Ready. Set. Go!

July 29, 2013 by

Monday, 29th July 2013 | The earnings season has begun! Over the next few weeks, our IC Insider analysts will be busy scouring over company quarterly reports, crunching the numbers and calling it as we see it.

As in any race to perform, there will be winners and losers. The markets will be sure to respond and with the JSE and TTSE having a limited supply of some stocks, the bulls could be on the run.

Buy Rated Stock | Of the 5 company quarterly reports reviewed to date, 3 have been added to our Buy Rated list. National Commercial Bank, One Caribbean Media and Berger TT have interesting story lines that could improve your wealth health.

Better than a broker’s ‘buy’ recommendation, IC Insider has no vested interest in any stock transaction or conflict of interest. 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.

Related posts | NCB recovers from NDX hit | OCM profits growth slows | Berger TT profit poised for big gain

To search for published reports for a Buy Rated stock on IC Insider, please use ‘Search IC Insider’ and enter the company name, in full or in part.

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Filed Under: Company News, Stocks to watch Tagged With: , ,

Berger TT profit poised for big gain

July 29, 2013 by

The economies of Trinidad & Tobago and that of Jamaica are two contrasting ones. In the case of Trinidad, after a few years of decline the economy is growing again, albeit moderately. Jamaica on the other hand, is still experiencing decline. Interest rates, while sharply down in Jamaica at more than 6 percent, are nowhere near those of the Twin Island state with Treasury rates at less than 1 percent.

But a look at the results for Berger Paints in the two territories would make one wonder if the state of the economies aren’t the same. Both companies are struggling to maintain profitability as the construction sector suffered decline in both countries and are yet to be restored to health. In both countries, there are signs that things may be picking up. For example, Trinidad Cement reported improved sales in the first quarter this year over 2012. In the case of Berger Trinidad, there was a big improvement in the bottom line in the quarter to June with slight pickup in sales to $13.395 million versus $12.891 in 2012. Not much, but enough. This along with a cut in expenses to $13.52 million compared to $14 million, reduced the loss from $1.25 million before tax in 2012 to $185,000 this year and the after tax loss to $179,000 to June this year versus $973,000 in 2012. For the 12 months to March this year, on revenues of $64,146 million and expenses of $62,504 million, the paint company made a profit of $791,000 after tax.

According to figures released for the quarter to June, the company has eliminated some cost. This should made quite a difference to the full year results which IC Insider is forecasting to be 50 cents per share for the year to March 2014.

The price earnings ratio (PE) of the stock is low at just 7 times this year’s earnings, making it a good candidate for investors to profit from.

The financial position of the company is healthy, with working capital being more than two and a half times current assets to current liabilities. Equity capital stands at nearly $25 million with no major debt capital being used in funding its operations. There is virtually no cash on the balance sheet suggesting that they are using cheap bank financing to ensure shareholders max out on profits.

Insider call | Berger TT is an IC Insider Buy Rated stock.

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

Mayberry’s tough year so far

July 28, 2013 by

So far 2013 is not proving to be a good one profit wise for Mayberry Investments. First government debt swapped earlier in the year hit $337 million from profits in the March quarter and vestiges of the debt swap measures still reverberate in the numbers to June. For the latest quarter, net profit was $48 million after the company benefited from a tax credit of $16 million which raised the bottom-line from $32 million. This compares to profits of $36 million for the similar period in 2012.

For the 6 months, profit after tax amounts to a loss of $20 million and $149 million in 2012. Pre-tax profit of $214.6 million compares favourably to $165 million in 2012.

Revenues | Gross revenue for the quarter of $386 million is down on the same quarter last year of $432 million. During the quarter, there was growth in gain on sale of investments of 119 percent to end at $54.4 million, net foreign exchange gains moved from a loss of $10.6 million to a surplus of $30 million. There was a reduction in fees and commissions from $40 million to $17 and net unrealized market loss of $62 million on trading portfolio. All of these, along with interest expenses contribute to a net income of $186 million versus $217 million in the 2012 quarter before expenses.

First quarter recap | Containment in expenses and a slight boost in income helped Mayberry to record an operating profit of $158 million over the $104 million generated in the first quarter of the prior year. A one-off hit to the profit of $337.3 million arising from the NDX debt exchange plunged the operations into a loss of $178 million, before a tax credit of $87 million and share of associated profits of $24 million resulted in an overall loss of $67.7 million compared to a profit of $113 million last year. Revenues net of revaluation gains or losses came in at $473 million in the quarter up from $452 million in 2012.

mayberrylogo136pxThe company made increased profits from trading gains in the first quarter which rose to $117.9 million up from $36.4 million in the similar quarter of 2012. Mayberry sold 12 million shares in Access Financial Services for $69 million, reducing their shareholdings to 38 percent. The sale of Access would have contributed a large portion of the trading gains. Net foreign exchange gains helped too in boosting the top line with an increase from $9 million to $40 million. So did dividend income which moved from $15 million to $34 million, while fees and commission fell from $70.6 million to $19.4 million this year. Gains on investments fell to a loss of $11 million from nearly $3 million gain, the year before. For a full recap of the first quarter, read our post Mayberry profit bleeds from NDX

Second Quarter Expenses | Expenses for the quarter were $176 million compared to $194 million for the comparative period as loan loss provision fell from $40 million in 2012 to $9 million in 2013.  Other operating expenses rose from $69 million to $86 million, due mainly to a new asset tax imposed by the Government earlier this year. Year to June expenses are down from $354 million to $341 million due mainly to reduced loan losses which was partially offset by the asset tax.

Mayberry stock which was trading at $2.05 per share after the release of the first quarter results has since moved to $2.60 which it traded at for several weeks and closed at on Friday.

Financial Position | Assets on the balance sheet, declined from $23.7 billion at March 2012 and $20.77 billion in December, to $19.5 billion at the end of March but it is back up to $20.8 billion in the latest report. A decline in the investment portfolio of $5 billion countered by a decline of $4.5 billion on the liability side for securities sold under repurchase agreements accounted for the bulk of the change since March 2012. On the other hand promissory notes and loans increased over June last year by approximately $2 billion. The equity capital is holding steady at $3.7 billion.

Related posts | Mayberry profit bleeds from NDX

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

OCM profits growth slows

July 26, 2013 by

One Caribbean Media revenues climbed 21 percent in the June quarter and 32 percent year to date over 2012. Profit after tax was up 10 percent in the latest quarter and 23 percent for the six month period. The growth in the second quarter is down on that of the first quarter when management stated that acquisitions and revenues flows from a state election in Tobago and elections in Barbados helped to boost revenues and profit for the March quarter by 40.4 percent.

OCM better results came as profits for the 3 months climbed to TT$20.3 million, up from TT$ 18.3 million in 2012, emanating from revenues which were up to TT$131 million. For the six months, profit after tax is up to TT$38.4 million from TT$31 million in the prior year. Both revenue and profits grew over the amount generated in the first quarter of this year.

Management is, however, cautioning as they did in the first quarter report when they stated that the second quarter will be tougher than the first but expect growth to continue. They are again sending a message of caution that the second half of the year will be more challenging.

Results comparison | The June quarter profit is just a shade off from the amount earned in the December 2012 quarter of $21.4 million from revenues of $145.7 million, as well as the amount earned in September quarter last year of $21.8 million from revenues of $132.6 million.

OneCaribbeanMedia280x150For most media houses, the first quarter of the calendar year is not usually the best in either revenues or profit as advertisers take a more moderate position in the first quarter coming out of the high expenditure of advertising during the Christmas period.

Profit 2012 | For the 12 months to December last year, earnings came to $74.75 million slightly up on the $69.45 million generated in 2011 from revenues of $495 million versus $451 million for non-interest income, an increase of 9.7 percent. Gross profit rose by 14.6 percent to $178 million from $155 million in 2011, showing greater level of efficiency in generating income.

Gross profit margin was 36 percent for 2012 up from 34.4 percent in 2011 is now up to 36.5 percent for the year to June reflecting a big improvement over the 32.6 percent generated in the first six months of 2012.

Financial health | The company is in a healthy financial position, generating annual cash flows of more than $70 million per annum, some of which it is using to acquire other income generating assets. Cash inflows could rise in the current year as profit seems poised to climb above that of 2012. Equity stands at $609 million with no debt and current asset ratio of more than 3 to 1, and cash funds of $144 million at the end of March. Funds are clearly being built up for further acquisitions.

Forecast | IC Insider continues to forecast profits of $95 million or $1.41 per share for the current year giving the stock a PE of 12.75 times earnings. Based on the Trinidad stock market PE ratio and Guardian Media which is at PE of 22, the stock is rated a buy for medium term appreciation, as the stock price could almost double based on these comparisons.

Insider call | OCM is now an IC Insider Buy Rated stock.

Related posts | OCM profits rise strongly 

 

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

NCB cuts dividend in half

July 26, 2013 by

NCB declared a dividend of just 8 cents in its latest dividend declaration. The last payment was 16 cents per share paid on May 24 and 23 cents in March 2013.

The latest dividend will be paid on August 26 and the ex-dividend date is August 9, 2013. The August payment represents a decrease from 17 cents paid in 2012 and the May 2013 payment represents a decrease from $0.21 paid in May last year. Further back in time, the dividend pay-out ratio for the 2012 financial year to September amounted to 27% and for the 2011 financial year 25.7% compared to 42.2% for September 2010.

The cut and carving of dividend payments from one period to the next is in keeping with an unpredictable policy the company has been executing despite a recent re-publishing of the Dividend policy (see below). This is in stark contrast with a very consistent and predictable policy of Scotia Group and many other companies on the stock exchange.

dividends2_280x150NCB Dividend policy, 2011 Annual Report | The Board of Directors of National Commercial Bank recognizes the importance of capital in meeting the needs of shareholders, investors and the business. To this extent, a dividend pay-out rate has been determined.

The Board of Directors will declare, at its discretion, dividends to shareholders. These dividends will be paid from the realised earnings of NCB. The dividends will be subject to a maximum of 50% of the ordinary realised profit earned each year and will be applied after taking account of all transfers. In the event that the pay-out is less than 50% in any one year, the Board of Directors reserves the right to increase future distributions proportionately.

Further, the Board, at its discretion, may distribute to its shareholders the full amount of any and all realised gains arising from non-recurring or extraordinary transactions.  The Dividend Policy is consistent with the Capital Management Plan and is reviewed annually or more or less frequently as determined by the Board.

Related posts | NCB recovers from NDX hit |  NDX slaps NCB profits |  Berger holds dividend, NCB cuts

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

NCB recovers from NDX hit

July 26, 2013 by

Despite the cost of the Government of Jamaica debt swap earlier this year the year, National Commercial Bank results to June are just a little distance away from the 2012 profit for the similar period. The banking group reported after tax profit for the nine months at $6.8 billion down from $7.36 billion in 2012 and profit of $2.27 billion in the June quarter compared to $2.587 billion in 2012. Contributing to the results is improvement in operating income which increased by 6.3 percent, or $1.7 billion, when compared with the nine months ended June, 2012. The increase is mainly as a result of net interest income, which increased by 7.9 percent ($1.3 billion) coming from the growth in loans, and investments, net fee and commission income increasing by 11.6 percent ($618 million), primarily due to increased card transaction volumes and increased fees earned from new loans.

Premium income, increased by 143.4 percent, or $2.1 billion, due mainly to the inclusion of general insurance premiums as a result of the acquisition of Advantage General Insurance Company. This is in contrast to the six months ended March when operating income declined by $26 million when compared with the six months ended March 2012. The decline was mainly caused by a $2.4 billion reduction in gains on foreign currency and investment activities arising from the bank’s participation in the debt exchanges, which plunged income for foreign currency and investment activities to a loss of $729 million in the March quarter, compared to a profit of $1.4 billion in 2012.

Loan Loss | A $450 million increase in provision for impaired loans compared to June quarter 2012 helped to keep earnings below that quarter’s net profit resulting in the net 2013 profit falling.

The data suggest that they have almost recovered from the low interest rates they are getting on Government of Jamaica debt instruments. The results for the quarter represents a recovery from the profit of $1.744 billion reported for the March quarter when the write down of the government bond was recorded. The NCBJ group accepted the Government’s debt swap offer and exchanged $118 billion of eligible securities. The primary impact of the exchange is a reduction in coupon rates and an immediate hit was felt from the lower interest rates from new instruments, compounded by the extension of the tenure of the securities.

NCB_buildingviaMLAArchitect.comExpenses up | Operating expenses increased by $670 million in the three months to June over the March quarter, of which $230 million is due to loan provisioning and $400 million to other operating expenses. For the nine months, operating expenses are up by $3 billion but much of this would be due to the acquisition of the general insurance company who financials are merged into the group’s figures.

Loans and advances, increased from $128.8 billion at the end of March 2013 to $135 billion and is up from $107.6 billion at June 2012, growing by 25.8 percent year over year. Investments of $227 billion have grown, but at a slower pace than loans, which is a good thing as the former has lower yields than loans. While the provision for loan losses is up, the total non-performing loans totalled $7.5 billion as at March is now at $6.6 billion due to writing off of loans that were previously provided for.

Dividend | NCB declared a dividend of 8 cents per share payable on August 24. The stock closed at $19.51 at the end of trading on Thursday with 368,314 shares trading before the results were released.

Insider call | NCB is now an IC Insider Buy Rated stock.

Related posts | NCB cuts dividend in half  |  NDX slaps NCB profits |  Berger holds dividend, NCB cuts

Photo via MLAArchitect.com

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

Jamaica Broilers buy US egg company

July 25, 2013 by

Jamaica Broilers Group Limited announced that they entered into an agreement on July 17, 2013, to acquire a leading producer and broker of broiler hatching eggs in the United States of America. This acquisition, if concluded, is expected to result in the doubling of the company’s fertile egg production output in the United States.

Completion of the acquisition, which is subject to certain conditions, is expected to be within forty-five (45) days.  Under the terms of the transaction, the purchase price is to remain confidential until completion a release from the company said.

Jamaica Broilers, which is a Jamaican company, stated in its 2013 annual report that revenues from its external customers in other countries was J$2.23 billion and in 2012 just over J$1 billion. All of this income would not be related to eggs and this provides some information as to the likely contributions to revenue from the acquisition candidate. It is likely to bring about economies of scale as certain activities can be merged thus leading to cost reduction.

Jamaica Boilers is one of our Buy Rated stock.

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

FX: Little more buying than selling

July 24, 2013 by

Wednesday, 24th July 2013 | In today’s forex trading, buying of foreign currencies exceeded selling by nearly three million as authorised dealers purchased the equivalent of US$31.4 million and sold US$28.66. As far as the trading in US currency, US$25.59 million was purchased and $23 million was sold as the average rate slipped back moderately by a few cents on both for buying and selling. The Canadian dollar put on 97 cents on the buying rate and 48 cents on the selling rate. There was not much change in the average rate for the Pound.

The highest and lowest rates were relatively stable except for the Pound where the highest selling rate fell $3.66 to close at $159.51 the lowest selling rate moved up by 70 cents at $152.

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Filed Under: Company News, FX Market, Stock Market Tagged With: , ,

H&L – big profits boost

July 23, 2013 by

Hardware & Lumber, a Grace Kennedy subsidiary, which recorded moderate increase in sales for the March quarter of this year, accelerated sales a bit in the June quarter at 8.9 percent pace over the second quarter of 2012 compared to a mere 2.4 percent increase in the first. Revenue out turn was $1.744 billion in the latest quarter up from $1.548 billion in the first quarter as well as an increase on the $1.6 billion generated in the second quarter of 2012. Year to June revenues increased to $3.29 billion over the $3.1 billion in 2012.

The second quarter revenues contributed to a big jump in profits for the quarter and the six months as profits jumped to $43.3 million from a revised loss of $1.44 million in 2012. For the six months profits amounted to $52.17 million up from a loss of $6.26 million.

Gross profit margin increased to 26.22 percent in the latest quarter, roughly the same for the six months period, compared to 25.5 percent in 2012. Operating expenses were kept to just $398 million in the June quarter just a few million up from the $391 million spent in 2012, but the six months figure grew quite a bit to $791 million versus $755 million.

HardwareLumber_Bldg150x150“Operating efficiencies were achieved through the rationalization of the staffing model as well as in other areas such as security and utilities. However, there was a significant increase in the costs associated with the company’s pension scheme and other retirement benefits, in keeping with the revision of the accounting rules governing such benefits which became effective January 1, 2013. For the first six-months, these charges increased by $40.7 million compared to the same period last year,” Management stated.

Interest cost also declined for the six months as the company paid down loans which stands at $458 million versus $650 million at June 2012. At the same time cash grew to $376 million compared to $196 million in 2012, but payables climbed to $1.1 billion up from $992 in June 2012 and $694 million at the end of December last year.

While there is a clear sign of a turn-around in the operations, the segment results for agricultural products and equipment reflect a loss of $55 million in the half year results compared to a profit of $129 million. The 2013 figure is only a slight improvement over the loss of $66 million in 2012. There is much room for improvement in the hardware division that could swell the bottom-line if that segment is turned around.

Outlook | Earnings should pick up as the year progresses and IC Insider expects to see earnings for the full year around $2 per share, making the stock very cheap.

Insider call | Hardware & Lumber is an IC Insider Buy Rated stock.

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

IPO: Epply closes, JSE to trade

July 22, 2013 by

EPPLEY offer closes early | The Eppley Initial Public Offer (IPO) which opened today, Monday July 22, 2013 at 9:00, has been closed with the issue said to be oversubscribed. Eppley Limited opened the invitation for subscription for 218,999 shares at a price of $377 per share. PROVEN Wealth, acting as arrangers and Lead Brokers of the offering, announced an early closure of the offer effective at 4:00 p.m., way ahead of the scheduled close on Monday July 29, 2013 at 4:00 p.m.

PROVEN Wealth President & CEO Chorvelle Johnson noted that she is “pleased with the level of subscription. The response to the offer has been very good with the issue being oversubscribed and hence the early closure.” The company is set to announce the basis of allotment within 3 business days.

JSE to start trading on Tuesday | The Jamaica Stock Exchange ordinary shares which were offered public in a recent IPO at $2.85 per share and was oversubscribed, will start trading on Tuesday. The listing brings to 52 the number of companies with ordinary shares on the exchange. Eppley which was fully taken up will bring that number to 53 companies when it starts trading in a few weeks’ time.

First Citizens | In the meantime word out of Trinidad is that First Citizens is attracting great interest but there is no indication that the $1 billion IPO is yet fully subscribed. The issue is scheduled to close on 9th August.

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