 million in the June quarter and 42 percent in the six months to $84 million. Provision for corporate taxes was minimal taxes ended at $1.2 million at the end of six months.
Gross cash flow from operations brought in $84 million but after net loan inflows of $350 million, the company ended with a cash balance of $505 million and financial assets of $373 million.  Amounts advanced in loans, lease and insurance premium financing increased from $2 billion to $2.5 billion.  Borrowings grew 31 percent to $2.8 billion from $2.1 billion at the end of June 2018. At the end of June, shareholders’ equity stood at just $776 million, up from $711 million in 2018.
Earnings per share tripled to 37 cents for the quarter from 12 cents in the 2018 second quarter, while half-year results amount to 40 cents per share, up strongly from 23 cents in the 2018 period. IC Insider.com is forecasting $1.20 per share for 2019 for PE of 12 times earnings at $14.50 the stock last traded at on the Main Market of the Jamaica Stock Exchange. Earnings for 2020 should exceed $1.60 per share, making the stock an attractive buy.

General Accident acquisition to boost results

General Accident head quarters

The junior Market listed General Accident acquired a 55 percent stake in Motor One Insurance, a Trinidadian based company, with a large branch network throughout Trinidad.
Motor One, is said to be one of Trinidad and Tobago’s smaller general insurance companies but the acquisition provides General Accident with a ready platform expand in the Trinidad market into motor vehicle and catastrophic insurance business in the Caribbean twin-island state which is said to be over 40 percent larger than the general insurance market in Jamaica. The acquisition will provide a platform for the local company to expand in the wider region and importantly, into Guyana where the economy is already growing strongly with the country set to benefit even more from the near term production of oil but that seems a bit off for now.
The acquisition, “is an important first step in our wider regional growth strategy which we believe will increase economies of scale, spread our risk and significantly enhance shareholder value,” General Accident’s chairman, Paul Scott stated in the release announcing the purchase.
General Accident is having a good two-year run, with rising income and profit, in 2016 revenues from core business hardly changed but investment income rose and helped to push pretax profit up by a third. In 2017, net underwriting revenues grew 28 percent over 2016 and by 22.6 percent in 2018 over 2017but profit declined 42 percent for 2017 and rose 50 percent in 2018 but was still below the pretax profit delivered in 2016. The company’s profit performance in the 2019 June quarter improved 31 percent to $104 million from $80 million in 2018 after tax and for the six months period by 42 percent to $135 million from $95 million in 2018.
Gross premiums written, rose 59 percent for the quarter to $4 billion from $2.4 billion and by 41 percent for the year to date to $7 billion from $5 billion in 2018.
Net premium earned rose 25 percent in the quarter to $503 million from $403 million and climbed 29 percent for the year to date to $989 million from $767 million in 2018. Commission expense increased 15 percent in the quarter to $116 million from $100 million and by 20 percent for the year to date to $260 million from $216 million in 2018 while commission income rose 14 percent in the quarter to $170 million from $149 million in 2018 and for the half-year, it rose 21 percent to $406 million. Investment and other income fell 18 percent in the half-year to $117 million from $143 million and rose 22 percent to hit $111 million.
Management expenses increased 26 percent to $227 million in the quarter and 19 percent in the six-month period to $419 million. Claims grew 28 percent to $339 million in the quarter and 23 percent in the half-year to $633 million. Other operating expenses increased in the quarter to $23 million from $11 million in 2018 and from $21 million to $35 million for the six-month period.
Gross cash flow from operating activities brought in $922 million, but net of amounts due to reinsurers and co-insurers and other working capital movements reduced cash provided by operating activities to $363 million. General Accident paid dividends of $150 million during the year and ended with cash and investments of $3.3 billion, up from $2.7 billion at the end of June 2018. At the end of June, shareholders’ equity stood at $2.2 billion. Total assets ended the period at $7.9 billion inclusive of dues from reinsurers and co-insures of $2 billion, cash and bank balances of $190 million and liabilities of $6 million.
Earnings per share came out at 0.10 cents for the quarter and 0.13 cents for the six months. IC Insider.com is forecasting 80 cents per share for the full year for a PE of 8 times earnings.

Increased cost stunts Main Event’s profit

Main Event revenues growing nicely profit stalls.

Sales climbed 29 percent for the quarter to $469 million from $364 million in 2018 but increased cost melted away the revenue gains leaving 40 percent less profit in the July quarter at $15 million, down from $25 million reported in 2018 for Main Event.
The third quarter’s performance is in stark contrast to the second-quarter performance. With $31 million lower revenues, profit in the April 2019 quarter was $62 million, well up on the July quarter’s outcome.
The company, an entertainment production and planning agent, recorded a strong 28 percent growth in revenues for the nine months to July of $1.36 billion, up from $1.07 billion in 2018. Very little of the increased income percolated into more profit for the nine months to July, as profit increased slightly by 2 percent to $108 million from $105 million in 2018.
The strong increase revenue is attributed to the company’s focus on diversifying its income stream that includes M-Style experience that focuses on the wedding market, expansion to the western end of the island and M Academy project, the company directors advised investors.
Gross profit margin in the nine-month period fell to 44 percent from 48 percent in 2018 and was also down in the July quarter by 42 percent, from 45 percent in 2018. Direct expenses climbed 37 percent in the nine months ending July to $761 million from $556 million in 2018, and by 36 percent in the quarter ending July to $271 million from $200 million. Gross profit rose slower than revenues by 21 percent in the quarter to $198 million from $164 million but increased 18 percent for the year to date to $604 million from $510 million in 2018.

Three directors of Main Event, including the mentor who is responsible to ensure compliance with the JSE rules.

Operating and administrative expenses rose a sharp 35 percent to $182 million in the quarter and 25 percent in the nine months to $492 million. Finance cost declined in the quarter to $8 million from $5 million in 2018 and from $14 million to $18 million for the nine-month period. “We have taken note of increased prices in third party inputs and increased inefficiency internally”, the directors indicated.
Gross cash flow from operating activities brought in $213 million, payables of $146 million and dividends of $18 million. At the end of July, shareholders’ equity was $631 million, long term loans of $139 million, net current assets ended the period at $470 billion inclusive of receivables of $375 million, cash and bank balances of $50 million and current liabilities of $240 million.
Earnings per share came out at 4 cents for the quarter and 36 cents for the nine months. IC Insider.com is forecasting 40 cents per share for PE of 14 times earnings, importantly, with the 2019 fiscal year ending in October investors should be looking at the 2020 results to deliver increased profits and stock price appreciation. Continued strong top-line growth and implementation of cost control measures will enhance gains in 2020 and should see earnings hitting 85 cents per share for a PE of 7. The shares are listed on the Junior Market of the Jamaica Stock Exchange and last traded at $5.72.

69M Access shares offered at $32 each

Proven Investments is offering 68.6 million or 25 percent of the shares it currently owns in Access Financial Services for sale, at $32 per share starting today with the issue not expected to be open beyond today.
The prospectus suggests that the offer could be upsized if deemed appropriate but information obtained by IC Insider.com indicates that it will not be. Proven bought the block of shares mainly from Mayberry Investments on December 30, 2014, at $9 each, to become the largest shareholder. On several occasions in the past, the CEO Christopher Williams maintained the view that they had no intention of selling the shares, but that was before they bought 20 percent of JMMB Group from NCB Group in December 2018, costing $9 billion and financed by debt. With JMMB Group going back to the market to issue new shares, Proven will need to have funds to buy enough shares to maintain their 20 percent holdings if they intend to account for profits on an equity basis.
At $32, the stock is an attractive buy for investors looking for a value play investment. It is priced under 10 times current year’s earnings and could double within a year.
Access is one of the most rewarding investment for shareholders over the years, with an outstanding record of increased profits high return on equity and good and consistent dividend payments. Return on equity slipped in the past two years as interest rates and new accounting standards took effect but the company continues to grow. In recent years, growth was boosted by acquisitions of other micro-lending companies. Last year the company acquired Embassy Loans located in the Florida area in the United States.
The company realized Net Operating Income for the quarter ending June 2019 of $539 million of which the new US subsidiary Embassy Loans contributed $151 million. Interest income from loans increased by $8 million or 2 percent to $408 million while net fees and commission for the period was $153m. For the period, Embassy Loans contributed $44 million and $103 million respectively to the group’s Interest and fee income.

Christopher Williams, Proven Investments CEO.

Operating expenses for the quarter, increased by 90 percent or $179 million compared to the corresponding period ended June 2018, resulting from an increase in allowances for credit losses, based on the implementation of the IFRS 9 provisioning methodology and the inclusion of Embassy’s operating expenses for the quarter amounting to $110 million.
Net profit after tax for the quarter ended June 2019 declined 24 percent to $165 million compared to the 2018 period and resulted in earnings per share of 60 cents. Annualised earnings work out at $2.40, at a PE of 15, the value would be $36.
Access will generate cash flow from profits monthly and increase the amount available for lending, as such, earnings per share should be in the $3 region for the current year putting the likely value around $45.
The stock tends to be scarce and the potential for long term growth remains positive if a bit diminished in recent times with pressures on interest margins. Consolidation in the industry locally is to be expected and Access should be able to take over more of the smaller players going forward. It is most likely that Access will move most of the administrative functions to Jamaica with the lower cost than in Florida and therefore cut the cost of the US operations.

Drop in CAC 2019 profit

CAC last traded at $13.10.

The past twelve months have been tough for air-conditioning company CAC 2000 with sales and profit plummeting as major road works around their business place disrupted business in a serious way.
Revenues and profits were significantly impacted by the disruption to business resulting from major road works in the Spanish Town and Hagley Park Road area. Additionally, to compliance with IFRS 15 which stymied revenues by an estimated 10 -20 percent, chopping $171 million off revenues for the nine months, Steve Marston, the company’s Chairman and CEO reported to shareholders in a commentary included with the quarterly financials.
Profit in the July quarter plummeted 326 percent from a profit of $19 million in the corresponding 2018 period to a loss of $43 million as sale revenues fell by 22.5 percent for the quarter to $221 million from $285 million in 2018 and declined 19 percent for the year to date to $738 million from $909 million in 2018. For the nine months to July, profit dropped 154 percent from $72 million in 2018 to a loss of $39 million.
Cost of sales fell 14 percent in the quarter, compared to 10 percent for the year to date leading to a fall in gross profit margin in the nine months to 32 percent from 39 percent in the 2018 period. Gross profit margin declined 30 percent from 36 percent in the 2018 quarter. Other income that included income from professional service undertaken in Barbuda declined from $4.4 million to just $73,478 for the quarter but jumped sharply in the nine months to $47 million from just $7 million in 2018.

Steven Marston,
Chief Executive Officer

Selling & Distribution expenses fell 49 percent to $5.3 million in the July quarter and 42 percent for the year to date to $16 million. Administrative and other expenses rose 24 percent to $97 million in the quarter and increased 13 percent in the nine-month period to $291 million. Finance cost rose in the quarter to $6 million from $5.5 million in 2018 and increased to $18 million from $17 million for the nine months. CAC paid a dividend amounting to $4.5 million in 2019.
Gross cash flow was negative with the consumption of $26 million but the company still ended with more cash funds at the end of the period of $149 million. At the end of July. Current assets ended the period at $1.06 billion inclusive of trade and other receivables of $522 million. Current liabilities stood at $459 million including Payables of $381 million. Shareholders’ equity stood at $444 million with borrowings at just $208 million.
The future for the company for the current fiscal year lies in the ability to close as many of the projects of the more than $800 million of projects Management says is on hand.
Companies hurt from temporary disruptions can be candidates for big recovery in stock price when they return to normal operations CAC seems to one such entity. Investors in looking at this company should focus on the next fiscal year when the operations should not suffer from the disruptions encountered in the past year. Earnings per share ended with a loss of 33 cents for the quarter and a loss of 31 cents for the nine months. The company’s shares are listed on the Junior Market of the Jamaican Stock Exchange and last traded at $13.10.

Stanley Motta doubles Q2 revenues

Stanley Motta 58 Half Way Tree building.

Rental revenues rose 105 percent for the quarter to $109 million from $53 million and climbed 118 percent for the 6-months to $205 million from $94 million in 2018, resulting from increased rental space in May of 2018 at real estate holding company Stanley Motta.
Profit soared 302 percent in the quarter ending June to $46 million, up from $12 million in 2018.
For the six months to June, profit grew a stunning 418 percent over the $22 million earned for the same period in 2018 to hit $115 million. The sharp increase in income is due from added rental space let from the completion of the newly constructed building, the larger tenanted unit that was handed over to the new tenant in May last year.
Operating margin before finance cost in the first half of the year, climbed 48 percent, from 50 percent in the year 2018, and by 55 percent in the quarter from 41 percent in 2018. Operating profit rose by 176 percent in the quarter to $59 million from $21 million in the 2018 quarter and increased 198 percent from $47 million to $139 million for the half-year.
Administrative expenses rose 56 percent to $49 million in the quarter and by 38 percent in the six-month period to $65 million, due to a foreign exchange loss of $19 million on the revaluation of the long-term loan and the cost of producing the 2018 annual report. Finance cost increased to $13 million from $10 million in the 2018 quarter and declined from $24 million to $22 million for the six-month period.
The Company ended June with shareholders’ equity of $3.9 billion, current assets of $62 million, current liabilities of $173 million. Cash funds ended at $47 million paying an interim dividend of $93 million. Amounts owing to creditors amounted to $114 million and long-term borrowings stood at $708 million. Real estate held amounted to $4.7 billion in value.
Earnings per share came out at 6 cents for the quarter and 15 cents for the six months. IC Insider.com is forecasting 30 cents per share for the full year from operations but gains in the value of the property will most add to reported profit by the end of the year. was paid in the year to date. The stocks that are listed on the Jamaica Stock Exchange closed at $6 on Thursday.