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.

Barita to pay $666M in dividend

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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?

 

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.

Profit grows 35% at Wisynco

Profit before Taxation for the March quarter at Wisynco Group jumped $283 million from $813 million for a 34.8 percent increase to $1.1 billion, from the comparative year ago quarter and for the nine months to March, pretax profit climbed $1.2 billion for a 46.4 percent increase to $3.9 billion, up from $2.7 billion in the prior year.  After provision for taxes on profit, earnings attributable to stockholders rose 24 percent to $831 million from $673 million earned for the preceding year.

Wisynco ended at $25 on Friday.

The current quarter “includes foreign exchange loss of $35.4 million compared with a $68 million foreign exchange gain for the 2021 quarter,” the directors William and Andrew Mahfood stated in their commentary on the results.
The results equate to earnings per share of 22 cents for the quarter, up from 18 cents in the 2021 quarter and 79 cents, up from 59 cents in 2021 for the nine months. ICInsider.com projects earnings of $1.20 for the year to June or $4.4 billion, with earnings of $1.70 or $6.3 billion in 2023.
The 2022 quarter’s revenues rose 27.8 percent to $9.7 billion, the highest in the company’s history, above the $7.6 billion achieved in the 2021 third quarter.  Revenues for the nine months rose at a much slower pace than the current quarter of 20 percent to $28.4 billion, from $23.6 billion in 2021.
Revenues were driven by strong demand in all product categories and channels. Usually, our Q1 and Q2 Revenue patterns represent our higher earning quarters, however, this Fiscal Q3 trended higher than Fiscal Q1 and Q2, reflecting the anticipated bouncing back of our economy from the Covid measures being relaxed. Additionally, our increased focus on Exports continued driving growth in the channel and we are embarking on additional strategies to continue this trajectory,“ the Mahfoods stated.
The period was not without its challenges. Cost of sales rose 31 percent in the quarter to $6.6 billion resulting in gross profit rising at a much slower pace of 21.6 percent to $3.1 billion from $2.6 billion in the previous year. “Gross Margin at 32.3 percent was 170 basis points lower than the 34 percent for the corresponding quarter in the prior year due mainly to our LNG plant experiencing disruption in energy supply resulting in the company having to spend an additional $81m to purchase electricity,” the directors reported. They went on to state, “additionally, we had production downtime which led to some higher costs of production as well as increased input costs.”

True Juice bottled and distributed by Wisynco.

Selling and Distribution expenses increased 16 percent for the quarter to $1.78 billion from 1.54 billion in 2021 and increased 12.8 percent to $5.2 billion in the nine months from $4.6 billion in 2021. Administrative expenses fell in the latest quarter to $289 million from $339 million in 2021 and slipped slightly to $1.02 billion from $1.03 billion for the nine months. Depreciation fell from $782 million to $718 million for the nine months and taxation jumped 108 percent from $465 million to $957 million and 86 percent from $141 million to $265 million for the quarter.
Gross cash flow brought in $4.3 billion and $3.3 billion after working capital growth and ended at $1.2 billion after investments, addition to fixed assets and paying $1.5 billion in dividends.
But the group remains in robust financial health, with shareholders’ equity of $17 billion and long term borrowings at $1 billion, while short term loans stood at $800  million. Current assets ended at $16 billion, including trade and other receivables of $3.6 billion, and inventories of $3.4 billion, while cash, bank balances, and investments stood at $9.2 billion. Current liabilities ended the period at $5.8 billion and net current assets ended at $10.4 billion.
The stock traded on the Main Market of the Jamaica Stock Exchange at $25 at a PE of just over 20 times earnings and seems to be heading for the mid $30 region over the next twelve months.

MPC Caribbean’s awful reporting

Disclosure of relevant information by listed companies provides information for proper investment decision making and reduces concerns and mistrust if all materially important information is disclosed, thus improving investor confidence in those companies.
In order to deliver pertinent information to investors, management including directors of listed companies will have to go beyond providing the minimum information stipulated by law or accounting regulations.
Against that background, it is instructive to examine MPC Caribbean Energy a company with its shares listed on the Jamaica and Trinidad stock exchanges.  In looking at this company and its extremely poor reporting it is worth noting that the state-owned Development Bank of Jamaica invested US$1 million in the company’s shares. It has become the norm that companies that hold subsidiaries must consolidate the financial results of the subsidies with that of the parent company so that investors can get a full picture of the financial performance and standing of the group as a whole.
The company has been an excellent example of how not to communicate with investors as they destroy credibility with investors. That is pitiful when it is considered that it has a need to go back to the market for fresh capital to continue expansion.
The company made two public share offers to raise funds from the public with both coming up short of the target, due to poor communication and the management’s lack of understanding investors and how to communicate with them effectively.
MPC recently reported comprehensive income of US$1.14 million for the year to December 2021, flowing from the net change in unrealized gain on investment amounting to $1.136 million less expenses of US$205 million. Both the auditors and directors failed to inform investors as to the true nature of the gain. At the end of the year, the above mentioned gains, pushed shareholders’ equity to US$20.8 million with total funds invested at US$30.9 million.
The auditors’ report states, “as required by IFRS 10.31, the Company has reflected the 85.69 percent ownership in MPC CCEF at fair value through profit or loss.”
Of course, the above method of providing financial Statements to investors is clearly not acceptable for a publicly listed company as investors are not getting a clear picture of what is happening within the group. The question that arises is whether the fair value gain is equal to normal profit from operations or not? Investors should not have to guess about this. This is important due to the most important method that investors use to value companies.
In addition, shareholders should know what is the income, expenses and profit that are generated by the group and what the full financial status is. The current approach does not disclose this information which is critical, but awfully sad. There is no other company on the JSE that reports in the above manner.

Shareholders deserve better from MPC

The structure between the listed company and its subsidiary is confusing with each having similar names making it much more difficult to understand which one does what. The company’s management is German, which adds uncertainty to it. The directors by and large are not well known and the manner of communicating with the public makes it abundantly clear that they are not in sync with investors.
Another issue that exists with the company, is that directors tend to use industry jargon in their commentary. The December report starts with – “In the fourth quarter of the year, the commercial and technical performance of the underlying assets of the Company’s investment in the Investment Company were within the expected range. Necessary technical measures were carried out, thereby, stabilizing the production of the underlying assets. ”That is great but they go on to spoil it by talking about OpEx value in the next paragraph. What is OpEx value? They know but few others do.
The bright spot is to be found in the Outlook released at the time of the interim report. “After implementing all the technical measures to resolve limitations that took place in the course of 2021, we are looking forward to 2022. In addition to the expected performance improvement of the underlying assets, the Investment Company expects to further diversify its portfolio with the operational asset Monte Plata Phase 1 Solar Park (33.4 MWp) in the Dominican Republic. The expansion of the Monte Plate Asset with Phase 2 (40.5 MWp) is progressing well and financial closing with the senior lenders FMO and DEG is expected to take place in Q2 2022. The completion of the acquisition remains subject to CNE approval, which is expected to be obtained in the course of Q1 2022. The start of operations of the expanded solar park with a total capacity of 74 MWp is targeted for Q2 2023. The PPA was signed on 15th October 2021 for a period of 15 years starting from the Commercial Operation Date. It will become the largest asset in the portfolio expanding the geographic footprint to a total of four countries incl. Jamaica, Costa Rica, El Salvador and the Dominican Republic.”
Here again, investors are left in the dark as none except the directors have any indication as to what is to be expected. Investors cannot be asked to invest in companies with such poor reporting. The Jamaica Stock Exchange owe the investing public to bring this terrible reporting and lack of information on the finances of the group to an end. The least that can be done is for investors to be presented with the audited accounts of the subsidiary along with those of the listed company for the annual as well as quarterly, that way the full picture will be disclosed.

SVL profit for Q1 surges 68%

Gaming company Supreme Ventures posted a net profit of $1 billion for the 2022 first quarter to March, an increase of $400 million or 68 percent compared to the first quarter in 2021, resulting from Gaming income climbing just 18.7 percent to $12.7 billion, compared to $10.7 billion generated in the corresponding period in 2021.
“This huge uplift in profitability for the three months is a result of several factors including the hugely successful re-introduction of the popular Instants “Scratchaz” game and our successful implementation of significant cost-savings initiatives,” Gary Peart, Executive Chairman, stated in his report accompanying the results.
“Total gross ticket sales for the quarter was $27.7 billion, an increase of 164 percent over the corresponding period in 2021, as customers welcomed new initiatives that positively impacted their pockets during a difficult economic downturn,” Peart continued to state.
Direct expenses amounted to $9.8 billion and were $1.2 billion, or 13 percent, higher than the $8.7 billion incurred for the 2021 first quarter. Peart further reported that “with a continued focus on expense management, we have further invested in expanding the business as we prepare for the reopening of the economy and the expected upturn that will result. The increased cost resulted from the higher amounts paid to our key partners and regulators during the quarter.”
Gross profit for the quarter amounts to $2.9 billion, representing a rise of $864 million or 42.8 percent compared to the $2 billion pulled in during the first quarter of 2021.
Segment results show the Lotteries segment being the star performer in the group, accounting for nearly 93 percent of segment results in generating gaming income of $6 billion, a 31 percent increase of $1.4 billion in revenues, while segment results showed an increase of 82 percent to $1.2 billion from $630 million in 2021.

Supreme Ventures traded at a new high of $33.41 on Friday.

The Sports Betting segment reported $287 million and gaming income increased 16.6 percent by $490 million, to $3.5 billion, over the first quarter of 2021. PIN codes sales saw an increase of $116 million or 3.9 percent to $3 billion for the quarter, resulting in segment results of $85 million, almost doubling that earned in 2021.
Cash inflows from operations hauled in $1.65 billion, up from $1 billion in 2021, but mainly due to dividends paid amounting to $686 million, purchase of shares in a subsidiary and purchase of property and equipment, the company used up $935 million of the surplus at the end of December last year of $4.4 billion.
At the end of the period, Shareholders’ Equity stood at $4.55 billion and was augmented by borrowing $6 billion in long term loans and $443 million in short term funding. Current Assets ended the quarter at $7.6 billion, up from $7.1 in the previous year’s first quarter. Current Liabilities stood at $5.7 billion compared to $3.7 billion at the end of 2021 first quarter. Cash funds and short term investments ended the period at $3.4 billion, down from $5 billion in 2021.  Net current assets deteriorated over the past year ending at $1.9 billion compared to $3.45 in March last year.
Earnings per share for the quarter is 37.79 cents, up 68 percent over the EPS in 2021 of 22.46 cents, if the trend continues, earnings for the full year should hit the $1.60 mark for the year with a PE of 20 at Friday’s closing price of $32. The company will pay a dividend of 34.01 cents per share on May 20.