Profit rises 29% at PanJam

Stephen Facey Chairman & Paul Hanworth Chief Operating Officer

Trading income at PanJam Investment grew a strong 35 percent to $3.26 billion for 2019 while operating expenses rose just 7 percent to $1.7 billion leading to a 66.6 percent increase in operating profit of $1.55 billion, up from $938 million in 2017.
The major contributor to the increase in operating income was a 151 percent increase in investment income to $1 billion, from $423 million in 2017.
Share of results of associated companies contributed $4.7 billion to profit, compared with $3.9 billion in 2017. After taxation of $311 million and finance cost of $624 million, profit ended at $5.3 billion for an increase of 29 percent. Earnings per share rose to $5.06 for the year.
The group saw growth in profit from Sagicor Group and Downing Street Fund 11 and V but suffered a loss at Chukka Caribbean with revenues falling from $4 billion to $3 billion. New Castle saw a reduction in profit even with an increase in revenues while Caribe Hospitality saw profit rising from $242 million to $271 million of which their share is 32 percent.
PanJam holds equity investments worth $6.8 billion up from $2.4 billion at the end of 2017. The value of investment properties moved from $7.9 billion in 2017 to $8.4 billion and investments in associated companies total $26.3 billion. Total assets at the end of the year was $45.9 billion up from $39.4 billion in 2017. The group borrowed $10.6 billion at the end of 2018, up from $7.5 billion in 2017 and has equity of $34 billion.
PanJam is in the process of upgrading the Oceana building in downtown Kingston to a combination of hotel and residential units slated for sale. There also plans for a business hotel in Montego Freeport in Montego Bay.
The group stocks trades at $81 on the Jamaica Stock Exchange at a PE of 12.5 times 2019 estimated earnings of $6.50 and a net book value of $32. PanJam is a stock Investors should consider holding in the long term portfolio to benefit from growth to flow from expansion in the investment field and real estate holdings.

Sagicor’s good profit poor presentation

Jamaica Sagicor Group reports increased 2018 profits.

Financial statements are meant to be understood by users. As most readers are not likely to be trained in accounting, the statements should be prepared in a manner for the average user to understand.
The latest audited financial statement put out by the Sagicor Group and audited by PriceWaterhhouseCoopers includes a profit statement that is a picture of confusion and extremely difficult to understand, that is just not good enough and it should be revamped, for greater clarity. It is just not clear how the statement moves from gross premium income through to investment income and then to total income. To determine what is being conveyed, one has to be fully conversant with computing of income statements and need to decipher what each line item really is and what set of figures relate to what item.
The group recorded total income of $70.7 billion up from $69.7 billion in 2017. The major operation areas generated less income that in 2017. Insurance generated $9.8 billion in 2018 compared to $41 billion in 2017 while investment income fell to $24.3 billion versus $26.7 billion in the previous year. Expenses moved from $55.9 billion in 2017 to just $54 billion in the latest period to December 2018. The reduction resulted from a big decline in movement in actuarial liabilities from $10.7 billion in 2017 to just $2.3 billion in 2018.

Reading the statement one has to guess whether the total cost is that of operating profit or expenses, as there is no caption to clarify. The report then ends up with profit before tax of $18 billion, up from $15 billion in 2017, but readers have to search to determine how the amount, was arrived at. After taxation charge of $4.2 billion versus $$2.9 billion in 2017, the group reported net profit of $13.9 billion against $12 billion in 2017. Earnings per share ended at $3.65 but was boosted by gains of $1.5 billion arising from consolidation of Sagicor Real Estate Fund.
At year-end, shareholders’ equity rose to $74.3 billion from $68.5 billion at the end of 2017 while total assets jumped to $394 billion from $352 billion.

How the east was won?

Annmarie Vaz winner of the East Portland seat.

Anne Marie Vaz increased her party’s support by a stunning 58 percent, over the JLP’s haul in the 2016 General Election to win the East Portland by-election on Thursday with just 11 votes less than 10,000.
At the same time, Damion Crawford only pulled out 5 percent more votes than was polled for the PNP, in 2016. The story gets increasing bad for the PNP and it is not just in this election. The writing was on the wall for years but poor candidature, by the JLP lent the view to many onlookers, that East Portland was safe PNP territory. The 2007, results with the PNP winning by less than 800 votes, should have sent a clear warning to them that things were changing rapidly.
In this latest election, the number of new voters on the list, grew by 5.6 percent, but Crawford’s increase of 4.8 percent was less than the rise in registered voters. Looked at differently, he picked up just 354 votes more than in the 2011 elections or only 3.8 percent more. On a net basis, he garnered only approximately 25 percent of new voters, while Vaz got 75 percent. This is consistent with a pattern seen island wide since 1993 and is one that is not likely to change, anytime soon.
The Labour party was able to get out their 8,000 voters of 2011 and add 24 percent more voters to it, in addition to commandeering the vast majority of new voters, the vote tally at the end of the preliminary count suggests.
The results on the surface is a major about turn for the seat. Closer examination of the numbers for a longer period tells a clear tale. The huge 2019 increase is due to a below performance for the JLP in the 2016 elections, when the votes by the party sank by a hefty 22 percent and  well against the national trend. The trend since the 1993 elections, suggests that the natural growth in party support should have seen them polling over 9,700 votes, just below the numbers she got in the latest polls.
The data also points out that the trend is indicating that the JLP should have polled around 2,000 more votes than they did, this time around.  Those voters are there in their corner based on the growth in support, reflected in the average gains in votes cast in prior elections. This bit of information is also reflected in public opinion voting survey data.

Guardian Holdings profit jumps 31%

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Guardian Holdings jumps $1 to new 52 weeks’ high.

Profits at the Trinidad based Guardian Holdings, jumped an attractive 31 percent to TT$534 million above the TT$407 million reported for 2017 that is due to shareholders of the group.
The results translate to earnings per share of $2.30 versus $1.75 in the prior year. “Insurance underwriting activities drove the performance led by the Life, Health and Pension business segment which had a stellar performance achieved primarily from improved persistency, expense management and improved product mix,” Henry Peter Ganteaume, the company’s Deputy Chairman, disclosed to shareholders in his commentary accompanying the results.
Net Written Premiums by 6 percent to reach $4.16 billion but gross written premium rose by 7 percent to $5.86 billion. Net income from underwriting activities more than doubled from $403 million to $863 million. The deputy chairman went on to state, “The Property and Casualty business segment returned a satisfactory performance as it was spared major catastrophic events during the year. However, the persistent soft market conditions led to a marginal increase to Net Written Premiums. Also of note were the not-insignificant profits made by our Asset Management and Brokerage businesses. These two ‘segments’ hold promise to become important and non-risk exposed elements of our overall Group earnings profile over the relatively short term. NCB shareholders will be big winners in a successful Guardian acquisition. Net income from investing activities fell from $1,191 million to $982 million, driven primarily by volatility in Global equity markets, which resulted in a Net fair value loss of $12 million in 2018 compared to an exceptional gain of $246 million in 2017”.
Operating expenses increased by 7 percent to just under $1.05 billion. Based on the 2018 performance, the directors propose a final dividend of 48 cents, which will bring the total dividend to 71 cents, an increase of 4 cents or 6 percent over 2017. Shareholders’ equity grew to $3.4 billion at the end December and total assets at $27.3 billion.
Guardian stock closed at a 52 weeks’ high of $19 on the Trinidad Stock Exchange on Wednesday at a low PE ratio of 8.2 times last year’s earnings and no doubt even lower than 2019 earnings. If NCB financial gets approval for the acquisition of majority shares in the company, they would have picked up a gem at a very low price making the NCB’s investors the winners and the Guardian sellers, big losers.

Flat profits at Jamaican Teas

Jamaican Teas

Domestic sales at Jamaican Teas was robust for the first quarter to December last year, with a 16 percent increase in both the manufacturing operation and at the company’s sole supermarket. Exports fell sharply and pulled down overall sales.
JTL’s first quarter revenues from manufacturing operations declined by 10 percent, due mainly to a stock reduction exercise at the main USA distributer, resulting from export sales declining 40 percent, following a very strong 67 percent increase in the first quarter of 2018 fiscal year and a 24 percent increase for the full fiscal year. The group had no sales of houses in the period as the sole scheme that was developed was completed. Sales generated from the property development in the 2017 quarter of $48 million.
The decline in export sales in the December quarter negatively affected results for the quarter for the group. Nevertheless, the Group’s first quarter net profit attributable to the owners slipped 4 percent, from $52 million to $50 million.
The Company is reporting pick up in exports following the closure of quarter, as well as local sales in both the manufacturing and supermarket operations. With the prices of certain stocks rising since December, the group should be enjoying gains in their equity portfolio.
Earnings per share per share from continuing operations finished at 7.3 cents, down from 7.7 cents in 2017.
For financial year commencing, October 2018, the Group adopt the new accounting standard IFRS 9, resulting in all realized and unrealized gains on listed equities becoming part of the profit and loss account.
The Group continues to enjoy improving financial health with equity capital of $1.4 billion and borrowed funds of just $178 million. The quarter ended with combined quoted investments at $454 million, up from $319 million in the previous year and net cash on hand equaled $132 million.
Jamaican Teas is listed on the main market of the Jamaica Stock Exchange and last traded at $4.
Persons connected with IC are associated to the company.

Everything Fresh picks up Meat company

Everything Fresh traded at $1.61 on Monday.

Everything Fresh completed the purchase and takeover of Meat Experts for a consideration of $50 million, the company reported to the Jamaica Stock Exchange.
The company expects to spend an additional $30 million for upgrades, the release stated. “Meat Experts is a widely integrated manufacturing operation located in Bog Walk, St. Catherine. It has its own abattoir, cutting, processing, packaging and cold storage facilities and logistics network. This acquisition will add several new products to the Everything Fresh lineup, promote the support of local livestock and produce farmers and reduce costs. Everything Fresh will be serving both its bulk and retail clients with additional products that will be launched under the Meat Experts and Everything Fresh brands. Everything Fresh continues to pursue other salient opportunities which exist,” the company stated.
The acquisition provides diversification for Everything Fresh that was previously a purely a distributor of edible goods including fruits and meats.

Everything Fresh two major owners and directors, Mr. & Mrs. Pullen.

Everything Fresh is listed on the Junior Market of the Jamaica Stock Exchange, with the stock closing at $1.61 on Monday.
The suffered a reduction in revenues in the September 2018 quarter from $450 million to $422 million but the nine months period enjoyed a rise from $1.365 billion to $1.39 billion. A loss of $17.5 million was realized in the September quarter versus a profit of $11 before tax in 2017 and for the nine months, profit declined to $27 million before tax from $35 million in 2017. The acquisition could add between $20 to $30 million in profit for the group, based on the capital involved in acquisition and the upgrade to take place.

Big leap in BUY RATED Wisynco profit

Profit at Wisynco attributable to shareholders, rose a strong 36 percent to $776 million for the December quarter and 30 percent for the half year, to $1.54 billion.
Profit for the period would have been even better had the company not picked up a foreign exchange loss of $128 million in the December quarter. Profit before Taxation increased 24 percent to $942 million over the $760 million realized in 2017. The company earned of 21 cents per share for the quarter and 41 cents per share for the six months.
Revenues for the December quarter rose 16 percent to $7.1 billion over the $6.1 billion achieved in the corresponding quarter of 2017, while revenues rose 14 percent to $13.9 billion in the half year period.
Gross profit increased 18.3 percent, to $2.8 billion over the $2.4 billion achieved in the same quarter of 2017, for the half-year gross profit grew 18 percent to $5.4 billion. The company is eking out greater operational efficiencies with gross profit margin of 39.8 percent bettering the 39 percent for the 2017 second quarter. For the six months, gross profit margin grew to 38.8 percent from just 37.4 percent in 2017.

Sugar canes from which sugar is made.

Selling and distribution cost rose at a much slower pace than revenues, with a 12 percent increase for the quarter to $1.47 billion and 11 percent for the half year to $2.94 billion. Administrative Expenses increased 21 percent for the quarter to $284 million and grew by a sharp 79 percent to $544 million for the six months.
“Sales of Worthy Park spirit brands which include Rum-Bar Rums, Rum Cream and Vodka, commenced in November. The distribution of the Worthy Park packaged sugar commenced at the beginning of January,” Wisynco stated. The expanded products range, will lead to increased sales and profit, this fiscal year.
The company closed out the calendar year, with healthy looking financials, with just under $10 billion in equity capital, borrowing of $2.3 billion, cash funds of $3.63 billion and net current assets at $5 billion.
Wisynco is an IC BUY RATED stock with the potential to earn around $1.10 per share in 2019 and $1.55 for the next fiscal year that starts in July, with the stock price hitting at least $15 by the end of this year.  Usally reliable reports is suggesting that the company could land the distribution rights for another major local brand that would ahve a big impact on revenues and sales. The stock traded on the Main Market of the Jamaica Stock Exchange at the close on Friday at $10.40 for a PE of less than 10 times this year earnings compared with an average of 16 based on earnings for the market at the end of 2018.

Twice a year dividend for Wisynco

Shareholders at Wisynco 2018 AGM.

Wisynco declared a dividend of 7 cents per share payable on February 26, 2019 to shareholders on record at February 12, 2019.
The company in its report to shareholders accompanying the half results, states, that “going forward dividends will be declared semi-annually, with the first interim dividend being in January and the final dividend in July of each year.”
Wisynco reported a 36 percent rise in net profit for the December quarter to $776 million and 30 percent for the half year to $1.54 billion.

NCB hikes dividend 29%

NCB hiked dividend to 90 cents from 70 cents in 2018.

NCB Financial hikes dividend 29 percent, to $2.2 billion or 90 cents per share, as profit from ongoing operations jumped 40 percent in the first quarter to December last year to $5.7 million before taxation.
Profit after taxation and one-time gains, resulted in net profit of $7.4 billion for the first quarter of the 2019 financial year, slightly lower than the prior year’s results that included a gain (negative goodwill) of $4.4 billion relating to the acquisition of Clarien Group. Profit for the latest quarter, includes a gain of $3.3 billion from the disposal of 326,277,325 JMMB Group shares at $28.25 per share.
The strong improved results climbed on the back of 24 percent in net income, to $20.7 billion from $16.7 billion in 2017, offset by a 21 percent increase in expenses. Included in expenses is loan loss provision of $1, up from just $146 million in 2017 and seems tied to the need to adjust loan provisioning in line with new Accounting Standards. Depreciation and amortization cost almost doubled to $1.3 billion, from $667 million in 2017. Other operating expenses jumped 29 percent to $6 billion from $4.7 billion in the prior year. The big improvement in revenues flowed from increases in net interest income from $7.55 billion to $9.85 billion, an increase of 30 percent, while exchange trading delivered a third more, at $4.2 billion.
Retail and Small Business Banking segment profit grew a strong 36 percent to $1.34 billion, but Payment Services fell just 2 percent to $1.2 billion. Corporate Banking jumped sharply by 76 percent to $1.25 billion, Treasury and Correspondent Banking was up by just 14 percent to $1.65 billion. Wealth, Asset Management and Investment Banking, grew attractively by 39 percent to $1.2 billion, Life Insurance & Pension Fund Management rose 29 percent to $1.3 billion while General Insurance moved from a loss of $107 million to a profit of $227 million.

NCB giving back to the community.

The Group’s loans and advances, net of provision for credit losses, rose 16 percent to $373.5 billion. NCB stated that “the growth was driven by our Jamaican that increased by 22 percent or $50.4 billion. Non-performing loans totalled $18.5 billion as at December 2018 (December 2017: $15 billion) and represented 4.9 percent of the gross loans compared to 4.6 percent as at December 2017.”  Customer deposits grew just 7 percent to $461 billion. The varied growth rate between loans and deposit is a strong positive for profit as the revenues climb faster than cost.
The group re-launched a revised take-over to acquire up to 32.01 percent of the outstanding shares of Guardian Holdings which, when combined with NCB’s existing 29.99 percent holding will bring the total to 62 percent. The profit of the group will get a further boost from this acquisition. IC has updated the earnings per share for 2019 to $14 from continuing operations and with the stock price at $145, the PE is just over 10 times earning making the stock BUY RATED with a 2019 target price of $225.

Indies shareholders exposed to tax risk

Indies Pharma reported lower profit for the year to October as slower gains in second half revenues and a more meager profit margin sapped the contribution from the increased sales.
While the company needs to sort out the loss in profit margin. There is also another big issue directors need to deal with. Included in receivables is shareholders’ loan of $136 million with no movement in the year and no information in the audited statements of terms relating thereto including the date for liquidation. IC source suggest that the recent two large blocks of shares of approximately 115 million units traded in the market this week, is a move to clear off the balance and that should show in the March quarterly report.
Additionally, directors owe the company $37 million, an amount that increased during the year. The company needs to clean up the balance sheet as it could be subject to taxes on distribution for the amount owed to the company by directors and possibly the shareholders. The other factor is that it appears that these amounts are free of interest. Other related party indebtedness also needs regularising with specific terms for transparency.
Profit for the full year is down to $120 million after tax, from $137 million in 2017. At the half way mark, profit was $54 million versus $52 million in 2017, the growth in profit for the 2018 second half was less than in 2017.
Revenues from sales grew just 2.5 percent for the year, down from 9.9 percent at the half-year mark. Cost of sales rose 16.6 percent for the full year compared to the 17.5 percent at April, but with sharply differing sales growth. The net effect is a fall in gross profit for the full year to $393 million from $412 million in 2017. Gross profit improved to $187 million at the 2018 half-way mark, from $177 million in 2017.
Administrative cost was virtually flat at the end of April at $110 million versus $108 million and climbed 6.7 percent to $240 million for the year. Finance cost, inclusive of foreign exchange losses, was flat at $16 million for the year.
As the company listed on the Junior Market, the corporate tax bill is down to $18 million, from $35 million in 2017.
The statement of financial position reflects pretty strong financials, with equity capital of $668 million, strong working capital including $102 million of liquid funds.
Indies last traded at $3.35 on the Junior Market, based on these results the PE ratio would be 37 but investors are looking for a brighter 2019 results.