Tropical Battery IPO oversubscribed

oThe Tropical Battery issue of 325 million ordinary shares at $1 each opened on Tuesday, September 22, was oversubscribed. The company exercised the option to close the offer early at the end of the opening day.
The offer comprised shares sold by existing shareholders and by the company. The net proceeds that the company will get will be for expansion and upgrading of the operating facilities and working capital needs.
Earnings per share are around 7.7 cents, putting the stock is price value at a PE ratio of 13 times 2020 earnings, leaving little or no room for short term gains, with it, priced 19 percent above the market average.
NCB Capital Markets, brokers for the issue advised that applicants of reserved shares will be allocated in full while applications in the General Public Pool will receive the first 50,000 units plus approximately 30.6499 percent of the excess shares they applied.
All monies to be refunds will commence next week Wednesday, September 30, will be processed as per their instructions on the GoIPO platform. Refunds to all other applicants will be made to the respective broker.
The company is t listing on the Junior Market of the Jamaica Stock Exchange with the profit for the next five years not subject to corporate taxes and the following five year period resulting in taxes paid at 50 percent of the regular rate.
The listing will take the number of Junior Market companies to 41 and the 44th company to be listed on that market since 2010.

More US$ for NCB Financial Group

NCB Financial Group went to the international market to raise US$175 million in funds from the issuance of diversified payment rights for payments due from correspondent banks, up the amount taken to US$250 million.

NCB Financial Montego Bay branch

According to the banking group in a release on September 22, “the Board of Directors of National Commercial Bank Jamaica has approved an upsizing of the Securitization of its Diversified Payment Rights to up to, Two Hundred and Fifty Million United States Dollars following an oversubscription of the transaction.” The transaction will be rated by FITCH Ratings and placed in the International private placement market by Westwood Capital LLC, as Arranger.
The transaction will swell the pool of foreign currency the bank will have at its disposal for lending or investing. At the end of the 2019 fiscal year ending September, NCB Group owed just US$50 million but owed US$309 million on Merchant voucher receivables.
NCB Group is listed on the Jamaica Stock Exchange and owns the majority of shares in Guardian Holdings, a Trinidadian based listed company and Clarien Bank in Bermuda.

IPOs are back the Tropical issue

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

10 to 1 stock split for Caribbean Flavours

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

Caribbean Flavours a Derrimon’s subsidiary

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

NCB starts group rationalization

NCB Financial Group announced the commencement of the streamlining of the group’s insurance portfolio. The move is in keeping with one of the rationales for acquisitions, to maximize returns from combining two or more entities.

NCB Financial Head Quarters in Kingston

According to NCB “in a bid to strengthen its Jamaican insurance portfolio and optimise its product and service offerings and customer experience, NCB Financial Group has begun the process of streamlining the insurance business currently offered by its competing subsidiaries – NCB Insurance Company and Guardian Life”.
NCB Insurance made applications to the Financial Services Commission seeking approval for the transfer of NCB Insurance of insurance and annuities business portfolio to Guardian Life and for the NCB Insurance to become licensed dealer under the Securities Act and to be registered as an insurance agent under the Insurance Act.
The submission also indicates that the application for approval of transfer of business and the application for registration as an insurance agent are contingent upon each other. If approved, these applications will allow NCBIC to discontinue its business as an insurance underwriter, retain and continue to operate its business as a Pension Fund Administrator and Investment Manager, while selling insurance products as an exclusive agent of Guardian Life under a new company name.
Other areas that investors can look forward to for cost-cutting will be in administrative costs, marketing, while the merger of the investing arms locally and overseas will bring enormous benefits.

Traffic returning to Highway2000

Toll transactions for the first two months of 2020 were increased 2.1 percent increase over to the same period last year at Trans Jamaican Highway, the company reports in a news release to stakeholders.
The impact of national measures taken to limit the spread of the Coronavirus weighed on motorway traffic since mid-March 2020. “The decrease in traffic for March was 19.3 percent following the closure of schools, all-island curfews and the ‘work from home’ order issued by the Government of Jamaica for non-essential workers,” the release stated. According to the company, April, “saw a significant decrease of 52 percent when compared with April 2019, due to additional measures introduced such as the lockdown of the parish of St Catherine, which started on April 15.”
“The end of this confinement on May 1, was immediately followed by an increase in traffic on the motorway, as the decline fell to 34.2 percent when compared to May 2019. The trend being observed thus far for June 2020 is down 20 percent compared to the previous year,” the statement continued to say. The company estimates that the overall decline for the first semester of 2020 will be close to 20 percent.
“It is to be noted that the initial forecasts for 2020 showed traffic growth of around 1 percent compared to 2019 where the number of transactions were 24.2 million (66,223 vehicles per day)”, the statement concluded.
The company’s stock is listed on the Jamaica Stock Exchange and closed trading on Tuesday at $1.33 on the Main Market, down from the IPO price of $1.41.

QWI recovers 26% of lost value

QWI Investments‘ net asset value (NAV) per share surpassed the $1 mark again in hitting $1.01 per share at the close of the markets on Thursday. The NAV is up 26 percent from the lows reached in March.
The share price tumbled over the past month with the fall in the overall market, in sympathy with the fall in the net asset value per share to a low of 80 cents on March 20 but recovered some lost ground to close on April 3, at 93 cents per share. The stock traded on the Jamaica Stock Exchange as low as 63 cents on March 10 with that price proving to be a bottom so far. The price moved upwards to close on Thursday at 83 cents for a rise of almost 32 percent since the low in March.
The Company’s investment portfolio is invested in stocks that are listed on the Jamaica Stock Exchange, USA stock exchanges, with a few stocks that are listed on the Trinidad and Tobago Stock Exchange.
The local stock market has seen a V-shaped recovery over the past three weeks, and if this continues into the fourth week, it could result in more gains in the NAV for the Company. The stock is listed on the Main Market of the Jamaica Stock Exchange.

Sweet River delisted from Junior Market

Sweet River Abattoir and Supplies became the first Junior Market company to have its shares delisted from the Junior Market of the Jamaica Stock Exchange.
The delisting is effective on Monday, February 10, 2020. According to the Jamaica Stock Exchange, “the delisting is in accordance with Junior Market Rule 505 (14) (a) (i) and the Company’s failure to remedy Board Level and financial requirements breaches.
Sweet River was listed in2014 and the shares were undersubscribed, leaving the company short of critical working capital to function properly, as it embarked on building out a new abattoir. The targeted in the IPO was to raise $180 million from the sale of 46.6 million shares to the public, but subscribers only applied for approximately 30.6 million shares amounting to $118 million. Recently, the company’s land and buildings were auctioned off and acquired by the purchaser for far less than the more than $300 million they are recorded on the books.
Sweat River ran up losses of $124 million up to June 2019, according to the last interim report the company released to the JSE and had a net worth of just $19 million.

MPC Clean Energy hits $275

MPC Caribbean Clean Energy (MPCL) stock traded at a record $275 on the Jamaica Stock Exchange on Monday as investors position to take advantage of a rights issue of 22,848,320 class B shares to be offered by the company.
The listed shares were priced at J$130 or US$1 when it came to the market in late 2018. The proposed new shares will be by way of a renounceable issue at J$140 to Jamaican shareholders and US$1 per share for shareholders in Trinidad and Tobago with a record date of November 8 as the Company seeks to raise the equivalent of US$22,848,320 from its shareholders.
The company went to the market in November 2018 to sell up to 50 million shares but the take up fell well short with the capital with just 11.25 million units with Jamaican taking up over 77 percent of the issue and Caribbean Clean Energy Feeder Ltd taking up 18.4 percent.
MPCL has 34.4 percent interest in the Paradise Park project that comprises a 50 MWP solar PV plant in Westmoreland in Jamaica that comprises a total investment of approximately US$64 million.
The second seed asset Tilawind is a 21 MW onshore wind farm based in Costa Rica in which MPC effectively holds 50 percent with the other half owned by ANSA McAL Group a Trinidad and Tobago group the total investment in that operation is approximately US$50 million. The wind park has been in operation since March 2015.
According to the company, a further 14 projects have been prioritized and form the indicative deal pipeline for the Investment Company. These require a total investment estimated at US$499 million to deliver up to 314 MW of new renewable energy capacity. The listed company invests in MPC Caribbean Clean Energy LLC who in turn invest directly the operating projects.
The company posted earnings for the nine months to September that reverses the positives number in the June Quarter. The results released are confusing, lacks transparency and will not help the company in raising the desired capital.
According to management, they have investments in two power-generating operations, with both in operation for the September quarter and generated share in profits of associated companies of $56,788. With just one-quarter of operation before from one location, they enjoyed a share in the profit of associate of $145 million in that quarter. The management report states that production at the Costa Rican operation generated 9.4 percent more energy than in the prior year. The numbers just do not seem to add up and management did not provide an explanation as to the reason why in their quarterly report. While the company is reporting total share of profit of $205,858 and a loss of $45,749 for the nine months period, the results from operations look vastly worse. The company reported a loss of $109,523 for the September quarter but advertising cost of $87,020 was the major cause of the big loss.
Regardless of what has been achieved to date, the performance is well off from the projections in the prospectus with a projected income of US$1.39 million and profit of $1.25 million for 2019 and projected revenues of US$2.94 million in 2020 with a profit of US$2.76 million.

$45 for Barita Investments rights

Barita Investments headquarters

Barita Investments will offer 116,845,955 ordinary shares to its ordinary stockholders by way of a renounceable rights issue of 11 shares for each 100 own as of August 20.
The exercise price will be $45 per share with the last date for renunciation will be September 10. Shareholders will have up to September 15, to accept the amount of their offer but can apply for additional shares from amounts not taken up by allottees, up to September 20.
The current offer is the second rights issue to purchase additional shares in the company, in less than a year. The stock traded on the Jamaica Stock Exchange on Friday to close at $91.50, for a rise of 72 percent for the year to date. but it has gained 862 percent in the last twelve months, not including gains from the issue of rights in March.