Scotiabank Trinidad & Tobago is reporting improved results in the July quarter, than the year before and for the April 2014 quarter. Net income after tax for the latest quarter, amounted to $140 million an increase on the $134 million earned for the same period last year. The improvement was helped by rising net income and recovery of bad loans, with the latter amounting to $8 million versus a loss of $3 million in 2013.
For the nine months to June, profits fell to $390 million from $404 million, but it represents an improvement over the decline in the six months results, with profits of $250 million versus $270 million in 2013. The second quarter results of $105 million compared with $128 million, was one of the factors pulling down the results, as net revenues fell compared with the prior year. In the latest quarter, while net interest income has not declined, it hardly grew, other income grew a bit from $100 million to $132 million for the quarter and for the nine months by $30 million to $467 million, with all the increase coming in the last quarter.
Total assets ended the period at $20.2 billion up from $19.5 billion at the year end, but encouragingly, for the bank, the main income generator, loans, grew from $10.576 billion at the end of the 2013 year, with a small increase to $10,847 in April, but it jumped sharply to $11.47 million in July. This growth should help in improve income generation going forward. The bank will need to keep close to the last quarter pace, to help move profits forward, in a serious way.
With the July quarter showing some signs of improvement, earnings going forward should end up around the $3.50 range in 2015, if the pace of loan growth continues. With the price of the stock having pulled back below $60, it could be an attractive buy in the months ahead. At the close of trading there was still no buying interest in the stock and it looks set to decline some more, as investors seem to be ignoring the improved third quarter numbers.
Scotiabank Trinidad improved results
Sterling Investments listing set for October
Sterling Investments Limited, (“SIL”) a St. Lucia registered investment company, is slated to be listed on the Jamaica Stock Exchange, on October 13. No shares will be offered to the public, but may be purchased after they are listed.
In 2013, the company generated income of $70 million and comprehensive profit of $56.7 million, including $11 million from unrealised gain on investments. For the six months to June this year, income amounted to $25.7 million plus gain on sale of investments of $2.8 million and $25 million in Forex gains resulting in profit of $34 million, for the half year. SIL generates interest income from securities owned and capital gains realized from increases in the price of the securities.
The company began operation in December 2012 and enjoyed growth in in total assets, to reach $492 million at the end of 2013, and net assets of $440 million, with a loan of $31.5 million. At the end of June this year, total assets climbed to $737 million, with net assets of $554 million and loans of $171 million. “Over 92 percent of SIL’s assets are invested in US dollar fixed income assets, comprising, Non-Investment Grade Corporate bonds 37 percent, Investment Grade Corporate bonds 29 percent, Municipal Bonds 26 percent and Private Equity 8 percent” the company reported at an investment forum used to introduce the proposed listing.
“Over the last 18-months, SIL’s net book value per share has grown by 38 percent after fees and distributions. This rate of return has been influenced by favourable movement in bond prices over the review period and movement in the Jamaican dollar. The average coupon rate on the securities in SIL’s portfolio in June 2014 was 8.34 percent per annum, while the average yield to maturity was 8.36 percent per annum,” management said. The company, however, uses leveraging which can boost the net income per share above the actual interest income, if all goes well. The total number of issued ordinary shares is 4,014,547 units giving a net asset value of $138 per share at the end of June.
“For the year 2013 a total of J$7.9 million was paid in dividends or J$2.96 per share for a dividend yield of approximately 3 percent, the Company pays dividends twice yearly,” Sterling said.
The directors of the company are, Derek Jones (Chairman), lawyer and former partner of Myers Fletcher, Michael Bernard, former CEO of Carreras, Maxim Rochester, former PriceWaterhouse partner and Charles Ross, CEO of Sterling.
The number of shares are very limited, and should result in a stock that is illiquid. With the return of stability to the local currency and the level of buoyancy now seen in the daily flows, at a time when inflows tend to be inadequate to meet supply, suggest that earnings going forward will not benefit much from local exchange rate slippage, on this basis earnings per share should normalise to around $45-50 million per annum, around $13 per share, not making for an attractive buy, unless one expects major movement in the local exchange rate, going forward.
Insiders pick up 5m Sagicor shares
Two Executives of Sagicor Group purchased a total of 4,979,956 shares, under the company’s Executive Long Term Incentive Scheme, on September 29, 2014, the company advised the Jamaica Stock Exchange. The purchase brings to 8,414,404 units acquired mostly by executives since June. Executives sold a total of 3,075,556 units during the same period.
The Group offers stock grants and stock options to senior executives as part of its long-term incentive plan. The Group has set aside 150,000,000 of its authorised but un-issued shares of $0.10 each for the stock grants and stock options. The lowest price option is dated March 2009 and would expire in March 2016 with an exercise price of $7.66 for 5,069,770 shares. All the rest that are vested, have an exercise price that are above the current stock price of $9.65. The exercise prices for the rest range between $10.45 for the 2010 vested amount of 4,039,454 with an expiry date of March 2017 and $14.10 for the 2012 vested amount of 1,813,036 shares, with an expiry date of 2019.
The Group also has in place a share purchase plan which enables its administrative and sales staff to purchase a pool of Sagicor Group shares at a predetermined discount rate of the closing bid price on December 31 each year. During 2013, the Staff Share Purchase Plan Trust purchased 3,417,136 shares over the Stock Exchange for a total value of $28,380,000.
Sugar helps Seprod hike profit
Seprod reported a hike in profit of 14 percent for the six months to June this year, slower than the 34 percent increase in the first quarter. The company posted profit of $698 million for the half year, up from $614 million in 2013 and $298 million in the quarter versus $317 million in the 2013 quarter.
Seprod, involved in the manufacturing and processing of food products, oils, sugar, milk as well as a food product distribution business, enjoyed an 8 percent rise in revenues to $8 billion from $7.4 billion and 12 percent to $4.17 billion in the second quarter from $3.7 billion in the 2013 June quarter. While revenues climbed, Seprod suffered a reversal in the positive gains in investment income in 2013 with a fall of $110 million in the quarter and $118 million in the half year.
Gross profit grew a very strong 53 percent in the June quarter and a much lower 32.8 percent for the six months over the same period in 2013. Gross profit margins climbed to 29.70 percent in the June 2014 quarter, up from only 18.8 percent in 2013, for the six months 29.7 percent and 22.7 percent, respectively. These are good signs of an improving performance of the group. A major part of the improved performance, is the contribution the sugar manufacturing segment made.
Segment results show operating profit for the half year rising 61 percent, against revenues climbing only 11.4 percent, Distribution segment’s operating profit, fell from $99 million to $68 million. The group’s sugar operations made a loss of $15 million in the June quarter for the group net of minority interest and $30 million for the six months, a big improvement over the $166 million lost for the June quarter last year, and $200 million for the six months to June, 2013.
The group is now in the last six months of the year, when little income will be generated from the sugar operation at Golden Grove Sugar Factory in St Thomas. The cost associated with this operation will be absorbed and will dent profits in other areas. For the second half of 2013 the group picked up $322 million in losses from the sugar operation. Much progress has been made in reducing losses in the sugar operation but there is still some way to go to move to a profitable business. A lot will depend on increasing significantly, the amount of canes to be milled by the factory and by extension the sugar to be produced. They now need to produce around 3,000 to 4,000 tonnes more sugar, to break even.
Expenses| Selling expenses rose sharply by 43 percent in the quarter to $142 million compared with $100 million in 2013 and 22 percent for the six months to $241 million from $198 million. Administrative cost rose 25 percent to $428 million in the quarter versus $373 million in 2013. For the six months period, it rose only 7 percent from $784 million to $839 million.
Finances| Seprod has $4 billion in cash and investments. Borrowing stood at $2.55 billion up from $2.26 billion at June 2013, current assets are well in excess of current liabilities by more than 2 to 1 and equity stands at a strong $10 billion.
Longer term| For 2015 and beyond, a lot is predicated on the fortunes of the sugar operations in St Thomas, where the target is for the processing of 300,000 tonnes of canes and to produce around 25,000 tonnes of sugar. In 2013, Management indicated that the cane farms are already planted and increased production should be coming in from the 2014 crop. For the 2014 crop the factory, reached its highest-ever production levels, with 19,300 tonnes of sugar.
the group produced profits of $907 million last year and is expected to better this in 2014 by some. The stock remains buy rated.
More insider buying of D&G shares
Within less than a month of the release of Desnoes and Geddes full year results, to June, the company is reporting another purchase of shares by a director. The latest, is 3rd such inside purchase to have taken place, since the June results were released.
The latest acquisition is 507,650 shares on September 23. This comes on the heels of Desnoes and Geddes reporting strong full year results, with the promise of higher earnings, in the new fiscal year. The company previously reported the purchase 250,000 shares by a Director, on August 29, 2014 and 100,000 units, on September 1.
Profit on the rise for Dolphin Cove
The fast growing Jamaican north coast entertainment company Dolphin Cove, is reporting increased profits for the six months ended June, this year. Profit rose 30 percent to $287 million over the $221 million in the 2013 comparative period, according to the unaudited six months financial report.
For the June quarter, Dolphin made profit that is 34 percent ahead of that of 2013 to hit $139 million up from $103 million last year.
“This rise in profits is mainly as a result of the growth in revenues and supported by cost containment measures which resulted in operating expenses increasing by a lower percentage than the growth in sales. The decision to increase our investments in sales and marketing in the June 2014 quarter produced the desired results, as sales increased by 17 percent above that of 2013 and also surpassed the 11 percent increase in revenue which was experienced in the first quarter,” Manager said in a release of the results to shareholders.
Total revenues climbed 15 percent to $923.4 million for the half year, from $800 million and $471 million versus $400 million in June 2013 quarter, for an 18 percent increase.
The company would have benefited from the fall in the value of the local currency as its income is denominated in United States dollars, but much of its cost are in Jamaican dollars. The end may be in sight for a sharp fall of the local currency, even as the country in now in the period of low inflows and high demand for US dollars. So far the inflows have been buoyant, meeting demand up to the end of September with a stable rate so far. The company’s income is substantially reliant on developments in the tourism sector as it get the bulk of its income from overseas visitors for meals and the attraction of dolphins, sharks and stingrays.
IC Insider’s forecast for earnings, is $1.20 per share, for the current year ending December. In 2013 the company earned 82 cents. Based on the rise in profit, the company pushed dividends up by 50 percent for this year to date and works out at a yield of 8 percent on the stock price of $8.
Equity stood at $1.57 billion at the end of June with borrowed funds at only $355 million.
Seprod considering a dividend
Seprod advised that at a meeting of the board to be held on October 6, 2014, a dividend payment will be considered.
Seprod paid a dividend of 55 cents per share on July 4, this year. Last year a dividend of 30 cents per share was paid on November 15 and 53 cents per share on July 8.
Seprod reported a hike in profit of 14 percent for the six months to June this year, slower than the 34 percent increase in the first quarter. The company posted profit of $698 million for the half year, up from $614 million in 2013.
50% hike in dividends at Dolphin Cove
Dolphin Cove hiked the amount being paid out as dividends this year, continuing to pay out 50 percent more than they did in 2013.
The latest dividend to be paid will be on Wednesday October 22, 2014, has moved from 10 cents last year, to 15 cents per share to shareholders on record at October 3, 2014. The stock trades Ex-dividend on October 1.
Previously, Dolphin Cove earlier this year, pushed up the dividend payment by 50 percent when they paid interim dividends of 15 cents per share, on June 30 and on April 9 this year. In 2013, 10 cents per share was paid on December 4, September 16, on June 6 and March 28.
The increase comes against the back ground of a continued rise in profit for the entertainment company, with profits for the six months ended June 2014, increasing 30 percent to $287 million, over the $221 million in the 2013 comparative period.
Little gain from NCB’s KWH sale
National Commercial Bank will collect $3 billion for the sale of its 32.59 percent investment in Kingston Wharves, which it executed today, on the Jamaica Stock exchange at $6.50 per share. But the banking group will not see a boost in its profit from the transaction although the shares were purchased at much lower price than what they have been sold at.
At the end of September last year, the investment was booked at $2,705,495 as the group accounted for their share of profit from the time the investment was made some years ago shortly after the banking was taken over by Lee Chin the majority owner of the bank. Since then Kingston Wharves reported profit of $734 million of which $240 million would be attributable to the bank’s holding. That would bring the amount booked up to June this year to $2.945 billion leaving a small difference which is less than the amounts of profit they would have booked had the sale not taken place.
The group will benefit going forward, from funds that it can either lend or invest in other areas. Jamaica will benefit from some foreign exchange inflows, as a result of the sale.
Kingston Wharves dominates
Kingston Wharves $3 billion trade dominated activity on the Jamaica Stock Exchange, in Wednesday’s trading. 466 million units of the stock, was sold to Jamaica Producers and an overseas entity in the shipping industry. National Commercial Bank was the main seller. The stock traded at $6.50 up from $5.01 on Tuesday but it had a bid of $5.75 which allowed the trade to take place at 29.75 percent above the closing price on Tuesday.
Trading activity resulted in the prices of 10 stocks rising and 5 declining as only 20 securities changed hands, resulting in 470,310,461 units trading, valued at $3,066,292,531, in all the market segments.
Main Market| The JSE Market Index gained 631.80 points to 72,064.01 and the JSE All Jamaican Composite index rose 706.45 points to close at 79,288.84.
Junior Market| The enjoyed trading in 324,780 units valued at JSE $353,366. The Junior Market Index fell 2.40 points to close at 649.56 as just 5 stocks traded with 2 advancing and 2 declining.