Company News — Page 159

Consolidated Bakeries hiked profit

August 30, 2013 by IC Insider.com

Consolidated Bakeries is reporting strong growth in profit in the second quarter, a continuation of increased profits experienced in the first quarter of the year. The strong growth is as a result of robust revenue growth in both quarters of the year. Revenue for the six months increased by 30.69 percent to reach $329 million and for the quarter by 40.46 percent over the same periods last year to reach $157 million. “The increases reflect real growth in volumes across our key items and primarily a result of activities in distribution and market programmes,” management stated.

Profit after corporation taxes which increased 172 percent in the first quarter more than tripled in the second quarter moving from $4 million in 2012 to $12 million for the first six months and net profit went up by 191 percent to $24 million. Helping with the improvement was a 55 percent gross profit margin, a big improvement over the 42 percent in the first quarter last year and year to date margin is 56.5 percent versus 52 percent in 2012. Operating expenses climbed sharply by 53 percent in the quarter and 31 percent for the six months period.

The improvement in revenues and profit is impressive. The concern that exists is that the results for the six months to June last year showed impressive numbers but there were losses in the last half, thus reducing what appeared to be acceptable results. The second half of the year tends to be a bit weaker for sales and profits for bakeries. As such, the impressive profits seen in the six months may not match the results in the second half.

Working capital was in a healthy state with current assets of $169 million compared to $46 million in current liabilities. Inventories are low at $16 million and receivables at $57 million seems to be well under control. Shareholders’ equity is $495 million and debt financing of only $23 million.

Depending on how the second half pans out, the stock could show some appreciation in the next two quarters. Earnings per share is only 11 cents to June, so at best, the full year earnings will be around 20 cents. At this rate, it won’t cause investors to run and grab the stocks, even at the current trading price of $1.35.

Related Posts | Consolidated Bakeries’ Q1 Profits Up

Bread Loaf Image courtesy of dplanet/FreeDigitalPhotos.net

Filed Under: Company News, Company Results Tagged With: Consolidated Bakeries, JSE Company

Q2 profit up strongly at Sagicor

August 30, 2013 by IC Insider.com

The Sagicor Jamaica Group made big strides in the second quarter with a 39 percent increase in the net profits of $1.56 billion versus reported profits for 2012 of $1.12 billion. It also represents a major recovery over the ‘NDXed’ first quarter results of only $620 million. Earnings per share came out at 42 cents, annualized $1.68.

“The improved results in second quarter reflect continued good new business and a higher pay-out of insurance benefits. We also recorded a “one-time” charge of $120 million for an adverse Privy Council judgment relating to a Cayman Islands legal claim. In first quarter we had the impact of the National Debt Exchange and Private Debt Exchange (NDX programme) which resulted in “one-time” realized capital losses of $1.2 billion,” management said in a release accompanying the results. Profit of $2.18 billion was realised for the six months to June against $2.60 billion in 2012 attributable to stockholders. Earnings per stock amounts to 58 cents, while in 2012 it amounted to 69 cents for the six months. Total Comprehensive Income including, net profit for the period and movements in reserves held in Equity, was $1.33 billion compared to $3 billion for 2012.

“Unrealized fair value losses on available for-sale securities exceeded unrealized foreign exchange gains. The unrealized fair value losses emerged from lower bond prices as interest rates rose, especially USA corporate bonds. Following the NDX programme we now carry a large portion of GOJ securities with lower market values, lower coupon rates and extended tenors” the report to shareholders stated.

Revenues | Revenue of $15.24 billion was above prior year by 1 percent. With the effect of the NDX programme excluded, Revenue would have been up about 9 percent. Net Premium Income, in aggregate, was 4 percent more than that for 2012. The Individual lines of business earned premiums were up by 9 percent while Group Insurance and Annuity premiums were level with prior year. There was good new business across all lines. Investment income, before interest expense and capital gains was higher than in the prior year by 1 percent, reflecting lower coupons from March on some GOJ bonds management indicated to shareholders.

Administrative expenses of $3.73 billion were 10 percent more than in 2012 but the increase in the June quarter is 12.8 percent. The increase would have be only 6 percent if the $120 million legal claim is excluded. The increased expenses reflect mainly higher compensation costs, the $120 million legal claim paid in June 2013 and higher loan loss provisions in the Banking Group.

Stockholders’ Equity as at June 2013 was $33.21 billion, compared to $32.64 billion as at December 2012. Significant unrealized fair value losses were also recorded in June to Investments Reserves in Comprehensive Income, as bond prices fell with rising interest rates, especially USA corporate bonds. Total assets climbed to $185 billion from $175 in December last year as the group continues to grow moderately.

Insider call | At an annualised earnings of $1.68 per share generated in the latest quarter and with a stock price of just $8.20, the stock is undervalued and is accorded a Buy Rated rating.

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

Dolphin continues to grow

August 30, 2013 by IC Insider.com

Dolphin Cove reported improved profit for the six months to June of $221 million compared to $195 million in 2012, an increase of 13 percent and for the three months to June, $103 million versus $84 million, a 22.6 percent gain. Total revenue for the six months to June was $787 million versus $706 million in June 2012, an 11 percent increase and $393 million for the June quarter compared to the previous year’s $344 million for a 14 percent change.

Gross profit rose 11 percent year to date to $696 million and was up 13 percent in the recent quarter. Administrative cost rose faster than revenues 20.6 percent for the six months but 25 percent in the June quarter. Interest cost declined from $11 million in the six months last year to just $1 million for 2013.

Both revenues and profits would have been negatively affected by the slowdown in visitor arrivals this year and would have slowed growth somewhat.

The consolidated financial position of the Group is strong, showing a healthy net current assets over current liabilities of $252 million position with cash funds and investments of $205 million, but the position is boosted by increased borrowing for capital spend for fixed assets and new dolphins with $174 million spent on animals in the last twelve months in preparation for expansion. This is in keeping with the company’s plan to open and operate additional parks in other Caribbean countries where they acquired real estate and additional dolphins for the attractions.

Notwithstanding the investment in fixed assets, the company paid dividends (20 cents per share) during the six month period.

The stock is priced at $9 each and carries a PE of more than 10 times this year’s estimated earnings, which should be around 80 cents per share. Based on the value, the stock would be Hold Rated.

Related posts | Growth slows for Dolphin | Dividends to come

Image courtesy of Bill Longshaw/FreeDigitalPhotos.net

Filed Under: Company News, Company Results Tagged With: Dolphin Cove, JSE Company

Scotia: No change in dividends

August 29, 2013 by IC Insider.com

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The two Scotia companies announced dividend payments today with both payments scheduled for October.

Scotia Group Jamaica approved a third interim dividend of 40 cents per stock unit payable on October 9, 2013, to stockholders on record at September 18, 2013.

Scotia Investments approved an interim dividend of 45 cents per stock unit, payable on October 9, 2013, to stockholders on record as at September 18, 2013. The dividends to be paid represent a continuation of their dividend policy and are the same amounts that they have been paying against this year’s profits since the start of this year. Both companies raised the pay out in January this year from 37 cents for Scotia Group and from 40 cents for Scotia Investments.

Dividend announcement from Scotia published 28th August, 2013 | The Board of Directors of Scotia Group Jamaica and Scotia Investments will consider a dividend payment at a meeting to be held on August 29, 2013. It is expected that the two entities will retain the payments they have been making for the year to date of 40 cent per share in the case of Scotia Group and 45 cents in the case of Scotia Investments.

Both companies are expected to release nine months results to the end of July on Thursday, August 29 along with teh announcement of the dividends. Investors will be watching Scotia Group numbers to get an indication as to the timing for investment purposes and possibly the state of the financial market.

For Scotia Investments, the results will determine if investors in Trinidad will continue their strong interest in the stock. A return to reasonable growth in profits could see increased interest as the stocks dividend yield will be very attractive for investors in the Twin Islands.

In the April quarter in spite of a $397 million hit from the debt swap of Government of Jamaica instruments, Scotia Group was able to report 92 cents profit after tax, with the July quarter likely to recover from the negative effect from the debt swap, which resulted in a lower rate on the investment instruments. The baking group could post higher earnings in the latest quarter, but a lot will depend on how much provision have been made for non-performing loans and how much has been made from exchange rate movement of the Jamaican dollar.

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

Producers profits up, is it time to buy?

August 29, 2013 by IC Insider.com

Directors of Jamaica Producers have purchased quite a bit of their company’s shares in recent months as the fortunes of the company seem to be on the improve. However, we ask the question: Is Producers right for the average investor?

The answer: Not at this time. With the stock price at the $18 level and the net book value placed at $29 per share, the gap is significant and earnings have not reached the level for the wider investing public to accord the stock a higher value, regardless of what the Directors’ buying actions may suggest.

In the just released company results, Producers reported a jump in profits by 42 percent to $158.5 million for the six months to June 2013 relative to the same period last year, and was up 59 percent for the latest quarter to June, over the June 2012 quarter to $73 million. For the six months, revenues increased by 6 percent to $3.7 billion and 5 percent to $1.84 billion for the June quarter over the same periods in 2012.

JP Europe | Revenues increased by 8 percent to $1.34 billion for the European division resulting in a 20 percent increase in pre-tax profits of $56.5 million for the second quarter and $116.4 million for the first half of 2013, more than doubling the result for the comparative six months of 2012. The turnaround in this area resulted from moderate improvement in the economies within the region, exchange rate movements between the Jamaican dollar and the Euro as well as expansion of sales to new areas within the EEC.

JP Tropical | Pre-tax profits of $26.6 million for the second quarter increased by 105 percent from $12.9 million in the 2012 period, a turnaround relative to the first quarter 2013 loss of $54.8 million, which included one-off exceptional restructuring costs of $35.9 million. With very limited banana supply, total revenues for the JP Tropical Division for the second quarter were down by 3 percent relative to the 2012 second quarter and rose by 4 percent on the first quarter.

During the latter weeks of the six month period, production of bananas resumed on the farms in St. Mary, commencing the generating of income to help cover the cost of re-development and maintenance of the resuscitated banana farms, which had negatively affected JP Tropical Division’s previous results. With the return of banana production, the JP Tropical Division improved its pre-tax profits for the second quarter compared to both the first quarter of 2013 and the comparable period last year. The primary snack production facility in Jamaica has now returned to production having been closed since Hurricane Sandy in 2012.

The recent acquisitions and investments in our JP Tropical Division collectively made a positive contribution to the divisional performance and we expect them to be an increasingly important part of the division in the future. The primary focus for the Division going forward will be to grow revenues organically by taking advantage of our installed base of productive capacity.’

“Mavis Bank has had a strong first half with operational efficiency gains allowing the company to meet export targets” management stated. Tortuga had mixed results in the first half with improved performance in Jamaica and Barbados and weaker sales in the US and other Caribbean markets. Tortuga’s overall performance was also affected by the seasonality of the product which typically generates peak sales in the fourth quarter and the Caribbean winter tourist season.

Regarding the Mining Company Limited, a subsidiary in which they hold a 51 percent interest, the company stated, “It had a satisfactory performance in the first half driven by the quality of our output and reliability of our service. We are now taking steps to expand mining operations from our base in St. Mary by opening a facility in Clarendon to allow us to participate in the South Coast market.”

The group has borrowings of $1.2 billion, which was used in funding investment in some of the associated companies as it reduced the amount in cash funds and investments that the Group held prior to the major investments. Cash and short term now stands at $435 million and $558 million for longer term investment. Investment in associated and joint venture companies amounted to $2.75 billion with the bulk of it being in Kingston Wharves. Shareholders’ equity at the end of June amounts to $5.4 billion.

Related posts | Insider Trades | Profits up at Jamaica Producers

Filed Under: Company News, Company Results Tagged With: Jamaica Producers, JSE Company

Pan Jam profit stable

August 28, 2013 by IC Insider.com

Pan Jamaican Investment Trust released results for the half year to June and reported profit attributable to shareholders for the June quarter of $486 million, a slight 4 percent increase on the $468 million in the 2012 quarter. For the six months ended June, Pan Jam made $710 million, compared to $970 million for 2012, a decrease of 27 percent. The results equated with earnings per share amounted to $2.28 for the quarter and $3.34 for the six months to June.

The year to date results were negatively affected by the decision by both Pan Jam and the Sagicor group, an associate, to swap older debt with a higher book value for new government of Jamaica debt at a lower value (JDX2) which resulted in a large loss.

Helping to boost the results was the share of results of associated and joint venture companies which rose from $227 million to $532 million in the June quarter and up from $305 million in 2012. For the six months to June, these investments resulted in $769 million being booked and is largely due to an increased shareholding in Sagicor, which was partly offset by increases in finance costs of $119 million.

In their comments on the results, Management stated that “Investment income of $44 million in the second quarter was lower than last year’s comparable quarter by $36 million, as unrealised losses on securities trading of $26 million eroded foreign exchange gains, interest income and dividends. Year to date investment income of $145 million is 27 percent ahead of last year due principally to significantly higher foreign exchange gains. Property income was flat compared to last year for both the quarter and year to date, as stable occupancy levels and continuing modest growth in rental income were offset by reduced property revaluation loss.

“Group operating profit for the 2nd quarter decreased by $73 million or 32 percent, compared to last year’s 2nd quarter. For the year to date, group operating profit of $388 million is $23 million or 6 percent less than last year’s level. Total revenue was lower for the quarter compared to last year by $32 million, 7 percent, principally attributable to the decline in investment income, but ahead of last year for the 6 months.”

Occupancy | The group enjoyed overall rental occupancy exceeding 95 percent for the 2nd quarter, a slight decline from last year, while contribution to group operating profit of $158 million for the quarter ($342 million year-to-date) was $42 million ($16 million year-to-date) lower, attributable to reduced property revaluation gains.

Operating expenses | Management said that operating expenses increased by $41 million for the quarter, and $69 million for the 6 months, driven by increased levels of direct property costs, professional fees associated with investment opportunities and general increases in staff costs. Finance costs increased compared to last year by $119 million to $137 million for the quarter, and by $298 million to $331 million for the 6 months, resulting from increased loans booked.

Associated Companies | The associated companies consist principally of a 32.8 percent investment in Sagicor; minority positions in New Castle Co. Limited, owners of the Walkerswood and Busha Browne lines of sauces and seasonings; Mavis Bank Coffee Factory Limited; Hardware & Lumber Limited; Caribe Hospitality Limited (developers of the planned New Kingston Marriott Courtyard Hotel) and Chukka Caribbean Adventures.

Pan Jam’s share of Sagicor’s comprehensive income for the quarter was a loss of $426 million consisting primarily of unrealized losses on available-for-sale securities, net of exchange gains. For the year-to-date, the share of the net unrealized loss is $275 million, compared to a share of net unrealized gains of $52 million for the comparable period last year.

According to management “New Castle’s results for their fiscal year ended April 30 2013 increased more than threefold on the back of a 44 percent jump in revenue, while Mavis Bank again posted good results. Chukka overcame Hurricane Sandy-related disruptions to cruise ship passenger arrivals and the temporary closure of the cruise ship port in Turks and Caicos to post returns in line with expectations.”

Balance Sheet | Total assets at June amounted to $22 billion, compared to $21.4 billion at the end 2012. Stockholders’ equity increased to $16.6 billion equating to a book value per stock unit of $77.85.

Related posts | Pan Jam’s profit dented too

Filed Under: Company News, Company Results Tagged With: JSE Company, Pan Jam

Is C2W doomed?

August 28, 2013 by IC Insider.com

After almost two years, C2W Music, which promised that they would be making profits by now is yet to show the income, much less profits.

In its prospectus for the IPO to raise $129 million on the Jamaica Stock Exchange, the company made this statement about profitability, “As a start-up, the Company is expected to post a Pre-Tax Loss for 2012 of approximately US$241,849. The Directors expect earnings to stabilize from 2013 onwards, with a projected profit before tax of US$668,100 in that year, increasing threefold to a projected Profit before Tax of US$2.36 million in 2016.”

The results to June indicates that those projections were just a pipe dream as the company not only reported a loss of US$345,855 for the six months to June 2013, but for the similar period in 2012 when the loss was US$131,284, and there was just US$1,803 income for the six months. While it is not impossible to win contracts for songs that could change the picture, one would need to see a steady, if even small, flow of income but that is not the case with a year and a half now gone.

Shareholder equity now stands at US$377,257 down from US$1.2 million at June last year. Cash is almost gone entirely with just US$14,335 left of the sum raised in the IPO. C2W has assets in the form of advances to song writers of more than US$300,000 but that is not income and only $24,000 are due within a year.

The company needs a knight in shining armour and FAST if it is to avoid the burial ground. Crunch time is nigh.

Filed Under: Company News, Company Results Tagged With: C2W, TTSE

First Citizens lousy investor’s relations

August 28, 2013 by IC Insider.com

It was once said that as a country, Trinidad wanted to be the financial capital of the Caribbean, but recent activity on the country’s capital market indicates that they have a far way to go in achieving such a goal — if that is possible.

First Citizens Bank launched the largest ever Initial Public Offering (IPO) of shares in the history of the T&T Stock Exchange with a market value of approximately TT$1.1 billion on Monday 15th July at an offer price of TT$22 per share for 48,495,665 shares. The bank said the IPO will assist in widening its capital base in order to facilitate future strategic expansion plans. The offer was slated to close on August 9 and was extended to Monday, August 12th 2013 as the 9th was a public holiday.

First Citizens Brokerage & Advisory Services, a subsidiary of First Citizens Investment Services, is the Lead Broker for the Offer for Sale. The handling of the entire issue is a classic demonstration of poor investor relations and that is not a good sign for investors.

Listing on September 16 | The T&T Stock Exchange has advised that First Citizens has applied to have its shares listed on the TTSE on September 16th 2013 subject to the approval of its application to list by the Board of the TTSE.

This is madness and is reflective of lack of sensitivity in their financial market. First off, the opening time for the issue was unnecessarily long so those who applied early had their funds tied up without any compensation. Even worse is after nearly a month of closing of the issue, investors are yet to know what is their allocation of shares. First Citizens said on their website that investors will find out between August 30 and September 6.

A check with the T&T Stock Exchange as to why it will take such a long time for the shares to be listed indicates that the problem is not with the Exchange, who are ready to list as soon the information is available and is approved by the Stock Exchange Council. A Stock Exchange source suggests that the delays maybe due to the broking community not being fully conversant with how to execute a timely IPO.

Oversubscription | Information obtained suggests that the issue was about two times oversubscribed with institutional investors probably being the main subscribers resulting in the high level of oversubscription.

While the management has made major missteps in dealing with this issue, IC Insider still rates the stock as Buy Rated based on the issue price and potential earnings. We believe there should be a steep appreciation in the stock’s value when it is compared with others within the financial sector.

Filed Under: Company News, General Business News, Initial Public Offers, Stock Market, TTSE Market Tagged With: First Citizens, Trading Activity, TTSE

General Accident undervalued, but . . .

August 27, 2013 by IC Insider.com

General Accident Insurance Company continued to perform well in the second quarter as they did in the first of this year with profit increasing 48 percent to $80 million in the second quarter bringing the six month results to $177.7 million, an increase of 57 percent over the same period in 2012. The company said they made more money in both our underwriting and investment operations and as a result were able to improve their overall profitability and capital efficiency.

Underwriting | For the two quarters, gross premiums grew to $3.2 billion, an increase of 21 percent over the first six months last year. Net earned premiums grew by 8 percent to $443 million. “Premium growth was driven by the healthy organic growth of our core commercial property and motor businesses as well as the execution of facultative transactions on behalf of large domestic and multinational clients,” the company said.

“Our combined ratio improved from 92 percent in the first six months of last year to 90 percent in the first six months of 2013. The improvement in our combined ratio, the insurance industry benchmark for underwriting profitability, occurred despite continued softness in insurance rates and a deteriorating loss ratio. As a result, our underwriting profit in the first half of 2013 stood at $42 million compared to $34 million during the same period last year”, management continued to state.

Claim expenses rose from $247 million for the year to June last year by 25.5 percent to $310 million in 2013. Management expenses rose from $145 million for the year to June 2012 by 14 percent to $165 million in 2013 and in the latest quarter from $75 million to $88 million, an increase of 17 percent.

Investment Performance | For the six months to June investment income amounted to $145 million, an increase of 68 percent compared to $86 million in the first half of 2012. Investment income in the June quarter was only $52 million much less than the amount generated in the first quarter. A slower fall in the value of the Jamaican dollar would have resulted in a lower gains from foreign currency trading or translation.

Summary | A sharp change in commission expense from a loss of $78 million in the June quarter of 2012 to a small surplus of $6.5 million helped in no small manner to boost the bottom-line in the quarter even as net premiums earned declined from $205 million to $187 million and claims jumped from $118 million to $157 million over the same period.

The company paid out $50 million in cash dividends to shareholders in the first quarter.

Assets jump | The company that had assets totaling $3.9 billion at the end of December last year, has seen a major jump to June to $7 billion mainly as amounts due from reinsurers and co-insurers doubled to $2 billion. The amounts due from policy holders climbed $1.3 billion to $41.8 billion and cash and short term investments increased by $500 million.

On the other hand, amount due to reinsurers and co‐insurers moved up by $1.75 billion, insurance reserves up by $1.3 billion and shareholder’s equity by a little over a $100 million to $1.4 billion since December last year.

Return on average equity is 25 percent which is attractive if the company can maintain the current profit levels. If they can, then earnings per share should reach 35 cents for the year, which makes the stock now priced at $1.85 cents a bargain.

The stock traded at $2.81 in 2011 when profits were not as strong as it is now. Additionally, a number of junior market companies are trading around 6-7.5 times 2013 earnings with General Accident at 5.3 times, suggesting there is room for capital gains in the medium term. Of course Jamaica is in the midst of the hurricane season and some investors may not want to be bold ahead of the end of the season, just in case there is major damage and claims. This stock ought to be watched for benefit from what could be a nice price gain before year end.

Insider call | General Accident is an IC Insider Buy Rated stock.

Filed Under: Company News, Company Results Tagged With: General Accident, JSE Company

TCL stock gains continue

August 23, 2013 by IC Insider.com

Friday, 23rd August 2013 | Trinidad Cement continues on its merry march upwards on the Trinidad Stock market thus reducing the potential gains left in the stock. It was this week’s greatest mover, moving from a bid of $1.76 at the end of last week to a closing price of $2.05 this week for a gain of nearly 17 cents. With a potential gain of 544 percent left and the bid being firm at $2.05 with a fair volume, expect to see the stock price increase in the week ahead.

National Flour Mills and Guardian Holdings lost value thus increasing the potential gains in these stocks. Elsewhere values remained the same as at the start of the week. Angostura has a bid of $9.11 at the end of trading on Friday , which is above the last selling price, suggesting that it will trade higher in the week. Guardian Holdings looks as if it could decline some more before it starts to rise.

Based on PR ratios, the Top Four stocks with potential on the TTSe are Trinidad Cement, National Flour, Guardian Holdings and Berger TT.