Sagicor Group profit climbs 49%

November 6, 2016 by

Sag bnk logoSagicor Group net profit attributable to Stockholders jumped 49 percent to $3.1 billion for the September quarter and 27 percent to $7.39 billion for the nine-month to September, over the similar period in 2015.
Improvement in realized gains from securities trading played a big role in the increased profit with investment income rising 43 percent or $1.6 Billion in the quarter to $5.5 billion and a rise of 20 percent or $2.6 billion to $15.56 billion for the nine months to September.
Earnings per stock ended at 79 cents for the quarter and $1.89 for the nine months compared to $1.49 in 2015 and could end around the $3 region by the end of the financial year. Return on average Stockholders’ Equity was 19 percent compared to 17 percent.
“Our core Insurance and Banking businesses produced good results. The overall performance was principally driven by good business growth across all lines, greater than expected capital gains on sale of securities and favourable benefits experience“, management stated in their report to shareholders.

Rose Hall hotel owned by Sagicor Real Estate fund

Rose Hall hotel owned by Sagicor Real Estate fund

Revenues for the quarter rose 25 percent to $16.3 billion versus $13.1 billion in 2015, for the nine months, revenues came in at $45.33 billion, better than prior year by 14 percent. Revenues include net premium income of $25 billion rising from $22.35 billion in 2015. Realized capital gains from securities trading of $3.29 billion, were substantially up on prior year.
Administrative expenses of $10.8 billion, were 13 percent more than in 2015, well below the rate of growth in revenues. “The cost increase was driven by higher staff costs, expenses relating to our expanded credit cards program and other non-recurring items,” management said in their report to shareholders. For the September quarter, administrative expenses rose 11 percent to $3.7 billion
Sagicor Group comprises a number of companies offering financial products and services, including life and health insurance; annuities; pensions administration; investment services; commercial banking; investments banking; captives management; property management and real estate sales and rentals.
The company shares are listed on the Jamaica Stock Exchange and last traded at $23.18 and is undervalued.

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LASCO Manufacturing profit jumps 45%

October 26, 2016 by

Lasco canProfit jumped 45 percent to $363 million for the quarter ending September this year, from $250 million in the September 2015 quarter for LASCO Manufacturing from revenue of $2.2 billion, an increase of 29 percent over the 1st quarter, this year and 35 percent over the June quarter of 2015.
For the six months period ended September 2016, LASCO generated a net profit of $587 million, 18 percent above the previous year’s profit of $497 million.
Revenue increased 28 percent to September 2016 to $4 billion, over the same period last year resulting from increased production as part of the expansion of the manufacturing plant. Gross margin of $1.3 billion, was achieved compared to $1 billion, the previous year.
Expenses for the six months rose 23 percent to $585 million, compared to the same period last year, due mainly to increases in marketing and equipment maintenance expenses.
Lasco new drnks“Production at the Liquid Plant continues to grow steadily, and we will further increase our capacity to meet the market demand for our iCool line of beverages, by ramping up production with the installation of additional equipment by the end of the financial year. We continue to be optimistic and confident about the future for this product line with substantial profits to be realized” Robert Parkins, Managing Director, stated in a release with the results.
Perkins went on to say “The new Dry Plant at White Marl is now fully operational, and together with the existing Red Hills Road Dry Plant recorded an increase of 24 percent in profits over last year at the end of the 2nd quarter. New products will be introduced by the end of the year to enhance the product line which is projected to continue to realize significant sales and profits.”
“The Statement of Financial Position shows Property, Plant and Equipment moving from $3.5 billion, at the beginning of the financial year to $4.6 billion at the close of the 2nd quarter. This is due to approximately $1 billion, of assets associated with both the liquid and dry plants being transferred during the period from work in progress as a result of continuing commissioning of these operations.”
The company reported cash flows from operations of $1.5 billion including more than $600 million released from working capital of which $1.17 billion was spent on expanding the plant.
IC Insider is forecasting $1.8 billion in profit or 45 cents earnings for the full year to March next year and $3.7 billion or 90 cents per share for 2018. Lasco last traded at $5 on the junior market of Jamaica Stock Exchange.

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Lawsuit may cost CAC $200m

October 25, 2016 by

Steven Marston, Chief Executive Officer

Steven Marston,
Chief Executive Officer

CAC 2000 (CAC) could be facing a $200 million charge to the 2016 financial results arising from the successful claim X-ray Diagnostics against the company.
CAC in a release to the Jamaica Stock Exchange stated that the court ruled in favour of the Claimant and awarded damages of US$372,100 and J$568,187 plus loss of profits of $7,077,874. Interest at commercial rates and legal fees were also awarded.
CAC further advised that on application, the court granted a stay of execution of 42 days and that its legal counsel is reviewing the judgment but, in the interim, the company will be providing for these amounts less the insurance amount of $20 million in the 2016 accounts.
IC Insider estimates that the company will likely be hit with a total cost of US$1 million and J$100 million before the insurance coverage when interest and legal fees are factored in.
The judgement resulted from a claim in negligence and or breach of contract as a result of a fire that occurred at the Claimant’s premises on May 11th, 2003. The Claimant prevailed at first instance in the Supreme Court with CAC appealing the judgment on account of the trial judge in the Supreme Court excluding the testimony and or report of the Company’s expert from the evidence. The Court of Appeal held that the exclusion of such evidence “created an unnecessary imbalance which was not in the interest of justice.”
CAC logo 12-15CAC reported a loss of $9 million after tax for the July 2016 quarter and profit of $31 million after tax for the nine months period, compared to $39 million for the July 2015 quarter and a profit of $71.6 million for the nine months to July 2015.
The net results came from sales revenues of $679 million for the nine months period compared to $674 million for 2015 and $198 million for the July quarter versus $259 million in 2015. The company saw a large climb in administrative cost of 42 percent for the nine months in 2016 and 57 percent for the quarter.
CAC successfully raised $120 million before cost of approximately $10 million in its initial public offering in December 2015. The stock traded traded on the junior market of the Jamaica Stock Exchange at $6.30 on Monday.

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Stunning 47% increased Scotia profit

September 15, 2016 by
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Scotia hq 25 9-14 Scotia Group reported a stunning in net earnings jumping 47 percent for the third quarter to $3.3 billion over the 2015 July quarter. For the nine months, net earnings jumped 36.7 percent to $8.2 billion. Total comprehensive income for shareholders of the group ended at $9.3 billion for the nine months ended July 2016 up 10.5 percent from $8.8 billion.
For the third quarter, total comprehensive income of declined from $4.4 billion to $3.66 billion.
The results translate to earnings per share of $1.07 cents in the July quarter and $2.64 for the nine months, with full year’s earnings set to end around $3.90 and would put the PE at 7.8 versus an average of 9 based on estimated 2016 earnings for the main market valuation.
President and CEO of the banking group, Jackie Sharp, in a report to shareholders, commenting on the performance stated, “We continue to show strong performance this year, resulting from the execution of our strategic initiatives to grow revenues and reduce operating costs. All business lines showed good volume growth year over year, as we continued to meet our customer’s diverse needs. Our loan portfolio, after allowance for impairment losses, grew by $15.2 billion or 10.2 percent year over year. Customer Deposits also increased by $42.4 billion or 20.8 percent year over year. Funds under management in our wealth business grew by $15.9 billion or 14.9 percent year over year.”

Jackie Sharp - CEO Scotia Group

Jackie Sharp – CEO Scotia Group

“Total revenues excluding impairment losses on loans for the nine months ended July 2016 was $28.8 billion, representing an increase of $2.46 billion above prior year. The positive movement was achieved through increased volumes and improved non-interest revenue, which cushioned the impact of reduced margins. Net interest income after impairment losses for the period was $17.6 billion, $670 million above the same period in 2015. This was due to an increase in net interest income of $745 million, resulting from growth in loan volumes, particularly our Retail loans, Residential Mortgages and Small Business portfolios, coupled with lower levels of wholesale funding. Impairment losses on loans increased by $75 million when compared with the same period last year.
Other revenue for the nine months ended July 2016 amounted to $10 billion, an increase of $1.7 billion or 20.6 percent compared to the same period last year. This was due to growth in net fee and commission income from increased transaction volumes on our deposit and payment services, credit card and merchant service business segments, as well as higher foreign currency gains.”
Sharp went on the further state “Operating Expenses amounted to $15.6 billion over the nine months ended July 31, 2016, a decrease of $464 million or 2.9 percent compared to prior year. Salary related expenses declined by $400 million, which offset higher operating expenses of $276 million. There was also a decline in asset tax of $330 million.”
Loans, after allowance for impairment losses amounted to $163.9 billion as at the end of the 2016 quarter, while nonperforming loans totalled $4.4 billion, representing 2.7 percent of total gross loans down from 3.1 percent last year. Total customer liabilities represented by deposits, securities sold under repurchase agreements, and policyholders’ funds grew to $350 billion, an increase of $35.3 billion or 11.2 percent compared to July 2015. A significant portion of the growth was reflected in core deposits, which grew by 20.8 percent year over year the company stated.
The stock that traded at $30.50 on the Jamaica Stock Exchange is undervalued and importantly with strong growth in the third quarter and increased growth in the loan portfolio as well as a pickup in economic growth in Jamaica augurs well for strong growth in profits going forward. Note need to be taken of a possible fall in foreign exchange gains an area that grew sharply in the July quarter by 127 percent to $1.17 billion.
The group declared another dividend of 45 cents per share and seems set to pay total dividend for the fiscal year of $1.80 providing an attractive yield of 6 percent.

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Dip in profit at Jamaica Broilers

September 13, 2016 by

JB factJamaica Broilers sales revenues increased 12 percent over the $8.9 billion the group generated in 2015 to reach $10 billion for the first quarter ending July this year. Profit after tax from continuing operations fell to $401 million from $420 million in 2015.
The profit performance resulted from gross profit that grew in line with sales with a 12 percent increase in for the quarter to $2.7 billion, from $2.4 billion in the corresponding quarter last year and an increase in finance and other income of $178 million up from $123 million in the company’s 2015 first quarter.
Directors in their report to shareholders state that the “Jamaica Operations reported a normalised segment result (after adjusting for the effects of the disposal of subsidiaries) of $641 million compared to $783 million reported last year. This was a result of increased levels of poultry imports and increased input costs. The US Operations continued to grow steadily and reported a segment result of $297 million, which was a 14 percent increase over the prior years’ $261 million. This quarter’s results include for the first time the operations of the new subsidiary International Poultry Breeders Hatcheries Inc., based in Iowa.”
“In the Other Caribbean Operations segment, the increased production of table eggs in Haiti Broilers SA is now reflected in the profits being reported for the quarter. The normalized segment result, after adjusting for the effects of the disposal of subsidiaries, amounted to $74 million which was $49 million or 196 percent above the $25 million reported last year.”
JBG ChickDistribution costs, grew much faster than sales, with an increase of 29 percent over the previous year, to $321 million from $248 million while administration costs moved up by 20 percent to $1.79 billion from $1.49 billion in 2015.
The profit out turn resulted in earnings of 33.08 cents per share for the quarter. IC Insider expects that with continued growth in sales revenues investors should see increased profit for the current year which will be aided by improved economic activity in the markets the group operates in.
At the end of the quarter, shareholders’ equity stood at $12.7 billion while loans grew from $6 billion in July 2015 to $6.9 billion in 2016 while cash funds and investments ended at $1.7 billion in 2016 versus $1.8 billion in 2015.
Jamaica Broilers’ shares are listed on the Jamaica Stock Exchange and last traded at $14.52 at PE ratio of 11 times last fiscal year’s earnings.

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Stock split coming for JSE

September 2, 2016 by

Exchange placeJamaica Stock Exchange (JSE) advised after trading closed on Thursday that the Board of Directors will be considering a stock split at a board meeting scheduled to be held on Wednesday, September 21, 2016. With only 140 million shares issued and 90 million being held by brokers members there is a strong possibility for a 5 for 1 stock split to allow for greater liquidity.
JSE reported of profit of $32 million for the June quarter versus $15 million in 2015 and $158 million compared to $102 million for the six months to June 2015. The improvement in net profit flowed from a 52 percent rise in revenues to $188 million for the June 2016 quarter compared with $124 million in 2015 and $525 million for the half year to June for a rise of 37 percent versus $382 million in 2015. Earnings per share for the half year ended at $1.12 versus 73 cents in 2015. The JSE had a big month of trading in August with some special trades that took place thus swelling the volumes and value to $6.6 billion for July to August compared to $6.5 million for the June quarter.
Expenses in the June quarter rose less than the growth in revenues at 40 percent and for the half year by 26 percent. Increase in salaries related cost was the major area of cost increase rising faster than the increased revenues. Salaries and related cost jumped 65 percent in the June quarter compared with a 52 percent gain in revenues for the quarter and 44 percent increase in wages for the half year to June, 7 percentage points higher than revenue growth. Wages accounted for 55 percent of total cost in the quarter and 46 percent for the six months period for all of 2015 the ratio was 43 percent.
JSE signSegment results show a sharp jump in both revenues and profit for the Exchange Operations and that of Trustees Services for the half year. Exchange operations revenues grew to $326 million from $233 million in 2015 resulting in pretax profit of $151 million from $84 million in the six months to June 2015 while Trustees Services saw revenues shooting to $114 million from $46 million and with profit of $64 million from $18 million in 2015.
The stock traded on Thursday at $24.10 delivering a huge gain for investors who bought shares in the public offer in June 2013 at $2.85 per share. Some investors have done even better in buying the stock below $2 per share after it was listed.

Filed Under: Company News, Company Results

ISP Finance revving to expand

August 29, 2016 by

ISP Finance plans to issue $150m in bonds in September.

ISP Finance plans to issue $150m in bonds in September.

Newly junior market listed ISP Finance is getting ready to expand, grow revenues and profit by way of a $150 million public issue of a 10 percent Secured Corporate Bonds due 2019 which are expected to be listed on the Jamaica Stock Exchange. The minimum subscription is $20,000 for each application. Interest will be payable quarterly.
The issue opens at 9 am on September 1 and will close at 4:30 pm on September 22, 2016. The Company will have the option to prepay the bonds at par before the due date. ISP reported revenues of J$52 million, a 7.2 percent increase over the J$49 million record in the second quarter of 2015, according to its unaudited financial results for the second quarter ended June, this year. Gross profit amounted to J$49 million compared to J$44 million in the comparative quarter in 2015. Net profit for the June quarter came out at J$11.7 million representing a 240 percent the $3.4 million generated in 2015, however, the company reversed $7.9 million in the June quarter, cost relating to the IPO, which it expensed in the first quarter, thus inflating the second quarter profit. For the six months to June revenues grew to $106 million from $99 million in 2015. Net profit for the six months ended at $8.6 versus $3 million in 2015.
The increase in the company’s revenue in the 2nd quarter of 2016 resulted from increased business activities, while the decrease in interest expenses in the 2nd quarter of 2016 was due to repayment of a loan to commercial bank.
At the end of December 2015, the company’s loan portfolio, before loan loss provision stood at J$304 million and grew marginally to J$305 million at the end of June. After loan loss provision of $70 million, it stood at $234 million as of June this year versus $241 million at December and is up from the $225 million at the end of March 2016. Cash on hand stood at $67 million while the amount borrowed fell to $127 million including overdraft balance of $38 million from $328 million at the end of 2015.
The funds being raised could propel loan growth significantly and with it profits particularly in 2017 as the funds would be available for a full year compared to a few months for 2016. Importantly, more funds will be available for the busy Christmas period. IC Insider forecast earnings for 2016 at of $59 million or 57 cents per share with earnings jumping sharply higher in 2017, if most of the bond funds are received and are on lent.
The company is not without risk and success will be highly dependent on management’s ability to make proper credit assessment and police tightly loan repayments by its clients.

Filed Under: Buy Rated, Company News, Company Results Tagged With: ,

Undervalued JMMB Group

August 23, 2016 by

JMMB Group traded 1,790,063 shares but fell 34 cents to $9.50 on Monday.

JMMB Group traded 1,790,063 shares but fell 34 cents to $9.50 on Monday.

At $9.50 per share, JMMB Group stock is one of the most undervalued main market stocks on the Jamaica Stock Exchange, with the financial group posting net profit of J$593.4 million and earnings per share of 36 cents for the quarter ending June 2016.
Total comprehensive income for period, amounted to $1.14 billion versus $894 million in 2015 and is a factor worth paying attention to as it gives a better indication of the performance of the group than the regular profit out turn.
The JMMB Group reported net operating revenue of J$3.42 billion for the first three months of the new fiscal year, reflecting a 9.9 percent increase compared to the corresponding period in 2015 and was due mainly to positive growth in net interest income, fee and commission income and foreign exchange margins from cambio trading.
Keith Duncan, Group Chief Executive Officer of JMMB

Keith Duncan, Group Chief Executive Officer of JMMB

The Group’s net interest income grew year-over-year from J$1.44 billion to J$1.55 billion, an increase of J$109 million or 7.6 percent, due larger investment and loan portfolios coupled with reduced cost of funds across the territories. Fee and commission income increased by 56.3 percent or J$107 million to J$298 million, from growth in managed funds. Additionally, loan fees increased given the material growth in the loan portfolio. Foreign exchange margins from cambio trading grew by 72.3 percent or J$186 million to J$443 million, driven largely by increased volume and taking advantage of one-off market opportunity. Gains on securities trading, net was down 8 percent at J$1.13 billion. The prior period’s results included one-off gains of J$501 million, if these gains were excluded, core gains on securities trading would reflect growth of 56 percent, the company reported.
Operating revenue grew in all the territories with 26 percent of operating revenue generated outside of Jamaica. Nevertheless, the Jamaican entities continued to post positive performance. In Trinidad and Tobago, the Group’s operations continued to move in a positive trajectory, reporting a 32 percent or J$150.2 million growth in operating revenue at J$614.6 million. The operations in the Dominican Republic also posted growth in operating revenue; up 22 percent or J$49 million to J$275 million.
JMMBOperating expenses rose 14 percent to $2.58 billion a bit faster than a 10 percent rise in overall revenues net of interest cost, but if one off gains are adjusted for, revenues would have grown by 31 percent, much faster than operating cost.
JMMB Group’s asset base totalled J$245 billion, up J$22 billion or 10 percent relative to a year ago. The growth was due primarily to larger investment and loan portfolios. The investment portfolio increased by J$20 billion or 13 percent to J$171 billion. In addition, loans and advances, net of provision for credit losses was J$40 billion, up 21 percent or J$7 billion. Growth in the asset base was funded by customer deposits and repurchase agreements. Customer deposits increased by J$6 billion or 15 percent to J$46 billion, while repurchase agreements were 7 percent higher at J$156 billion.

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Another big quarter for Jetcon

August 15, 2016 by

Sanya Goffe addressing the audience at the listing of Jetcon's shares in March.

Sanya Goffe addressing the audience at the listing of Jetcon’s shares in March.

Jetcon Corporation enjoyed two good years in a row with another good quarter results for the June 2016 quarter, with profit rising 91 percent to $23 million up from $12 million for the similar period in 2015. For the year to June, profit rose to $41 million, an increase of 71 percent over the $24 million earned in 2015 before corporation taxes.
The company accounted $4.7 million in tax, in the first quarter but none in the second quarter, with the shares listing on the junior market in March, this year. Earnings per share ended at 12 cents versus 8 cents for the June quarter and 21 cents for the six months to June compared with 12 cents for 2015.
Having been listed on the junior market our profit will be tax free for 5 years. With just half the year completed, profit is 9 percent off from the after-tax profit of $40.3 million reported for the full 2015 financial year and the company seems poised to surpass the 2015 earnings in the September quarter, if recent trend for 2016 to date continues.
Revenues climbed 39 percent for the quarter to $194.9 million and 45 percent for the six months to $342.9 million. Gross profit margin declined to 18.54 percent from 19.24 percent in the quarter and 19 percent for the six months versus 18.38 percent in 2015. Sales are usually greater in the second half of the year than in the first half.
honda civicIn a release by directors accompanying the financials, the company stated that “Administrative and other costs rose by approximately $5.2 million due to listing on the market which accounted for $2.5 million while salaries adjustments accounted for $2.7 million of the increase. Part of the increase in salaries is directly tied to the increased sales that took place.”
“Sales in June were the highest for the half year with sales for July is ahead of June in volume and sales revenues. Bookings which have been ahead of 2015 for each month this year continues to be positive.”
Inventories stood at $236 million at the end of June, compared to $125 million in June 2015 and $84 million at the end of December last year. Supplies peaked in June and is slated to start to decline by the end July onwards to the end of the year as deliveries to customers exceed new inflows of cars. Payables increased as a result of increased purchase of motor vehicles.

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Expansion for Paramount

August 15, 2016 by

PTL Lub Grnd bkingAllegheny Petroleum and junior market listed company, Paramount Trading joined forces to establish their jointly owned lubricant plant to be housed at 39 Waltham Park Road the same site as Paramount other operating facility.
The plant for which ground was broken in July, is expected to replace imports amounting to approximately US$4 million now being supplied directly by Allegheny Petroleum, according to Hugh Graham, Managing director of Paramount.
Establishing operations in Jamaica, adds more value and will allow for a greater customer reach and create greater margins than that which applies to imports. The initial investment is US$4 million and includes the warehouse, equipment, software and lab testing equipment. The venture will have the capability to test lubricants in use for customers in Jamaica rather having to send samples overseas for testing. There are plans to expand product range in the future and provide products for exports. The plant is expected to start production in January next, Graham confirmed with IC Insider.
According to Graham in 2012, when they listed on the junior market, Paramount had 36 workers and now has 76 employees and the number will increase to 100 employees, with the latest expansion.
The ground breaking ceremony was addressed by Minister of Finance, Audley Shaw, who indicated that this venture vindicated the decision of the government to provide the tax incentive for the junior market as well as the economic policies being pursued that is geared to encourage more production of goods in Jamaica as opposed to relying on direct imports.
Robin Levy, assistant general manager of the Jamaica Stock Exchange indicated that the company has done well since it has listed and said “since listing in 2012 the company has gone on record higher revenues and tripled profit with the stock price rising from $2.45 to just under $11.” Since the ground breaking, the stock traded at $11.50 and now has a bid at $12.
In the year to May, the company posted an 18.5 percent increase in profit, to reach $173 million, from sales revenues of $1.02 billion with other income accounting for $39 million for the year, up from $869 million versus $16 million in 2015, respectively. Administrative, selling & distribution cost rose sharply by 34 percent to $181 million as the wage bill and rental expenses grew appreciably.
PTL All buidWhile profit grew in the year, segment results show mix out turn for each division. For 2016, Chemicals grew revenues by 12 percent and gross profit by 19 percent over 2015, for Construction and Adhesives, for the same periods, revenues grew by 59 percent and gross profit by just 6 percent. Manufacturing sales fell by 16 percent with profits remaining unchanged, while Transport enjoyed a 16 percent growth in sales leading to a 61 percent rise in profit and Lubricants sales climbed 403 percent with profits jumping 127 percent. Graham indicated to IC Insider that the fall in manufacturing sales is due to a customer reorganising their business. The data suggests that the new lubricant plant is likely to be the area of growth for Paramount.
In 2015, Graham indicated that a rights issue was likely, asked about that source of funding for the expansion, Graham stated “I can’t talk about that now,” he however, stated that “some other revenue announcement should be made soon.”

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