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.

8 Junior Market stocks that should split

Stock splits and bonuses are two tools companies have in their tool kit to deliver value to their shareholders if used appropriately. Interestingly while the Scotia Group has used these tools repeatedly for the past several decades, Directors at NCB Group have frowned on the practice seeing no value to the group.
The critical point is that directors run a company for the benefit of shareholders not solely for the benefit of the company. Shareholders are kings and queens of the companies they own shares in and directors should not lose sight of that factor.
Some companies have split their stocks and investors love the results of these splits as they see where the values have mostly gone up, before and after the split. Some companies like the Lasco group have handled the split badly by overdoing it and creating too much liquidity that kills the value of the stock for years. The split is also an indication that a company’s profit is likely to grow short term which would cause the stock to struggle as the price gets more expensive without the split.
A look at the Junior Market shows 27 of the 45 companies listed trading below four dollars, with seven priced at more than twice $4. The price differential between the two groups suggests that a stock split is warranted if management is serious about the minority shareholders as well as creating the liquidity in the stock to maximize publicity from listing.
The seven companies are Access Financial, with only 270 million issued shares, with a stock split well overdue that will result in improved liquidity and build interest in it. Cargo Handlers at $11.50 has limited liquidity and needs a split to build back excitement into trading it. Dolphin Cove is the third one with the price at $15.25 and recently much higher, but the majority owner may not be so inclined to go the route of a split, but one never knows as local shareholders could well prevail on them to do so. Fosrich now trading around $27, is proposing a 10 to 1 stock split at the Annual General Meeting (AGM) this month. Honey Bun trading at $8.50 has the potential to move up to the $20 region later this year or early in 2023 and warrants a second split, having done one a few years ago.

Fosrich to vote on a 10 to 1 stock split at the coming AGM this month.

Back in 2020, management of ISP Finance had indicated that a split was on the cards, but even with the stock at more than $22 and highly illiquid with less than 3 percent of shares freely available for regular trading action to split the stock is nowhere in sight. Main Event is just at the borderline at $8.20 so a split may be in the future when it has fully recovered from the loss in business, with the advent of the covid-19 pandemic. There are 300 million shares issued with the top 10 holdings accounting for 93.5 percent. Stationery and Offer Supplies hinted at a past AGM that they had looked at it but felt the time was not right. The time may well be very close with the price trading recently around the $12 region with record profits expected this year a split could well happen with the AGM coming up later this year. The company has only 250 million shares issued of which 90 percent are held by the Top10 shareholders. Medical Disposables trades at $7-8 region, with the price not yelling for a split just yet but if management is smart they would split the stock with only 263 million shares issued, a two for one basis as rising profit this fiscal year will probably put the price to around $5 after such a split when all is said and done.

Sagicor snaps up another Alliance company

Sagicor Investments signs a definitive agreement to purchase the securities dealer book of business of Alliance Investment Management, a release to the Jamaica Stock Exchange by Sagicor Group stated.
Sagicor Group & PanJam hit new closing highs.Sagicor Group subsidiary, Sagicor Investments entered into a definitive agreement for the purchase of the securities dealer book of business of Alliance Investment Management. The purchase, which is subject to due diligence, is expected to be completed over the next two months. Sagicor Group President and CEO, Christopher Zacca stated that “this latest acquisition of the AIML book of business will further expand SIJL’s client base and allow us to offer the best possible service and investment returns to our new investment clients.”
This news comes on the heels of the Sagicor Group purchase of 100% of the shares in Alliance Financial Services and would have been encouraged by the reputational damage emanating from the debacle with their principals and the country’s central bank.

MPC Caribbean’s awful reporting

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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.

Gooden buys 10% of Elite Diagnostic

Reports reaching is the chairman of Elite Diagnostic acquired more than 35 million shares on Friday, with the majority coming from Excel Investments, that owned the largest block of 130 million or 36.9 percent of issued shares.
The trade means that Gooden, who previously owned a mere 242,230 or a fraction of one percent, will now own around 10 percent of the company, the third largest shareholder behind Excel with 85,231,108 units and NCB Capital Market with 66 million shares or 18 percent.
Gooden, a very knowledgeable person in the investment field, also heads NCB Capital Market and controls the largest block of shares in the company of 28 percent, compared to Excel with 27 percent.
The Elite Diagnostic trade was the largest block of shares trading on Friday, accounting for 76.5 percent of all Junior Market trades on that day, but trading ended with 85.2 million units on the offer to sell at $2.57 and 30 million on the bid to buy at $2.50. gathers that the amount on offer is not up for sale and should have been cancelled before the market closed.
The purchase is a strong endorsement for the stock and the company’s future that ended as the number one choice in this weeks’ ICTOP10 Junior Market listing.
The results for the second quarter to December stated, “continued spread of the Coronavirus disease (COVID-19) continued to negatively impact the operations of the company. Revenue continues to be impacted as social distancing protocols reduce the number of patients booked per day.”

Elite CEO Warren Chung & shareholder in Excel Investments chatting with a shareholder at Elite’s 2018 AGM. understands that the restriction placed for curfews restricted business as the offices could not be opened late, thus affecting business.
Gooden most likely would have seen the prolonged trend of year over year and quarter over quarter growth in revenues and the strong positive cash flow the company continues to generate and prospects for more expansion of the business as solid credentials for future earnings and profit.
For the six months to December last year, the company generated a profit of $7 million but had positive cash inflows of $83 million, with revenues rising 22 percent from $236 million to $288 million with eth December quarter rising 16.6 percent from $128 million to $148 million. Profit in the second quarter increased from $3 million in 2020 to $7.3 million. Importantly gross profit margin is an astounding and attractive 66 percent.


JFP lists on Monday

Trading of shares that were recently offered to the public in JFP Limited, will commence on Monday on the Junior Market of the Jamaica Stock Exchange and bring the total listings on the market to 44 and will move to 45 on Tuesday after the listing of Edufocal.
A total of 280 million ordinary shares were offered to the public with the issuing opening on February 21 and closed the offer being oversubscribed.

JFP production

Employee Reserve Pool applicants received 100 percent of their application with the balance not applied for was made available for Key Partner Reserve Pool who received all they applied for. GK Investments Reserve Pool applicants got all shares applied for, applicants from the General Public got 12,500 shares plus approximately 22.8 percent of the excess shares applied for above the Base Allotment. The oversubscription should provide a bounce for the stock when it opens.

Edufocal lists on Tuesday

Trading of shares in EduFocal that offered 129,689,219 ordinary shares to the public on March 3, will commence on Tuesday as the company shares will be listed on the Jamaica Stock Exchange Junior Market on that day and will bring the total listings on the market to 45.
The offer was oversubscribed, with Key Strategic Partners in this reserved pool will receive all their predetermined amount.
Applicants who applied for more than their predetermined amount will receive a pro-rata allocation of approximately 59.67 percent of the excess shares for which they applied, with any excess transferred to the General Public Pool.
All applicants from the General Public received 10,000 shares and approximately 16.57 percent of the excess shares.
Although the offer was handily oversubscribed, gathers there were applications that came in after the close just after the issue opened and closed minutes after opening so there is added demand that should provide a bounce for the stock.

Fesco raised $1 billion for expansion

Future Energy Source Company (FESCO), secured debt financing for One Billion Dollars, the company informed the Jamaica Stock Exchange to be used for general corporate purposes that support FESCO’s growth objectives.
The facility is a five years corporate bond to be listed on the Private Market of the Jamaica Stock Exchange, with NCB Capital Markets acting as Arranger. The proceeds will be utilized including working capital, operating expenses and capital expenditure related to the expansion of its dealership network and service station footprint and funding the entry into the consumer cooking gas and LPG market.
Fesco recently traded at an all-time high of $8.49 but closed on Wednesday at $5.28 after listing in April 2021 at just 80 cents per share. The company reported revenues of $8 billion for the nine months to December last year, almost doubling the $4.45 billion in the corresponding 2020 period and generating a profit of $171 million versus $92 million before tax.
Included in the expansion plans is the equipping large industrial corporate customers with digitally equipped tanks that will dispense fuel based on individual cards for each driver that will easily track usage for each vehicle as well as the acquisition of cooking gas cylinders in preparation for starting delivery of that service. According to CEO Jeremy Barnes, the plan is to have 22 branded stations within three years.
The company currently has 16 Fesco branded service stations in operation, with the newest one on Beechwood Avenue in Kingston the only one owned and operated by them.

Fontana raise J$500 million for expansion

Junior Market listed Fontana raised $500 Million of debt capital by way of a private placement of bonds to support the company’s continued growth, which includes plans to develop a warehouse and distribution centre in Kingston and a new store Portmore, the company disclosed.

Artist impression of the Portmore store.

Scotia Investments acted as Lead Arranger and Broker for the company that reported its most successful year in 2021, with revenues climbing 14.2 percent to $5.2 billion and profit of $512 million, up a robust 85 percent from $277 million in 2020. The company reported a rise of 17 percent in revenues to $1.3 billion for the September 2021 quarter over that of 2020 and profit after tax rising 35 percent to $61 million. The Portmore expansion, which was telegraphed to investors in late 2018 when it went public, is expected to add to growth in revenues and profit and provide investors with an investment vehicle that seems set to deliver good growth prospects for the future.
“The transaction was executed at a time when BOJ policy rates were increased for the first time in 13 years. The Ministry of Finance and Planning had also recently reopened Government of Jamaica long-term bonds that were taken up at yields that indicated that the long-term rates in the Jamaican Dollar debt space were increasing. Stanley Thompson, Senior Manager Capital Markets said, “In light of the changing market conditions, we pursued a fixed to variable rate bond structure. This financing strategy provided Fontana with the most competitive rate in the short term with the potential for a lower rate in the future if market rates reduce in the longer term.”
Raymond Therrien, COO at Fontana, noted that “Fontana is firmly capitalized for our expansion plans for Portmore in 2022 and continued growth in the various markets we serve across Jamaica.  We continue to explore acquisition opportunities as we grow the Fontana brand. Timing and certainty of execution were important to us. When we approved this transaction, our expectation was to have it closed before the calendar year end.”
Fontana owns and operates a chain of Pharmacies in Kingston, Montego Bay, Mandeville and Och Rios.



VM Investments buying Mutual funds

VM Investments (VMIL) has entered into an agreement with Republic Bank (Barbados) to acquire all the ordinary shares in Republic Funds (Barbados) Incorporated, the owner and operator of the Republic Bank Barbados family of Mutual Funds.

VM Investment to acquire Mutual funds.

The funds comprise  Republic Property, Income and Capital Growth Funds. The transaction completion is subject to the approval of regulators in Barbados and Jamaica. “VMIL is in an unprecedented growth mode, and we continue to be keen on strategically expanding our footprint throughout the region,” said Rezworth Burchenson, CEO of VMIL.

“VMIL was selected as the preferred bidder following rigorous pre-defined criteria,” VMIL stated. The required regulatory approval process is expected to be completed within six to nine months but could be extended depending on various factors. gathers that the total assets under management by the fund could be in the region of J$1.55 billion.
VMIL, a publicly listed company on the Jamaica Stock Exchange since 2017, reported a 69 percent increase in nine months profit to $612 million over the same period in 2020. Profit after tax for the September quarter jumped 82 percent to $348 million, over 2020 out turn of $191 million.
Growth in profits flowed from a 33 percent surge in revenue for the nine months to $1.77 billion, from $1.3 billion in 2020 and a 33 percent increase in the September quarter from $615 million to $818 million. The “performance was primarily driven by the improved investment climate which contributed to significant growth in gains from investment activities which increased by $520 million (270.71 percent) compared with the same period in 2020. These activities generated revenues of $712.17 million for the period,” VMIL informed investors in the release of the results.
Shareholders’ equity increased by $668 million from $3.9 billion at the end of September 2020 to $4.56 billion at the end of  September and net book value per share ended at $3.04, up from $2.60 in 2020.
The company reported earnings per share of 41 cents for the nine months and 23 cents for the quarter and could hit 70 cents for the full year with a low PE of 8.6, well below the average for the Main Market of 15.4 at the last traded price of $6.10.  the stock is one of TOP10 stocks.