Sagicor Financial raises US$320m
JP Morgan and Scotiabank, the joint book runners for the Bond, successfully completed the transaction on behalf of Sagicor. In a recent press release, Scotiabank VP, Dylan Coke, stated, “It is important to note that not only was the Bond very successful overall, there was a robust demand for it within the Region.” He added that approximately a third of the Bond’s takers were Caribbean investors.
Rating agencies Standard & Poor’s and Fitch, have both given the Bond issue a ‘B’ rating. This rating has been capped in line with the sovereign rating for Barbados.
Sagicor a Barbados based Life Insurance company is a provider of financial services in the Caribbean and 0perating in 22 countries, including the USA and Latin America, Sagicor has total assets of US $6.2 billion and $774 million in capital. The Sagicor Group offers a wide range of products and services including life insurance, annuities and group and individual health, and has an insured base in the region of two (2) million. Sagicor is a publicly traded company with over 37,000 Shareholders, and is listed on the stock exchanges of Barbados, Trinidad and Tobago and London.
The company is the largest shareholder in Jamaica’s Sagicor Group which includes banking, life and health insurance and fund management.
Sagicor Financial recorded net income from continuing operations of US$37.5 million for the first six months ended June, 2015, compared to the prior year result of US$33.2 million, an increase of 13 percent. Net income from continuing operations attributable to shareholders was US$21.8 million, compared to the prior year of US$19.3 million, an increase of 13 percent. Earnings per common share from continuing operations, was 7.0 US cents compared to the prior year result of6.2 UScents.
JMMB managed funds jump 51%
JMMB Group enjoyed a big jump in the total amount of managed funds being handled by the group in addition to the $223 billion that the group has on its balance sheet.
Off balance sheet funds jumped 51.2 percent to $58.8 billion, compared to J$38.9 billion for the prior year and is consistent with the Group’s strategy of moving assets off balance sheet as well as the dictates of the International Monetary Fund and the country’s Financial Securities commission. JMMB would be using the slate of Unit Trust as vehicles for shifting funds from on balance sheet to off balance sheet.
This trend is not peculiar to JMMB as other institutions have been on this path for some time. Effective October last year the Financial Services Commission, set a minimum amount for a retail repo. Currently the level is J$500,000 and US$5,000 and is scheduled to be increased on a phased basis to $1 million and US$10,000 by the end of December, this year.
JMMB stated in it release with the quarterly results to June that “the Group is now poised to expand its range of services in the Dominican Republic with the approval of its money market mutual funds”.
Gleaner’s media assets valued at $1.16
The Gleaner’s media assets to be transferred to RJR in the recently announced merger, is now valued at $1.16 per shares based on RJR’s closing stock price on Monday of $4. The Gleaner’s stock traded at $1.89 on Monday.
The proposed merger of the media arm of the Gleaner Company with Radio Jamaica (RJR) will see the Gleaner’s shareholders being compensated for the media business that RJR is acquiring at the rate of 1 RJR share for each Gleaner share. The initial information led to the interpretation that the Gleaner shareholders would be getting 1.2 billion of the RJR shares while the RJR shareholders would remain with just over 350 million shares. According to information on the Gleaner’s website, RJR will increase the issued shares to 2.4 billion units that will then be shared equally between the shareholders of both companies. RJR will do a combination of a share split and issues of new shares of which 1.2 billion of the shares will be given to Gleaner shareholders as the payment for the Gleaner Company (Media) Limited subsidiary.
RJR currently has 350.154 million shares issued to get the numbers to 1.2 billion for the company’s shareholders would translate to a split of roughly 3.43 to each existing share.
In addition to the value of the media assets, the Gleaner shareholders will retain shares in the new company that will retain the non-media assets. IC Insider.com pieced together information that suggests that these assets which include the current headquarters of the Gleaner, could be valued around $2 billion or roughly $1.70 per share.
$6.95 much for Sagicor X fund rights
The stock closed at $8.50 on the Jamaica Stock Exchange on Friday August 7th with 34,000 shares changing hands. The closing date for the issue is September 2, 2015, with the opening on August 19. The gross funds expected to be raised is J$4,157,036,165 and are intended to be used to assist Fund to acquire a convention hotel in Orlando, Florida, which is affiliated with a major hotel chain. The rights issue document states that the “resort has 742 rooms with over 62,800 square feet of meeting and convention space. It is located in Orlando at the entrance to the Universal Theme Park. The balance of the purchase price is expected to be funded by way of a loan”.
Sagicor Pooled Diversified Investment Fund and other connected Sagicor entities which together own approximately 80% of the stock units of the Company have stated that they intend to take up all their Rights. Shareholders who do not take up any of their Rights will be diluted by 28.57% assuming that all the Rights Shares are taken up and the Rights Issue is not up-sized.
The Fund reserves the right, in the event of over-subscription for shares from the Un-allocated Pool to upsize the Rights Issue by releasing up to maximum of 149,533,675 shares into the Un-allocated Pool to meet demand from its shareholders. X Fund does not intend to up-size the Rights Issue beyond the aforesaid maximum. If the Rights Issue is up-sized to the maximum the issued share capital of the Company would be increased by 50% over the current amount of shares in issue of 1,495,336,750 stock units and a shareholder who did not take up any of his Rights Shares would be diluted by 33⅓%.
Buoyed by an abnormal first quarter results, earnings ended at 46 cents per share to June versus 27 cents for the six months to June last year. Unfortunately, the rights issue document fails to indicate what income and profit is expected from the property being acquired nor what the forecast is for the rest of 2015 for the overall operations, to allow investors an insight into what is to be expected.
The stock which is overvalued is unlikely to enjoy the generation of profits in the short run from ongoing operations to justify the price being asked. In a market where few stocks are selling at a premium to net asset value, it is difficult to see why rational investors would want to pay a premium to the market for such an investment and suffer later the prospects of disappointing earnings that will justify the price either. One only has to look at Proven Investments shares, where investors gobbled up the stock at inflated prices as high as 22 US cents only to see few buyers for it now at 18 US cents to realise that hype will often will out in the short run but reality sets in after.
Investors should know what they are buying but that is not clear from the offer document but Sagicor Group selling at a PE of 6-7 times this year’s earnings with a book value of $12.17 versus last traded price of $13 is a far better buy. The issue is taking place in a bull market so who knows what will happen?
Big new income stream for JSE
The Jamaica Stock Exchange is to receive another big shot in the arm, with a totally new source of income flowing from the decision of the Financial Services Commission that all retail repurchase agreements, must migrate to the Jamaica Central Securities Depository Trustees Services (JCSD) effective 31st of August.The total book of repurchase agreements amounts to approximately $500 billion as of March this year, the amount to be transferred may be lower has the FSC new regulations require that the minimum amount for a retail repo that is now J$500,000 and US$5,000 and is scheduled to be increased on a phased basis to $1 million and US$10,000 by December 31, this year.
Based on the fee structure the JCSD should earn around $50 million a year in fees from the securities supporting the repos. There will also be fees to be paid for each repo transaction, such transactions will be evidenced by an account held in the purchasers name at the JCSD. According to Robin Levy, Manager of the JCSD they will be trustees for the assets that back the repos, as such the dealers will no longer hold them directly in their name thus legally separating the ownership from the repo issuer during the duration of the repo agreement.
The stock exchange group will earn an annual fee for each dealer who is registered to deal in Repo securities by the JCSD. The fee structure listed on the Jamaica Stock Exchange has the annual fee at $100,000 with 20 dealers in the country the income from this source will be small only around $2 million per year if all of them sign on. The repo registration fee is likely to be the big income generator as each transaction will incur a fee based on its value.
The JSE enjoyed a very good first quarter this year with huge increase in income, a fare bit coming from one off type transactions but in addition increased trading activities flowing from increase trading levels on the JSE this year contributed to improved profits for the year to date. The JSE stock last traded at $6.23 on the JSE on Friday to gain over 300 percent for the year to date, but with earnings per share now looking like heading towards $1.50 level there is room for another surge forward for the stock. The company’s 2015 second quarter numbers should be out this week based on the released of the June 2014 quarter results on the July 23, last year.
Tax Inflows up cost down for GOJ
Expenditure is down by $3.76 billion, with reduced spend on capital expenditure accounting for $2.1 billion, interest $571 million and other programmed expenditure of $1 billion. Programmed expenditure savings, may include amounts budgeted for wage increases but not yet paid and may be purely a timing issue than a real savings.
Government borrowed $13 billion less than forecast, paid out $1.7 billion more than budgeted and that should result in a reduction in interest cost going forward. Overall, the Fiscal deficit for the two month period, is $5 less that budgeted and pushed the overall deficit to $11.5 billion down from $16.5 billion planned.The wage bill is $27 billion for the two months. A settlement of 5 percent for the year would add $8 billion to the cost, but government would get taxes direct and indirect form its payment. The longer the parties take to settle the less costly it will be for the government, or the easier it will become to pay a higher amount, but there is a matter of year two to contend with as well.
595 phone numbers switched
Cable & Wireless (C&W) is the clear winner in the number portability so far a 91 percent switching to Cable & Wireless according to data provided by C&W CEO Gary Sinclair on Thursday afternoon.
With only a few days since the sector started to allow the swapping of numbers in response to an IC Insider query Sinclair said “the numbers are overwhelmingly in our favour. Latest count 543 ported to us from Digicel and 52 ported out to Digicel from us”. Up to press time, Digicel representative who was contacted has not yet submitted their numbers.
The changes although more than the 200 the Minister responsible for telecommunication disclosed earlier this week, represent only a small fraction of the total number of more than 2 million phone customers in the island. Number portability has been long in coming and was promised to be in effect from last year but was put back based on request from Cable & Wireless.
While the change will provide telecom users with more flexibility it could be problems for some users in determining which numbers belong to which carrier with different pricing structure in place by the two dominant carriers.
Trading picked up on junior market
At the close of the market, there were 2 stocks with bids higher than their last selling prices, 2 with lower offers and 5 securities closing with no bids to buy and 6 that had no stocks being offered for sale.
Stocks trading in the junior market are, Access Financial lost 35 cents to close at $15.50 while trading 100 shares, AMG Packaging ending with 1,233 shares changing hands to close unchanged at $3.16, Caribbean Flavours closed with16,581 shares trading at $2.30, while gaining 21 cents. Caribbean Producers with 76,978 shares trading, ended lower by 12 cents to $2.88, Consolidated Bakeries finishing trading with 33,200 shares, the price inched up 1 cent to a 52 weeks’ high of $1.18 at the end.

Dolphin Cove closed trading with 11,167 shares at a new high of $12 after gaining 50 cents, General Accident Insurance concluded trading with 10,590 shares changing hands to close 11 cents higher at $1.67. Jamaican Teas closed trading with 47,930 shares and gained 48 cents for a 52 weeks’ high of $4. Lasco Distributors traded 18,564 shares, 3 cents lower at $1.65, Lasco Financial Services in trading with 432,000 units, gained 5 cents to end at $1.95, Lasco Manufacturing in trading 14,349 shares, ended 8 cents higher at $1.40, but closed with an offer to sell at $1.37 and Paramount Trading ended with 123,959 shares changing hands with an increase of 11 cents to $5.11.








