Trading on the Trinidad Stock Exchange on Thursday saw 12 active securities, of which 3 advanced, 3 declined and 6 traded firm. A total of 103,044 units changed hands, with a value of $4,901,363.
The Composite Index declined by 0.98 points to close at 1,151.20, the All T&T Index fell by 1.96 points to 1,987.28 while the Cross Listed Index remained unchanged at 41.25.
Gains| Stocks increasing in price at the close are National Flour Mills contributed 12,112 shares with a value of $15.74 to gain 3 cents to $1.30, for a 52 weeks high, Point Lisas Industrial Port put through 1,000 units at $4.20 with 5 cent gain and Scotiabank gained 10 cents to end at $63.40 while trading 94 shares.
Declines| The stocks declining at the end of trading are National Enterprises with a volume of 20,500 shares traded for $363,875, closed with a 2 cents loss at $17.75, Republic Bank with 31,323 shares changing hands, valued at $3,816,394 to close at $121.84 after losing just 1 cent and Trinidad Cement closed at $2.80 after shedding 5 cents.
Firm Trades| Stocks closing with prices unchanged at the end of trading are Clico Investment Fund with 21,561 shares valued at $474,342 remained at $22. Firstcaribbean International traded 3,460 shares at $5, First Citizens Bank with 1,228 shares closed at $35.95, Guardian Holdings added 10,102 shares valued at $136,520, to close at $13.75, Massy holdings traded 14 shares at $68.50 and West Indian Tobacco with 10 units closed at $118.01.
IC bid-offer Indicator| At the end of trading the Investor’s Choice bid-offer indicator had 6 stocks with bids higher than their last selling prices and 1 stock with an offer that was lower.
Three up three down on TTSE
What’s up with Grace’s stock?
At the close of trading on Monday, there were two lots of Grace’s stock on offer on the Jamaican Stock Market, 9,360 units at $63 and 200,000 at $65.
Over at the Trinidad Stock Exchange, the bid on the stock was the same as the last sale price, at TT$3.55 which equates to J$63, but only for 886 units. There was an offer to sell 12,300 units at TT$3.70 or J$65.50. Could the stock be set to jump? Probably.
Grace has been in the news recently with rise of 21 percent in profit for the six months to June and the purchase of a USA trading operation, La Fe Foods with revenues of US$80 million per annum, that should add nearly $9 billion to revenues in a full year.
Grace expects much benefit to flow from this acquisition, as La Fe Foods services the Hispanic market with a large population that should allow some of Grace’s branded products to find new markets. In addition, the acquisition will allow some products with inadequate margins, to be sold to a non-related distributor, to be exported by Grace to the USA market.
CWJ making headway, not there yet
Revenue from core business is up 11 percent while expenses are up by a much smaller 5 percent but Cable & Wireless still ended up with a loss of $712 million in the June quarter, this year, better than the $804 million reported for the 2013 quarter. The 2013 performance is boosted by other income representing, gain on sale of fixed assets of $130 million, putting operating income at $934 million than the reported figure. The company had a $580 million improvement in operating profit in 2014 excluding the gain on sale of fixed asset.
Cost rose by $250 million in the quarter as amortization cost, administrative, marketing and selling expenses and interest cost rose, offset by lower out payments for calls to other networks and labour cost. The company increased marketing spend during the quarter to drive sales of it MVP data and talk EZ plans, during the 2014 World Cup tournament. They were the leading sponsors of the CVM TV live broadcast of the games. The largest cost increase, is finance, rising 69 percent to $962 million, due mainly to a sharp rise in the interest rate charged by the parent company, based on higher Jamaican Treasury bill rates. Up to March this year the rate was 7.7 percent effective May 11th, it moved to 10.03 percent, the rate should decline by time the next reset date comes around November 11 this year as Treasury bill rates have been on the decline since May and should get even lower than currently, when the rate resets.
The company continues its focus on attracting new cell customers as well as internet data users, while trying to maintain landline business. The results show, in the strong growth seen in the June quarter, compared with June 2013. Mobile subscriber base increased by 37 percent with revenue up 34 percent, broadband base increased by 12 percent with revenue up 39 percent, in addition total revenue for the quarter is up on the inflows of $4.7 million for the March quarter.
The next two quarters, are periods when the company places emphasis on aggressively growing the customer base, as a result increased focus on marketing spend, can be expected to continue to increase revenue. While data suggest the possibility of profit this year based on continuing growth in revenues, a lot will be dependent on the aggressiveness of customer acquisition and by extension the cost to acquire them.
Cable & Wireless has a negative book value of $25 billion or $1.46 per stock unit, having written off large portion of its assets in recent years. The business as it now exists has a positive value, as such the net value per share could be far better than the book value indicates. The real value to shareholders must be its ability to convert losses to profit and soon. Investors in the market are sensing the improvement, driving the stock price up from 16 cents at the start of the year to 35 cents presently. Importantly, selling of the stock is down from what it has been in 2013 and in the early months of this year.
Of course the company has to depend on its parent company for financial support for capital in the short term but it is close to a positive cash flow from operations.
Is KLE Group about to turn a profit?
KLE Group raised $94.6 million from the IPO share issue when 27 million shares were sold at $3.70 per each, but the company has melted through these funds in a relatively quickly having turned a $9 million surplus at the end of 2011 into an accumulated loss of $81 million, as of June this year, leaving equity of only $42 million.
KLE operates Usain Bolts’ Tracks and Records and Friction Lounge night club in Kingston and Nightclub, in Portmore starting in the middle of 2013.
In 2013 the group lost $56 million and for 2014 to June, $21 million of losses were added to reduce the level of equity further. But things may well be looking up for them if information for the second quarter holds. Although there was a loss of $8 million in the quarter, this was a bit better than the $13 million in the first quarter, this year, even as revenues were less than in the first quarter as well as against the 2013 quarter. The first task at the company has at hand, is the curtailment of cash, this could be just around the corner. In fact there was a positive $6 million cash flow inflow from operations in the June quarter, a big improvement to the half a million in the first quarter.
Revenues| fell sharply in the June quarter from that in 2013 with $59 million in 2014 versus $89 million in 2013. The June income is also down on that of the first quarter at $68 million. For the six months to June, revenues fell to $127 million compared with $152 million in 2013, all the reduction occurred in the second quarter.
Administrative and other expenses fell to $40 million in the latest quarter, from $71 million in 2013 and $87 million in the six months versus $120 million last year. The cut in administrative cost in the quarter, helped to produce a small loss of $2 million, before depreciation and finance expenses and an overall loss of $8 million for the quarter, versus $19 million in 2013. “The company has further reduced operating cost including overheads eliminated as a result of corporate office consolidation at the beginning of May.” Gary Matalon CEO of the company stated in his report to shareholders. He went on to indicate, that the cost rationalisation has brought expenses much more in line with revenues. Expenses included a charge against fixed asset, amounting to $8 million in the June quarter. Unfortunately for the company, a 193 percent gross profit margin enjoyed in the 2013 second quarter, melted down to a still respectable 160 percent.
Making allowances for the one off charge against fixed assets and the cost reduction which only applied for two months out of the June quarter, KLE could be looking at a profit in the next quarter, assuming that revenues and margins are kept up.
Matalon spoke to the franchising arrangements reaching a matured stage where selling can commence, if successful it would bring in added revenues. But that is a promise, although reference is made about two potential candidates being courted.
Finances| As can be expected, with the burning through of capital, the group’s finances have deteriorated. Borrowing stands a $52 million, current assets stands at only $50 million including cash of $7 million and current liabilities of $143 million.
KLE stock last traded at $1 and now has a bid to buy 100,000 units at $1 and an offer at $1.90, the stock traded as low as 90 cents.
Revenue down at Kingston Wharves profit up
Revenues declined in the two quarters to June at Kingston Wharves by 19 percent, in the first quarter and 9 percent in the second, for an overall decline of 14 percent for the half year.
Revenues came in at $994 million for the June quarter, compared with $1.1 billion in 2013 and for the six months, $1.94 billion versus $2.26 billion. Decline was seen in both the regular revenue stream as well as for other operating income. “The reduced revenue was significantly influenced by the loss of business from a main shipping line and the overall decline in economic conditions” Grantley Stephenson Chairman and CEO, said.
Gross profit declined by 13.5 percent for the half year, better than the decline in revenues and 10 percent for the quarter, almost in line with the fall in revenue. Kingston Wharves picked up foreign exchange losses of $131 million in 2013 but only $68 million in 2014.
Administrative cost were down but at a slower pace than revenues at 11 percent for the half year and 8.5 percent for the quarter. Reduction in taxation provision from $85 million in the June quarter of 2013 to only $5 million in 2014 prevented profit after tax from falling below the $175 million earned in 2013 as well as the six months which ended at $353 million compared to $322 million excluding amounts due to minority shareholders. For the June 2014 quarter, Kinston Wharves made profit after tax and minority interest of $219 million. For the six months earnings per share is 25 cents. Return on equity is working out at 6 percent per annum, not great, but the funds acquired for investment in the port expansion and modernization is yet to be fully deployed, to generate profits and so improve the level of return.
Finances| The company boast equity of $13 billion, with loans amounting to $1.8 billion, cash and investments of $2.6 billion at the end of June. Net asset per share is $10 while the stock price is at $5 but there is need for strong growth in profit to help bridge the gap, this may have to await the completion of the expansion of the facility.
The real attraction here for investors, is the planned expansion of its facilities to take advantage of the Panama Canal expansion and the added traffic that is expected to flow form it.
Board resignations at Carib Cement
News just out from the Jamaica Stock Exchange, now confirm that Caribbean Cement Company has advised that Brian Young – the company’s Chairman, Judith Robinson – Chairman – Board Audit Committee and Bevon Francis – Member of the Audit Committee have resigned from the Board of Directors of Caribbean Cement Company effective August 19, 2014.
No mention is made of Rollin Bertrand, the former CEO of Trinidad Cement in the release. IC Insider expects that at some time, his tenure will come to an end on the Jamaican board, as well. The release did not state who the replacements are but as indicated in an earlier story IC Insider expects Christopher Dehring to head that board. IC Insider expects that there will be changes at the executive level in keeping with the removal of Bertrand as CEO of the group. Persons seen to be loyal to him will most likely be shifted from key position.
Major management changes likely at Carib Cement
The shareholders revolt that effectively ousted directors and Chief Executive officer at Trinidad Cement, earlier this week, is likely to have far reaching impact at the company’s subsidiary, Caribbean Cement.
The changes in Trinidad, saw the non-appointment of Caribbean Cement chairman Brian Young, who seems unlikely to win the favours of the new board and is hardly likely to see the new board in Trinidad accommodating him in the critical chairmanship position in Jamaica. Bevan Francis and former CEO of the group Rollin Bertrand also serve of the Jamaican board and are not included in the new board composition at the group level. Christopher Dehring who is now on the TCL board, may well be the man tipped to head the local board, when the time comes for the changes locally. Such changes cannot be far off as the new management in Trinidad, try to unearth whatever facts they their mission to determine the true state of health of the group, may uncover. Judith Robinson who is a former partner of Brian Young at Price Waterhouse could well be getting the axe as well.
Shareholders’ revolt oust directors at Trinidad Cement
Shareholders revolt ousted directors and Chief Executive officer at Trinidad Cement, at a special meeting on August 19th called to make changes to the directorship.
The former directors of the company decided to fight a battle that they could not win in an attempt to stave off the appointment of some new directors and removal of others. In December last year, IC Insider in an article on the debacle between some disgruntled minority shareholders and Trinidad Cement Limited (TCL) indicated, that it’s a fight that the directors were not likely to win. The effect of their intransience is a costly legal battle in which has cost the company unnecessarily.
IC Insider went on to say “in a battle with some local shareholders who want representation on the company’s board of directors and requested that the annual general meeting that should have been held on Friday July 12, 2013 to be put off pending court hearing as to whether a resolution to nominate them should be put on the agenda for consideration. The request by the minority shareholders to seek to nominate directors and have their names included as such on the notice calling the annual general meeting is reasonable, but that would have to be done ahead of the notice period which is usually 21 days ahead of the meeting. Information from the Guardian newspaper suggest that the company was formally informed of the request well ahead of the deadline date and the shareholders seem well within their right to have sought to prevent the AGM from going ahead without their names being put on. In all probability, the minority shareholders will win their initial battle with the company but it’s left to be seen if they will succeed at the general meeting of 2013 which now seems likely to be held in 2014 instead.”
At the special meeting called to change directors following a failed attempt to get the courts to block such a meeting the disgruntled shareholders who managed to garner more than 50 percent of the votes ousted to dissident directors including the CEO. The changes are likely to have repercussion of the board of Caribbean Cement as subsidiary of TCL. Bryan Young Chairs that board and it would be hard to see the new board accommodating him in the critical chairmanship position in Jamaica, Francis and Bertrand also serves of the Jamaican board.
Prior to the meeting Andy Bhajan, Rollin Bertrand, Brian Yopung, Leonard, Carlos Hee Houngand Bevon Francis resinged. At the meeting Wilfred Espinet, Alsion Lewis, Christopher Drehring, Michael Glenn Hamlel-Smith, Francisco Aguilera Calos Alberto and Nigel Edwards wefre appointe ddirectors.
The move should no pave the way for the legal battle now in the courts to be withdrawn and put the company in a psoitioon to hold the general meetings for 2013 and 2014 which were postpone pending the outcome of the court action.
Watch this one – Big inside trades at Jamaica Broilers
Investors should be keenly watching development at Jamaica Broilers. The company recently, advised the Jamaica Stock Exchange that senior management and directors purchased a total of 7,854,620 shares on August 15 and a Director purchased 237,500 shares on August 14, 2014.
The total cost of these trades would be in the order of $36.5 million. More significantly, there has not been any trade of this magnitude for years by insiders.
The trades may be carrying coded messages to the wider investing public as to what may be happening to profit. On July 30, this year, a director sold 500,000 shares, and a director purchased 574,651 of the company’s shares on March 28 and back in 2013 a related party sold 1,500,000 of the company’s shares to another related party on November 14.
A check with the Jamaica Stock Exchange shows the only other year recently that there was major trading in the stock by insiders was back in 2012, when seven Senior Managers purchased a total of 8,774,697 of the group’s shares on September 14.
The other times of major buying of the stock by managers and directors, was between April 2006 and April 2008. The trades in late 2007 triggered some outcry by investors which led to the company making a public statement in connection with the trades.
At the time of major trading of the shares by insiders in 2007, the company released a report to the Jamaica Stock Exchange around October 4, which stated that “Shares in Jamaica Broilers Group were traded by some directors and senior management in September 2007 during the time window which is allowed by the Jamaica Stock Exchange providing there is no material event requiring disclosure. We wish to State unequivocally that, when these shares were traded, there were no inside knowledge of any circumstances that were no available to the general public.
When these trades took place the company was of the view that – based on a sale contract with affixed selling price – good results would have been realised for the second quarter, irrespective of the reduction in world market prices for fuel graded ethanol.”
IC Insider projects that profits for the current year should hit a record $1.25 per share or $1.5 billion up from 79 cents per share or $950 million for the year to April 2013. The next set of results are due around the 8 of September and will be for the first quarter to July.
Massy Holdings rebranding cost TT$59M
Trinidad based, Massy Holdings rebranding and change of name, from Neal & Massy Holdings, to Massy Holdings has cost the group TT$59 million according to information included in the group’s nine months results to June.
The amount helped pulled the net profit for the quarter below that of the similar period in 2013, from $128 million to $99 million. Most of the companies within the sprawling group now carry the Massy name except in Guyana and St Lucia, the company stated in their report to shareholders.
The company’s former name came out of the merging of two companies operated by their founders, Harry Neal and Charles Massy that carried the individual names which were combined to form Neal & Massy. According the group’s 2013 annual report “In 1933, rising to the challenges of survival and growth, two entities concluded an historic merger, and became one – Neal & Massy Engineering Company Limited. They were responding both to world economic conditions of the Great Depression, and to the promptings of shrewd local bankers.”
According to information accompanying the nine months results, half of the rebranding cost relates to signage and painting for all Massy buildings, many of which were due for a face lift. The rest of the cost relate professional services training materials, advertising and events.