New head at BCW Capital

Gerald Wight is now the chief operating officer of BCW Group Limited, replacing Rohan Barnett, chairman Aubyn Hill disclosed to IC Insider.

“Management is constantly looking at the reality on the ground and make changes to fit where needed.” Hill stated in confirming the change. “We have to get more efficient, which meant cost cutting and more effective management. We made certain changes and Gerry Wright is now heads the company.” Hill said.

Barnett has opted to return to the USA, Hill indicated, where he previously worked at the Financial Security Commission (FSC) between 2009 to 2012 prior to joining BCW. When contacted, Barnet confirmed that he was no longer head and that he was no longer a director, but was definitely still an investor and he expected the company will continue to do well.

Chairman Hill says the company has strong shareholders who are solidly behind the company.

BCW Capital was formed in December 2011 and opened to the public in July 2012 after receiving a Securities Dealer License.  Located in Kingston, Jamaica, the company’s objective is that of being a boutique Securities Dealer based in Jamaica, providing an innovative product offering for Institutional and High Net Worth clients in Jamaica and the Caribbean.

 BCW Capital has been seeded with capital from Jamaica Broilers Group Limited, Wisynco Group Limited and James Goren.

CWJ: Making headway but slowly

Buying market share can be a costly and take years. Cable & Wireless (C&W) has found this this out the hard way. Once the only telecom operator in the Jamaican market, they have seen their dominance fade sharply to Digicel, the relatively new comer to the scene and it has spent hundreds of millions of dollars trying to win back market share.

Once highly profitable, C&W has suffered years of losses as they changed one CEO after another in search of the one that could stabilize and then grow the business. So far investors have not seen any returns for the patience. The early months of the last fiscal year looked as if it could be the turning point as the company aggressively went after new customers with a bold move of slashing mobile rates from $9 on prepaid calls to $2.99 per minute, just ahead of the Office of Utilities Regulation (OUR) forcing a cut of interconnection rates from $12 per minute to $5. At the end of the fiscal year to March, the company reported some success in boosting mobile revenues by 14 percent and mobile customers by 16 percent, but still reported a $5 billion loss, inclusive of redundancy payment to staff flowing from outsourcing of the maintenance area of its business as a part of a cost cutting strategy.

In the quarterly report for June this year, C&W reports continued growth in the mobile business but not for landline where it suffers from contraction, some of it, due to customers opting for mobile alone now that the rates are low.

cable-and-wireless-worldwide600x250C&W fight is on two fronts, one is cost cutting and the other is raising revenues. So far they seem to be making headways on both, albeit not fast enough. Revenues are down for the 2013 fiscal year partly as a result of reduction input payments for call termination which fell by $1.5 billion while revenues fell by $1.3 billion. The company also absorbed the additional telephone tax until March this year, estimated by IC Insider at approximately half a billion dollars.

June quarter | According to the company, active mobile subscribers are up 22 percent in the latest quarter and mobile revenues by 10 percent compared with June 2012 quarter. This revenue growth is remarkable when considered against the back drop of rates that were much higher for two months of the 2012 period and with last year’s June report showing a 21 percent jump in revenues. While growth in number of active subscribers is important as it will grow revenues, boosting the profit margin can be just as effective and may even be less costly. Here C&W is hoping that the reduction in termination rates will see most of its customers spending around the same as before thus boosting net income. The numbers from profit results since last year suggest that is happening, excluding land lines, but that could well be people using cellular as the cost differential is not all that great any more.

Legacy carriers | To be fair to C&W, legacy carriers worldwide have suffered severely from competition as the market has changed dramatically. Not only is mobile big, but the Internet has had a major impact on cross border communication, robbing telecom companies of high profit margin revenues.

The company’s focus on increased subscribers contributed to a 60 percent rise in acquisition cost for free hand sets. It’s costly but seems to be delivering results in growing the mobile business, which it badly needs since the land line business is mature.

Quarterly numbers | In spite of the much touted progress made in the mobile segment, results for the first fiscal quarter have not shown much of the benefits. Revenues are down from $4.8 billion to $4.35 billion some of which is due to the interconnection rate reduction as well as a cut in rates for prepaid customers ahead of the official start of the new termination rate from $5 to $1.10.

cable-and-wireless280x150Cost is up in some areas and the company speaks of a 25 percent jump in material spend to continuously improve the network. What is known is that administrative cost is up sharply both for the quarter as well as for the fiscal year which ended in March. The cost in this area is up to $1.77 billion from $1.5 billion in the last year June quarter and $5.8 billion for the full year. Labour cost is down due to reduction in staffing mid-way in the June quarter, so there is more to come for this item. The sudden jump in administrative and cost suggest that it is not permanent. In support of this, a look at the cash flow indicates what is happening. Two items amounting to $715 million accounted for the bulk of the increase, but these will not be ongoing; a $200 million in writing down a long term loan for loss on exchange and $515 million in provisioning for site restoration due to hurricane damage.

C&W reported a loss of $827 million in the June quarter, a big increase over the $430 million lost in 2012. For revenues alone to wipe this out would require a net 20 percent increase but a combination of a revenue increase and cost reduction could do the trick. Much is hinging on the reduced termination rates to pump more of the revenues to the bottom-line. The September quarter may be very revealing in pointing the way forward.

Of course, the C&W balance sheet is not looking pretty with negative equity of $20.5 billion and loans of $32 billion due to group companies and third parties. Current liabilities is at $10 billion while current assets are at $7.5 billion — not the kind of ratio that one would want to see under normal circumstances. But then, this is not your normal company.

Related posts | $2B slide in landline revenues sinks C&WJ | C&WJ announces $2.99 prepaid rate | C&W: Less jobs, more capital spend | D&G or C&WJ: to buy or not?

T&T PEs: Better buys ahead

Friday, 6th September 2013 | The PE Ratio chart for stocks trading on the Trinidad stock market has two movements to note for the week just ended.

Trinidad Cement fell sharply during the week to below $2 but the stock has become a more attractive buy with a potential return of 567% versus 350% last week. However, based on the closing bids and offers this stock could drop some more before reversing the recent decline.

Guardian Holdings fell to $14 this week, moving the potential gain from 250% last week to 270% this week and remains an attractive buy. Elsewhere in the market, not much has changed from this past week as prices remained fairly stable.

TTSE_PE+ChartSep6Below are charts that graphically show how TTSE stocks are ranked by PE Ratio potential.

Related posts | Cement could be good for your pocket |  | Guardian ongoing profits up 29%

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JMMB share offer taken up

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Jamaica Money Market Brokers advised that the offer to purchase two set of preference shares at 7.25 percent and 7.50 percent was oversubscribed and in accordance with the provisions of the Prospectus, JMMB will allot further Preference Share to all applicants in the amount that was subscribed. All Shares applied for will be allotted to applicants out of Preference Share currently held by JMMB.

JMMB advised that the Offers closed on the last day of work week (last Friday) and is oversubscribed. JMMB is currently encountering administrative constraints in the compilation and processing of the subscription applications in order to provide the information to the Jamaica Stock Exchange by close of business September 2, 2013.

Related posts | JMMB big bump in profits | Buy Rated stock list grows | JMMB to raise $750M |

D&G poor 4th quarter

Desnoes & Geddes, brewers of the world renown Red Stripe Beer, reported flat profits of $1.2 billion for the twelve months to June this year. Redundancy payments of $311 million, of which $160 million was in the last quarter, and an adjustment of $88 million relating to taxation booked in 2012, bit into net profits.

June quarter results came in at $161 million compared to $472 million in the same quarter last year. The poor last quarter results is not indicative of future earnings. D&G had telegraphed the lackluster numbers when it declared a dividend in June of only 10 cents per share, which brought the total payment to 30 cents for the year.

Sales for the fourth quarter was $2.682 billion, 5 percent lower than the similar period in 2012 and for the full year, $10.369 billion or 6 percent below last year’s figure. A change from exporting brewed product to the USA market in the latter part of the 2012 financial year to licensing a USA based brewery to produce and market the product, resulted in a reduction in export sales from $3.4 billion to $1.93 billion. Domestic sales on the other hand grew by 13 percent in the quarter and 11 percent for the full year.

RedstripebottleD&G100x150The company claimed that improved domestic performance was buoyed by new innovations in both the brewed portfolio and a stronger performing spirits portfolio. Cost of sales for the fourth quarter at $1.666 billion and full year of $6.118 billion decreased by 6 percent and 12 percent, respectively, versus the previous year. This would be partly due to the shift of production for the export US market. The shift in export strategy resulted in a big boost to profit in the export segment, which doubled from $405 million to $834 million but the domestic segment profit was flat at $2.49 billion. The domestic segment picked up more overhead cost than before when they were shared with the larger production level. D&G managed to improve the gross profit margin from 37 percent in 2012 to 40 percent in 2013 and gross profit after marketing cost to 32 percent from 26 percent excluding special consumption tax.

Profit before tax increased by 28.6 percent to reach $1.87 billion when compared to last year due to growth in domestic volumes and improved margin, dividend income which jumped by from $60 million to $184 million and royalties that moved from $342 million to $556 million.

Despite the higher pre-tax profit, result after tax was negatively impacted by a higher overall tax rate compared to 2012 when 25 percent was used compared with 30 percent in this year’s results.

CelebrationBrandsD&G150X83Regarding marketing, selling and administrative expenses, the company stated, “Marketing expenses of $190 million for the fourth quarter decreased by $42 million or 18 percent compared to last year mainly as a result of our new export model where expenditure to promote our US exports is provided by the licensee in America. General, selling and administrative expenses for the quarter were $29m (8 percent) above last year. The company’s joint venture with partner Pepsi Cola Jamaica, Celebrations Brands Ltd, began successful operations in most distribution hubs previously operated by Red Stripe and contributed a small profit to D&G’s results.”

The results helped boost cash from $973 million to $1.7 billion after dividend payment of $843 million and $880 million,  investment in fixed assets and the joint venture company and growth of $500 million in receivables offset by current liabilities that rose by $500 million as well. D&G ended the period with equity capital of more than $8 billion inclusive of deferred taxation.

Insider call | Keep an eye on this one for future developments.

Related posts | Major management changes at D&G | D&G will pay 10¢ dividend | Profits on the improve for D&G | D&G or C&WJ: to buy or not?

CPJ’s big jump in profits

With net profit for the last quarter of US$1.4 million from revenues of US$19.2 million, Caribbean Producers Jamaica (CPJ)‘s June profit surpassed the previous quarter’s results by 188 percent. As a result, Earnings per Stock increased to US.13 cents compared to US.4 cents the previous year.

Management stated their release that fourth quarter performed ahead of the company’s expectations in terms of projected sales thereby contributing to the significant increase in net profit. Revenue was up 9 percent in the quarter from US$17.7 million in the corresponding period last year. This, management said, “was the result of increased production and efficiency of the manufacturing division, the consumer support of CPJ Market Kingston and Cru Bar. In addition, the hotel sector remained buoyant during the quarter as high occupancies were enjoyed throughout the period notwithstanding the closure of major hotel properties.” The growth in revenues of 9 percent for the quarter is in contrast with of just 2.7 percent for the year.

The company reported achieving a 15 percent increase on Gross Operating Profit of US$5.4 million, a significant improvement when compared to the corresponding period last year of US$4.6 million representing 28 percent and 26.4 percent gross profit margins respectively for the last quarter.

CPJWineBottlesFreeDigi150x150In spite of the big jump in the quarterly profit, net profit for year increased by just 5 percent to US$3.2 million compared to US$3.04 million at June 2012.  Earnings per stock unit moved to USD 0.29 cents. The profit was realised from revenues for the year of US$69.4 million versus US$67.5 million over the corresponding period last year, an increase of US$1.9 million or 2.7 percent. For the year, gross profit increased from US$17.4 million to US$19.9 million as operating cost fell from US$50 million to US$49.5 million. Regardless, it is the results of the June quarter that is of most import as it points the way forward for profits.

CPJ reports its results in US dollars, as such exchange rate changes are not readily visible but some of the increased profits in the quarter would be due to lower cost of some local inputs making the result for the quarter larger than normal. That may well be true but sales in the period actually rose in real terms thus giving a good glimpse of possibly strong growth in the profits for 2014. The number suggests that the 2014 earnings per share should be in US$0.50 range as they ramp up sales form the manufacturing operations.

Selling and administrative expenses increased by 16 percent for the year to US$13.47 million from US$11.6 million and interest cost rose nearly 17 percent to US$1.8 million. The depreciation charge of US$1.5 million increased by US$469 thousand or 42 percent compared to US$1.1 million in the corresponding period in 2012 representing the capital expenditure for the manufacturing and operational assets set up this year.

Too much debt | At the end of June, shareholder’s equity stood at US$13 million but borrowings was at $24.8 billion, which is far too risky. Current assets that stand at US$32 million including US$3 million in cash is well in excess of current liabilities of $15 million, but short term loans amounts to over US$9 million. Cash flow for the past year came in at US$5 million and this should climb in the new year if the last quarter numbers are indicative of the 2o14 fiscal results.

Insider call | The company seems to be benefiting from the expansion that it undertook after the initial public offer (IPO) and the promise of strong profits that investors gleaned at the time of the offer does exist. IC Insider considers this stock as Buy Rated but is concerned about the high debt load, which is well beyond acceptable levels.

Related posts | Caribbean Producers Profit down | Debt swap for Caribbean Producers|  CPJ denies major customs breach

Image courtesy of Simon Howden/FreeDigitalPhotos.net.

TTSE: 3 major changes in PE rankings

There have been three major changes in the Trinidad stock market‘s PE Ratio chart due to price movements this week.

Trinidad Cement (TCL) gained 42 percent in the week and more than 200 percent since May. Questions may be asked as to how much further it can go but the PE ratio chart still has the TCL stock as the one with the greatest potential for growth in the market. It has more room to run before it is fully valued based on this year’s company profit performance so it’s still worth either buying or holding on to.

TTSE_PE+Aug30Neal and Massy has come down relatively sharply in price, as has Guardian Holdings. The declines have made them more attractive buys even though Guardian seem like it has further to fall before it bottoms.

Related posts | TTSE: TCL is hot | TTSE: Neal & Massy drops $2.93 | Guardian ongoing profits up 29%

Image courtesy of Jeroen Van Oostrom/FreeDigitalPhotos.net

Scotia Group moves up in spite of NDX

Profits for the nine months to July this year are up for one for the Jamaica’s largest financial institutions even as the debt exchange that the banking group engaged in during the April quarter knocked millions out of profits.

Scotia Group Jamaica reported net income of $3.06 billion for the third quarter ended July, $127 million above the previous quarter ended April and $468 million above the quarter ended July, 2012. For the nine months end to July, net profit was $8.7 billion compared to $7.95 billion for the same period last year. Earnings per share for the nine months was $2.70 compared to $2.45 for the same period last year.

Revenues | Profit flowed from operating income, comprising net interest income after impairment losses and including other revenue of $25.5 billion, an increase of $2.2 billion or 9.32 percent relative to the prior year. Overall total operating income, which is net of interest expenses and loan impairment losses amounted to $3.14 billion in the quarter, a strong 36.6 percent higher than in the similar period in 2012 and $8.6 billion year to date, 24.6 percent higher than in 2012. The year to date figure is affected by the loss picked up with the debt exchange. The instability of the Jamaican dollar made a good contribution to the group’s fortunes as they generated significant gains from this area for the year-to-date but not as much in the latest quarter.

Net interest income | Net interest income after impairment losses for the period was $16.86 billion, up $470 million or 2.87 percent when compared to the same period last year. The Group continues to report strong growth in loan and deposit volumes over the period. Loan loss expense increased by $215 million when compared with prior year, reflecting growth in the loan portfolio and the impact of continued contraction in the economy, especially on our retail customers.

scotiabanklogo150x150Other revenues | Other revenues for the nine months was $8.6 billion, up $1.7 billion or 24.6 percent when compared with prior year. This was due primarily to increased insurance revenue and fee income, gains on securities trading, as well as higher gains on our foreign currency trading and investments. Insurance premium grew to $1.9 billion in the year to date from $1.6 billion in 2012 and foreign exchange trading gains from $1 billion to $2 billion. Net fee income moved up for the same period from $3.95 billion to $4.32 billion. The gains from Foreign exchange is unlikely to continue at the pace seen to date in the next fiscal year.

Expenses | Operating expenses are up 18 percent in the July quarter over that of the similar 2012 quarter and 14.6 percent for the nine months over 2012, which are much slower than that of net revenues. While property cost was pretty subdued at 3.6 percent increase for the year to date with the quarterly figure increasing around the same level, labour cost jumped by 14.5 percent for the nine months and a big 23.8 percent for the quarter over 2012. Other operating cost, which amounted to $1.62 billion in the quarter, jumped 16.2 percent over 2012 and 19.9 percent for the nine months to July to $4.9 billion.

Loans | loans increased to $131 billion, an $8.5 billion or 7 percent increase and a $4 billion increase over April’s amount.  Non-performing loans (NPLs) at July, 2013 totalled $4.7 billion, reflecting an increase of $470 million from prior year and a decrease of $330 million from the previous quarter ended April, 2013 as recoveries increased in the quarter. The increase year over year is in line with the growth in the loan portfolio. Total NPLs now represent 3.51 percent of total gross loans compared to 3.58 percent last year and 3.88 percent as at April 30, 2013. The Group’s aggregate loan loss provision as at July, 2013 was $4.8 billion, representing 100 percent coverage of the total non-performing loans. For most of these doubtful loans, the Group holds meaningful collateral.

Balance sheet | Total assets increased year over year by $40 billion or 11.56 percent to $389 billion as at July. Cash resources increased by $29 billion to $77.7 billion primarily as a result of the growth in deposits and placing the group in a very liquid position.

Total customer liabilities (deposits, repo liabilities and policyholder’s funds) grew to $299 billion, an increase of $34 billion over last year. This growth was mainly reflected in the deposit portfolio as the group management stated that they “continued to acquire new customers and see increased balances from existing customers”. Total shareholders’ equity grew to $70.9 billion, $4.2 billion above prior year.

Insider call | Scotia is unlikely to be a major trailblazer as far as rapid profit growth is concerned with the Jamaican  economy in the state that it is in now. However, the earnings are such and the stock price is at a low $20, that it is very good buy for dividend income with a yield around 7.5 percent and capital gains ahead. An investment in this stock could double ones money over the next twelve months. Scotia Bank is now a IC Insider Buy Rated stock.

Related posts | Scotia: No change in dividends | Scotiabank wins Service Award | Scotia Group’s profit surprise

Q3 profits up at Scotia Investments

Scotia Investments Jamaica’s profit for the quarter to July this year was $562 million or 51 percent above the $372 million earned in the previous quarter and 18 percent above the $477 million made in the 2012 quarter. For the nine months ended July 31, 2013, net profit was $1.42 billion, down $90 million or 6 percent when compared to the same period last year. Earnings per share for July quarter was $1.33 compared to $1.13 in 2012. For the nine months earnings per share was $3.36 compared to $3.57 for the same period last year.

Revenues | Operating Income comprising net interest revenue and other income for the quarter amounted $1.178 billion, up $228 million or 25 percent from the $949 million recorded for the previous quarter. Operating Income, came out at $3.236 billion for the nine months period, up $142 million or 5 percent above the $3.094 billion for the same period 2012.

The company has recovered from the negative impact of the NDX on net interest income as net interest income for the quarter was $692 million, $66 million or 10 percent above the results of the previous quarter. Net interest income after impairment losses for the nine months period was $2.081 billion, down $33 million or 2 percent when compared to the same period the year before.

scotiabanklogo150x150Non-Interest Income | Non-interest income, inclusive of fees, securities trading gains and net foreign exchange trading income was $1.155 billion for the period, up $175 million or 18 percent compared to the same period last year and $485 million for the quarter, up $162 million or 50 percent over the $324 million recorded last quarter. The major factors contributed to the improvement is net fees and commission as there was a $69 million jump in this category in the quarter and $183 million year to date, net foreign exchange gain dropped sharply in the quarter from the prior quarter to $30 million, which was slightly lower than the $33 million generated in 2012. Year-to-date, the increase is $105 million with $100 million of than being generated in the April quarter.

Gains from securities trading climbed to $197 million in the July quarter compared to $78 million in July 2012 and year to July income amounted to $273 million versus $293 million. The difference reflect the impact of losses sustained when the company engaged in the debt swap with the Government of Jamaica resulting in a loss on investments due to receiving a lower value for bonds held.

Expenses| Surprisingly, they were able to hold expenses below the amount in the prior quarter to $366 million, down from $418 million in the April quarter but up on the $327 million for 2012. For the nine months expenses climbed sharply to $1.2 billion versus $984 million in 2012.

Assets | Total assets of $72.6 billion remained relatively flat year over year. “There was a $1 billion or 1.3 percent reduction relative to the year ended October 31, 2012, which is consistent with our strategic initiative to focus on growing our off-balance sheet portfolios,” the company stated. Meanwhile, Shareholder’s Equity amounted $11 billion.

Off balance sheet | Assets under management, including the Company’s custody book, were $115.3 billion as at the end of the quarter, up $14.2 billion or 14 percent above the same period last year and up $5.8 billion or 5.3 percent over the previous quarter. The growth was driven by increased net asset values in the managed funds.

Related posts | Scotia: No change in dividends | Scotia Investments one time dent

TCL up 209% in two months

Update to our post of Aug 27th, 2013 | In early July we told our readers “Cement was good for your pocket“. While we don’t know many took our advice seriously, we do know is that there has been quite a bit of buying of this Trinidad based company’s shares driving the price from 94 cents up to $2.94 at the close of trading on Friday. Not bad for a two months investment!

The good news is that our estimates suggest that it not over with prospects for more gains to come as the stock rallies to better align its value with the overall market.

Related posts | TTSE: 3 major changes in PE rankings | Cement could be good for your pocket

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Original post dated 27th August 2013 | We called it! TCL stock gains 115%

You read right! Trinidad Cement Limited stock price has gained 115% since IC Insider made to call out to buy at the beginning of July when the price was at 95 cents. It has since risen to $2.05 in almost 2 months. Not a bad pay day at all!

It’s not too late for you to make money on this fast moving stock! From all indications the stock still has lots of room to grow with the price on Monday, August 26 at $2.06 and the bid at $2.13 on the Trinidad Stock Exchange.

The main objective of IC Insider is to provide readers with opportunities not only make money, but to earn above average returns and avoid losses. To view our latest Buy Rated stocks, click here.

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