Company News — Page 163

CAC $150m Preference share issue

September 13, 2013 by IC Insider.com

CAC 2000 Limited (formerly Carrier Air Condition) went to the market in July to raise $150,000,000 with the option to upsize depending on demand by way of one Dollar (J$1) for Five (5) years redeemable Preference Shares with maturity set for July 31, 2018.

A cumulative preferential dividend is at a fixed rate of 10% per annum for the first year and thereafter a variable rate of 2.5 percentage points above the weighted average yield rate applicable to the 6 month Jamaica Treasury Bill Tender (WATBY), held immediately prior to the commencement of each quarterly interest period, until maturity.

The net proceeds of the offer will be used by the Issuer to invest in the expansion of the Company and to provide working capital.

The Issuer reserves the right to redeem the Preference Shares on any dividend date after a period of two (2) years by giving the holders 90 days notice.

Victoria Mutual Wealth Management are the brokers to the issue,which is being done by private placement.

The issue, which was slated for closure on July 31, has been extended. As of September 13th, the issue said to be nearly taken up in full. Lack of a strong name recognition in the market may be hampering the full take up of the offer.

Related posts | Capital market is alive!

JBG profit held back

September 12, 2013 by IC Insider.com

A drop in Hi Pro profit from flat sales, increased corporate taxes provision and increased finance cost held back profit for the first quarter of the new fiscal year for Jamaica Broilers Group, one of Jamaica’s leading agro product company. This is despite a big jump in revenues and profit from the US operations, as well as a turnaround from a big loss in the ethanol operations in 2012 into a profit in this latest quarter.

Jamaica Broilers’ financial results for the quarter to July, 2013 show profits attributable to stockholders increasing by 10 percent to $140 million or earnings per share of 11.68 cents against $127 million or 10.60 cents per share last year. The moderate improvement in profit flows from revenues of $7 billion, a 17 percent increase over the $6 billion generated in the corresponding period last year. Gross profits for the quarter amounted to $1.32 billion, a 17 percent increase over the $1.13 billion of the corresponding period last year.

Expenses up | Distribution and selling expenses grew by a strong 26.5 percent to $280 million while administrative costs increased 13.4 percent to $838 million. Management states that the increases essentially reflect the impact of inflation along with costs related to organizational strengthening. Finance cost rose from $51 million to $79 million in the quarter reflecting increased borrowing from $4.5 billion in 2012 to $5.3 billion at the end of the quarter.

Segments | The US operations climbed sharply in sales to $805 million, a 176 percent increase to external parties, contributing to a rise in segment profit to $76 million from $7 million in 2012. The broiler segment sales rose by 14 percent to $3.5 billion as segment profit moved to $234 million versus $189 million in 2012. At Hi Pro division, sales, which include feed and retailing of non-feed products, were flat at $2.56 billion but profit slipped from $230 million to $149 million. Ethanol sales at $248 million in 2013 was lower than for 2012 at $289 million, as profit from the operation ended up at $16 million, a turnaround from a $49 million loss. Other operations, which delivered sales of $200 million and profit of $36 million in 2012, reported a 154 percent sales jump to $309 million in 2013 but profit inched up to only $39 million. Other operations include the sale of feed ingredients, beef products, fish, cattle rearing, processing and co-generation energy supply.

The recent expansion in fertile egg production in Georgia and increased procurement activities is beginning to show positive results as stated by management in their release to shareholders.

Acquisitions | The quarterly results do not include revenue and profit from the just concluded acquisition of England Farms Company, a well-established fertile egg operation based in Arkansas. While this company operates in a different state than the current Georgia one economies of scale can be achieved by merging most of the administrative activities into one thus cutting cost. Specialisation may also be possible as well as savings in shipping cost where each unit can deliver supplies closer to the individual plants. In the release announcing the acquisition of this entity, management stated that it will double existing sales.

The purchase of Hamilton’s Smokehouse will result in an expansion in the volume of products available under the Hamilton Smokehouse brand and will provide opportunities for greater utilization of the Best Dressed Further Processing facilities at Spring Village, St Catherine, management stated. With the processing of Hamilton products to be done in JB existing facilities will mean higher profit margins as most of the former overhead cost of a stand-a-lone operation will no longer exits.

The build out in the 68 percent owned Haiti operations is continuing with increased sales of Haitian produced baby chicks, feed, layer birds, table eggs, and processed chicken.

The group has been spending on capital improvement apart from acquisitions, nevertheless they still had $1.4 billion in investments and cash at bank at end of July.

Insider Call | Jamaica Broilers is still on track to report between $1.50 – $1.80 earnings for the year notwithstanding the almost flat first quarter results and is an IC Insider Buy Rated stock.

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

Mystic Mountain $500m Pref shares

September 11, 2013 by IC Insider.com

In July, Mystic Mountain issued $500 million in 10.50 percent preference shares in a private placement. So how do they look financially? IC Insider got hold of some data to help investors understand what the operation is looking like. The funds raised are expected to cut borrowing cost, provide working capital and allow for expansion.

The company intends to apply to the Jamaica Stock Exchange for the listing of all of the Preference Shares by way of introduction and to make such application six months or as soon as conveniently possible after the closing of the Offer.

The company operates an attraction facility in Ocho Rios, Jamaica catering to all, but relying a great deal on foreign visitors to the island.

Information from the company states that “The Rainforest Sky Explorer is a chairlift ride which takes riders from the entrance to the heart of the action, 700 feet higher. The journey takes approximately 15 minutes each way and covers approximately 1.3 miles, giving riders superb views of the rainforest, the beautiful Caribbean Sea on the north coast of Jamaica and educational pictorial displays featuring Jamaican Olympian athletes that are set up at the top of the route.

RFA is a British Virgin Islands registered corporation that, through its Hong Kong wholly owned subsidiary, is the majority owner of five ecotourism parks, two in Costa Rica, one with a management agreement in Mexico, one in St. Lucia, and Mystic Mountain in Jamaica. RFA owns 54.9 percent of Mystic Mountain. The remaining 45.1 percent is owned by Mike Drakulich, Norma Clarke and John Dalton. Additionally, the Company is planning to build a sixth park in St. Maarten and is in advanced negotiations to develop a seventh park in Rio de Janeiro.”

Profitability | Net profit for September 2012 amounted to US$1.186 million up from US$1,018 million in 2011 with profits being made in the last four years, the period that the company disclosed results for. Financial performance for 2nd quarter ended March this year and March 2012 showed operating revenues up to US$2.20 million, a US$179,000, or 7.5 percent decline compared to 2012. Direct operating expenses totalled US$940,000 in the quarter, a 10.4 percent or US$48,000 increase over the 2012 quarter. Administrative expense increased marginally by 3 percent from US$441,000 in the second quarter 2012 to US$455,000 this year. Finance costs fell from US$56,000 to US$40,000 in the second quarter this year compared to the similar period in 2012. Net Income declined by 34 percent or US$299,000 to US$580,000 in the quarter.

Revenues for the 2012 fiscal year amounted to US$7.146 million, an increase of 16 percent or $1 million over 2011 primarily as a result of an increase in visitors over the year. The compounded average growth rate (CAGR) for the 4 year period is 9 percent. Direct operating cost of US$2.40 million increased by 25 percent or US$500,000 compared to 2011, resulting in a gross profit of US$4.75 million for a 12 percent improvement over the previous year.

Operating expenses of US$3.36 million increased by 12 percent or US$358,000 relative to 2011, primarily as a result of increases in general operating expenses such as repair and maintenance and office expenses. Gross profit margin declined from 67 percent in 2011 to 66 percent in 2012. In 2009 gross profit margin was 74 percent.

Finance costs of US$205 thousand declined by US$27 thousand or by 12 percent relative to 2011 of US$232 thousand. Finance cost was reduced from a high of US$611 thousand in 2009. Mystic has reduced its total borrowings from US$4.824 million to US$2.454 million in 2012 by paying down loans resulting in reduced interest cost.

Liquidity | As at September 30, 2012, the company had a current ratio of 1.05. This represents an increase of 22 percent of the liquidity position relative to 2011, in which the current ratio stood at 0.86. The level of equity to debt which was 110 percent in 2011 improved sharply to 160 percent in 2012.

The company’s working capital has been negative for the three years to 2012 and just went into the black in 2012.

Filed Under: Company News, Company Results, General Business News Tagged With: Mystic Mountain, Preference Shares

First Citizens shares set to explode

September 11, 2013 by IC Insider.com

A whopping $3.3 billion chased $1 billion of shares that were on offer in the twin island state of Trinidad and Tobago between July and August leading to a massive oversubscription for the 48 million First Citizens Bank shares at a very attractive price of TT$22 each. The high level of oversubscription is bound to result in a massive jump in the stock price after it opens on Monday, September 16 as some of 12,435 applicants who got less shares than they wanted will enter the secondary market to snap up more shares before the price gets too high.

Employees of the bank got 3.78 million units accounting for 7.8 percent of the amount offered and just more than half of what they were entitled to based on the allocation noted in the prospectus. The public got 12,852,807 units or 25.5 percent, which is 10.5 percent more than the prospectus had assigned them. Pensions and other trust funds got 12.1 million units representing 25 percent; mutual funds and unit trusts, 10 million units or 20.7 percent; the National Insurance Fund 10 percent amounting to 4.85 million units and well as companies registered in Trinidad and Tobago and the Caribbean Investment Fund.

The prospectus had indicated that if the Offer is oversubscribed, consistent with the Government’s policy of promoting the widest possible participation in share ownership, priority to receive the allocation (as a percentage of the maximum Offer) shall be given as follows in descending order of priority:

Employees of the Issuer 15%
Individual investors who are nationals of Trinidad & Tobago 15%
Registered pension and other trust funds, Credit Unions and Cooperatives 25%
Registered mutual funds including The Trinidad & Tobago Unit Trust Corporation 25%
National Insurance Board 10%
Companies registered in Trinidad and Tobago and other investors such as the Commonwealth Development Corporation and the Caribbean Investment Fund 10%.

The stock went on the market at a PE of 14.67, which is well below BNSTT at 22.6, BCB Holdings of 25.78 and Ansa Merchant Bank at 19.30 but just below Republic Bank at 15. Heavy oversubscription usually mean that the price will rise sharply as investors try to get more shares to satisfy their thirst.

IC Insider has labelled the stock, Buy Rated and this remains intact.

Filed Under: Company News, Stock Market, TTSE Market Tagged With: First Citizens, TTSE

Stocks & Securities dump repos

September 10, 2013 by IC Insider.com

Stocks & Securities (SSL) dumped their repo business and sold it to Jamaica National Building Society. Mark Croskery, Managing Director of SSL, said this is in keeping with the trend in the industry where financial institutions are reducing their exposure to this business.

The two government debt swaps (JDX) have brought into full focus the risk that is inherent in the business. The sharp swings that have taken place in interest rates has resulted in major changes to the value that companies book in their financial statements. Such risk means that these entities need to have a greater level of capital to withstand the potential losses that can occur.

Croskery stated that SSL has applied for a unit trust license, which they hope will be approved for later in the year. They expect to enter the market for money market offerings using unit trust vehicle.

The amount of the sale was not disclosed but at the end of 2011, SSL had $4 billion on their books. However, a source suggests that the amount may have declined to a much lower figure. With such sums and with the interest rates as low as they are, making a decent profit from the repo business is marginal. Interestingly, Croskery stated that there would be no staff changes as a result of the sale.

The sale is likely to provide capital for the company and strengthen its balance sheet.

SSL customers were recently advised that the company would no longer be offering these instruments.

Filed Under: Company News, General Business News Tagged With: JNBS, SSL

New head at BCW Capital

September 10, 2013 by IC Insider.com

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.

Filed Under: Company News, General Business News Tagged With: Appointment, BCW Capital

CWJ: Making headway but slowly

September 9, 2013 by IC Insider.com

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.

C&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.

Cost 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.

Filed Under: Company News, Company Results Tagged With: C&WJ, JSE Company

T&T PEs: Better buys ahead

September 6, 2013 by IC Insider.com

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.

Below are charts that graphically show how TTSE stocks are ranked by PE Ratio potential.

Filed Under: Company News, Stock Market, TTSE Market Tagged With: Guardian Holdings, PE Ratios, TCL, TTSE

JMMB share offer taken up

September 3, 2013 by IC Insider.com

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.

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: JMMB, JSE Company

D&G poor 4th quarter

September 3, 2013 by IC Insider.com

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.

The 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.

Regarding 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.

Filed Under: Company News, Company Results Tagged With: D&G, JSE Company