Carib Cement & AMG now Buy Rated

November 11, 2013 by

Monday, 11th November 2013 | We added two new stocks to the Buy Rated list based on the information emanating from their latest quarterly results.

Caribbean Cement underwent major changes to its finances with the parent company, Trinidad Cement, restructuring the debt by converting it to preference shares thus cutting cost of financing. Revenues have also climbed with increased prices and volume sales.

AMG Packaging sales are growing in double digits and was up 37 percent in the quarter ending August. A new, multi-functional machine is in the factory and expected to be in production in December and will replace older manual ones and a rotary die cut machine. Management states that the new machine will allow for automation of the processes. This will make for more efficiency in the production process and allow for increased production and sales to meet demand. The company is expecting significant reduction in overtime and energy costs as a result of the new machine.

Related posts | Carib Cement turns profit | AMG gearing for further growth

Buy&WatchNov11About Buy Rated stocks | The IC Insider’s Buy Rated seal of approval is given to a stock that we believe is a compelling buy with earnings that are strong relative to the price and strong prospects of generating high price gains within the next twelve months.

Our research is backed by published reports of the company’s performance and insights of future earnings that can be found at ICInsider.com. The final decision to buy, or not, is your personal choice.

To find published reports for a Buy Rated stock on IC Insider, please choose the category ‘Buy Rated’ under Company News or enter the company name, in full or part at ‘Search IC Insider’.

Filed Under: Company News, JSE Main Market, Stock Market, TTSE Market Tagged With: ,

Caribbean Producers’ impressive profit

November 11, 2013 by

When Caribbean Producers pitched their vision of an impressive future, many investors saw a new rising star on the horizon coming from the west and the company easily raised $425 million. The shares were heavily oversubscribed and shot up as high as $3 but reported results never met the hyped expectations.

All that has now changed with the latest quarterly results to September showing a 19 percent jump in revenues and a big turnaround for CPJ in the first quarter of the 2014 fiscal year which ends in June. From a loss of US$172,981 in the 2012 quarter, the company swung into a profit of US$447,421. IC Insider projects the company should pull in profits for the full year of US$8 million, around J$0.80 per share. However, the market’s lackluster reaction to the robust results leaves one searching for reasons why CPJ is not pleasing to investors’ palates.

Cost control | Although sales rose strongly from US$14 million to US$17 million contributing to the big improvement in profit, a major factor is the improved profit margin that rose from 37 percent in 2012 to 44 percent in the latest quarter helping to increase gross profit by a strong 35 percent. Also contributing is the maintenance of other cost increases to levels below or just above revenue growth as well as a turnaround of other operating activity from a loss of US$48,000 to a surplus of US$7,041. Selling and administrative cost rose 20 percent, a shade over the rise in revenues. Depreciation increased faster than sales, at 27 percent to reach US$435,500 but finance cost rose by just 7 percent to US$476,664.

CPJSpirits450x450The numbers suggest that the expansion into meat and juice processing is now bearing fruit and should get even better as they capture more market share with their new products.

Borrowings | The company took on a large amount of debt to help fund its expansion with borrowings at US$29 million at the end of September and equity of US$13.5 million, which was quite a risky financing arrangement. Since September 2012, loans have been used to fund a US$3 million increase in inventories and receivables and US$1.6 million increase in plant and machinery.

Positive cash | The good news is that in the latest quarter, there was a strong positive cash inflow of more than US$900,000 which should end up around US$10 million by the end of the fiscal year. That will be enough, coupled with cash now on hand of US$2.7 million, to meet loan payment of US$8.6 million due by June next year and US$9.5 million due in the next twelve months.

If the forecasted cash inflows materialise, equity would jump to US$21 million and borrowed funds should fall in line with equity, subject to funds being used in further expansion by the financial year end.

The company’s working capital is in very good shape with slightly more than 2 to 1 ratio, a situation that should improve as loans are reduced.

The company will begin operations in St. Lucia in 2013 with a well-established partner in the Eastern Caribbean. The new company, CPJ St. Lucia, will primarily focus on setting up beverage system programmes for the hotel sector on the island.

Insider call | IC insider is not only forecasting continued strong growth for this new fiscal year but a continuation into the next year as well, making the stock a good medium term investment. Caribbean Producers Jamaica Limited is an IC Insider Buy Rated stock.

Related posts | Caribbean Producers Profit down | Buy Rated: TTSE stocks climbing, JSE falters |

Filed Under: Company News, Company Results Tagged With: ,

LASCO manufactures more profits

November 11, 2013 by

Profit rose 15.5 percent for Lasco Manufacturing in the September quarter over the similar period of 2012 to reach $176.4 million versus $152.7 million. This reflects an improvement over the results in the first quarter, which when combined with the second quarter results, amounted to $315.2 million compared to $306.3 million for the same period last year, an increase of $8.9 million or 2.9  percent. The company had taken a $40 million hit in custom duties for spoilt raw material in the first quarter that occurred during the 2013 fiscal year.

The improved profit for the latest quarter came about primarily due to a rise in revenue, from $958 million in 2012 to $1.03 billion in 2013, an increase of 10.75 percent and far stronger than the year-to-date performance of 4.6 percent increase to $1.88 billion up from $1.79 billion to September last year. Gross profit for the six months rose from $502.4 million to $526.2 million, an increase of $23.8 million or 4.7 percent. For the quarter to date, gross profit rose margin declined a bit as evidenced by the by slower growth in gross profit of $18.5 million or 7.2 percent, which is below the growth in revenues. “The company was able to mitigate the effects of foreign exchange volatility by making early payments to foreign suppliers” management stated in their release with the results.

Operating expenses for the six months to September 2013 rose by a mere 2.2 percent or $4.5 million over the prior year’s $200 million to move to $205 million in 2013. For the quarter, operating expenses was just $97 million, a reduction compared to $108 million in prior year.

Lasco_FoodManufactoring150x150Improved cash management has resulted in a reduction in the finance cost of $7.2 million over prior year’s $13.8 million in 2012, compared to $6.7 million in 2013.

The new factory is expected to come into production during this month starting with liquid products of water and juices. The powder products factory will come into operation in 2014. The company was allowed to add interest on it $1 billion plus loan to the cost of the plant but once it’s in operation, interest and depreciation will be expensed and this could have a drag on profits for awhile until sales from the new plant can cover fixed cost.

Financial position | The company increased amounts tied up in inventories sharply to $664 million up from $283 million last year September and $490 million in March as trade and other receivables grew to $881 million from $710 in September last year and $629 in March this year. Trade and Other Payables have also gone up with the amount standing at $699 million from $481 last year and just $259 in March. Long Term Debt used in the expansion is now $1.37 billion versus $350,000 in 2012 and $804 million in March. The rate on the loan is under 9 percent.

The future | The real excitement about Lasco Manufacturing is the major expansion of the factory operations and the relocation of some of its activities that should reduce cost while expanding the products to be produced. This should translate into strong revenues and profits going forward, more likely in the next fiscal year which starts in April next year.

IC Insider is projecting earnings of 17 cents per share for the year ending in March 2014 and 30 cents for the following year with the new factory in full operation.

Lasco Manufacturing is an IC Insider Buy Rated Stock.

Related posts | LASCO Manufacturing profits in the future | Buy Rated: TTSE stocks climbing, JSE falters

Filed Under: Company News, Company Results Tagged With: ,

Profit inches up at D&G

November 5, 2013 by

Desnoes & Geddes, the brewers of Red Stripe beer is reporting moderate growth in after tax profits, moving by 8 percent to $368 million from $340 million in 2012. Sales barely grew from $3.1 billion to $3.28 billion in a quarter when local sales were up 14 percent to $2.8 billion and exports were down from $643 million to $465 million with the shift of the production of beer to USA.

The company spent less on marketing, $266 million versus $313 million in the 2012 quarter while general selling and administrative expenses declined to $288 million from $310 million due most likely to the transfer of this side of the operations to Celebrated Brands, their joint venture distribution arm. The transfer may also have impacted the dollar value of sales. Other income turned a loss of $8 million compared to a surplus of $59 million in 2012. On the other hand D&G’s share in the joint venture distribution was a positive $19 million.

Segment results | In spite of the climb in local sales and a decrease in marketing spend, segments results show profit for the local operation was flat at $553 million while exports rose from $210 million to $283 million.

D&GRed-StripeSilos280x150Financial Position | At the end of the quarter, the company has cash of $1.38 billion but receivables jumped to $1.9 billion from $739 million in 2012; things in this area would look a lot better. The company’s reduced funds tied up in inventories from $1.36 billion to just over a billion at the end of September. D&G has no interest bearing debt with equity capital of $8 billion.

D&G dominates the beer market in Jamaica and a lot of sales have been lost over the last several years as governments placed increased taxation on the products it sells. This along with a sluggish economy has held back its growth in profits and by extension the stock price. In the short turn, the company has had to resort to various cost reduction measures to help improve the bottom line. The September quarterly figures suggest that the company needs a Jamaican economy recovery in order to start delivering decent growth in profits. Nevertheless, the rate of return on equity is around 20 percent, which is not that shabby.

Related posts | D&G poor 4th quarter | Major management changes at D&G | Profits on the improve for D&G

Filed Under: Company News, Company Results Tagged With: ,

JPSCO list new preference shares

November 4, 2013 by

The Jamaica Public Service listed its new offering of 2,455,607 units of Class F 9.5% Cumulative Non-Redeemable Preference Shares on the Jamaica Stock Exchange. The shares were offered through a private placement. The shares will be traded under the symbol JPS9.5. The security has a market capitalization of $2.579 billion or 33.0% of the overall market capital of the preference shares listed.

Street Forrest, General Manager of the JSE told the audience that, “The JSE welcomes these new securities as we believe if we are to encourage investors to invest in the development of our country, we have to provide them with not only a transparent and efficient marketplace through which to invest but the products in which to invest. Ownership by Jamaicans in Jamaican companies, whether through ordinary shares or preference shares, is a critical path in improving the infrastructure leading to sustainable development. This is what the Stock Exchange seeks to foster through the different markets that we operate. We are committed to the development of the capital market but we cannot do it alone.  The government and the private sector must see the need for the development and especially the formation of capital through equity financing”.

JPSMeter200x200Street Forrest went on to say “I wish to congratulate JPS again for listing. The very nature of these Class F shares, being non-redeemable has some characteristics of ordinary shares”.

Kelly Tomblin, CEO of JPS, stated that “JPS has been a part of the national landscape for more than 90 years, and a long standing partner in over 95% of households and businesses across Jamaica. We believe that it is appropriate for Jamaicans to have more personal stake in the company that plays such an important role in national development”.  She also promised that there will be other securities listed on the Exchange in the future by JPS.

Filed Under: Company News Tagged With: , ,

AMG gearing for further growth

November 4, 2013 by

AMG Packaging is out with flat results for the year to August with profits of $49 million up about 4 percent from 2012, even as revenues from goods sold climbed 24 percent to $444 million as a result of a 16 percent increase in the volume of items sold.

The company reported improvement in gross profit which increased by 32 percent compared to the 2012 figure of 31 percent as it grew faster than sales. Increased administrative cost ate up just about all of the improvement in increased efficiency in the factory operations. This was due mainly to what management attributed to a revision to wage package, as there was no increase since 2009. Gross profit margin increased to 33 percent in the year from 31 percent in 2012 and 26 percent in 2011. In 2010 the margin was at 32 percent.

August quarter | Data indicates a 37 percent jump in revenues to $128 million but that was not enough to prevent a fall in profits in the quarter to $14 million versus $16 million in the 2012 quarter as just about all major areas of cost rose sharply. Raw material cost is up 49 percent, direct manufacturing cost grew by 42 percent, administration grew 36 percent, finance cost rose 197 percent and depreciation by 71 percent.

amg-packaging_logo150x150Negatively, return on equity fell in the year to 18.6 percent versus 22 percent in 2012 and 24.5 percent in 2011, clearly an area where work is needed. The company is working to improve efficiency and expansion of production by investing in new machines. During the year the company expended money on roof relays and some other items that have an one-off effect and not likely to be repeated in the coming year and should free the profit going forward. They are also moving to use LPG instead of placing total reliance on the electric grid, which they say will reduce energy cost in the coming year.

Management, in their report to investors, indicated that a multi-functional machine on order will replace older manual ones and a rotary die cut machine is being manufactured. Both are expected to be functional in the November quarter of 2013. These machines are expected to increase production and enhance the quality of products.

Finances | Current assets of $209 million including cash of $34 million is more than adequate to cover current liabilities of $71 million. Inventories climbed sharply to $93 million from $75 million in 2012 but it represents just under one and a half months of raw material cost.

Money borrowed rose to $85 million, an increase on the $29 million at the end of the prior year, with most of the increase used to fund expansion of the factory and added machinery. The debt compares favourably with equity of $291 million.

The stock recently declined to $3.50 and became weak sometime after the third quarter numbers were released suggesting minimal growth in the bottom line. Notwithstanding, the junior market has been exhibiting softness across most stocks. As such there could well be further decline in this stock price as there does not seem to be any major buying interest currently.

Insider call | With the expansion and modernisation that is underway and the tendency for sales to be boosted by increased volume the stock should be an attractive buy as a medium to long term investment around $3 per share.

Related posts | AMG is investing for tomorrow

Filed Under: Company News, Company Results Tagged With: ,

D&G to pay more

November 1, 2013 by

Desnoes & Geddes (DG) declared a first interim dividend for the year 2013-2014 in the amount of $0.20 per share and a special dividend of $0.05 per share payable on December 20, 2013 to shareholders on record as at November 22, 2013. The ex-dividend date is November 20, 2013.

The company reported profit that are up 8 percent for the first quarter to September.

The company paid a dividend relating to the 2013 fiscal year of 10 cents per share on June 25, 2013.  In December last year there was an interim payment 20 cents per share.

Related posts | Profit inches up at D&G |  D&G will pay 10¢ dividend

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Dividends consideration

October 29, 2013 by

The Board of Directors of Jamaica Money Market Brokers will consider an ordinary dividend payment at a meeting to be held on Monday, November 11, 2013. The last dividend paid was 10 cents per share on March 28, 2013. Last year December, a dividend of 13 cents per ordinary share was paid.

JMMB is an IC Insider Buy Rated Stock.

The Board of Directors of Desnoes & Geddes on Friday, November 1, 2013 will consider the payment of a first interim dividend for the year 2013/14. The company paid dividend relating to the 2013 fiscal year of 10 cents per share on June 25, 2013.  In December last year there was an interim payment 20 cents per share.

The Board of Directors of Carreras will consider a dividend declaration at a meeting to be held on November 6, 2013. Carreras paid a dividend of $1 per share in August, down from $1.50 in 2012 flowing form a decline in profit in the June quarter.

Filed Under: Company News, Dividends Tagged With: ,

Profit up 92% for Eppley

October 28, 2013 by

Recently listed Eppley Limited released results for the quarter ending September with profit almost doubling from $12 million to $23 million for the nine months and with profit of $9.8 million in the 2013 September quarter compared to $6.3 million in 2012. These figures contrast with the full year’s earnings for 2012 of $15 million.

The improvement in the latest quarter came primarily from tax reduction due to the tax free status junior market companies enjoy for 5 years. It was also helped by a $3 million increase in other income which had grown to $5.9 million. Interest income declined in the quarter from $20.5 million in the 2012 quarter to $14.9 million in the latest quarter but a reduction in interest expense to $1.3 million versus $7.2 million took effect as a result of conversion of some debt to equity and some that was paid off resulted in a slight improvement in net interest income. Income from interest in the nine months amounted to $45 million which is down from $59 million in the similar period of 2012.

Loans due from customers shrunk from $509 million last year September to $308 million in 2013. Post September, loans would have increased as the company reported having $33 million in uncommitted cash on hand compared with $121 million in actual cash on the books at September. Loans payable amounted to $109 million at the end of September and is down from $361 million at the end of September last year.

PreferenceStock280x150Earnings per share for the September quarter is $13.43 and for the nine months period $48.19. The company reports that yield on the total assets is 14 percent per annum, if this is maintained then the company which has 796,000 issued shares should end up in a full year with approximately $40 per share in profits. But then the company is seeking to raise added capital from a preference share issue, which if successful, will provide increased profits as the funds will allow them to provide loans at higher rates than the capital cost of the funds to be raised.

The company will hold an extraordinary general meeting this coming Thursday to seek approval of a resolution to create and offer up to 100 million preference shares to raise added capital.

The IPO prospectus stated that the board expects to distribute not less than 50% of its after-tax earnings to shareholders in the form of cash dividends, with the projected earnings that would translate to about 5 percent return.

Related posts | IPO: What or who is Eppley? | Epply fast listing

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Jamaica Broilers dividend

October 24, 2013 by

Jamaica Broilers Group declared an unchanged interim dividend of 8 cents per share payable on December 2, 2013 to shareholders on record as at November 5, 2013. The ex-dividend date is November 1.

Last year December, the company paid 8 cents per share as a dividend and they made an interim payment of 6 cents per share on March 28, this year.

Jamaica Broilers Group is an IC Insider’s Buy Rated stock.

Related posts | JBG profit held back | Buy Rated: TTSE stocks climbing, JSE falters | Jamaica Broilers is buy rated

Filed Under: Company News, Dividends Tagged With: , ,