Collapse of the JSE US market

Amazingly, while the JSE main market has been recording several record highs this year and the Junior market is up more than 10 percent for the year, the US dollar market has gone in the opposite direction.
The US dollar based market index is at its lowest level since February 2010 and also at levels not seen since mid-2016, with the index closing at 139.56 on Tuesday this week.
In February 2017, Margaritaville hit a high of 37 US cents and Proven Investments reached a high of 32 US cents, both have been sliding since, and hitting a 52 weeks’ low of 15 cents recently. Interestingly, Proven, the darling of many investors in the past, had very little buying interest in recent times. Margaritaville trades at 15 US cents and have lost 60 percent from the high and Proven has fallen 53 percent. Margaritaville suffered last year from dislocation that two hurricanes had on Turks and Caicos Islands and by extension on its operations while Proven picked up losses from the revaluation of the Jamaican dollar, but should recover from it, for the current year. In addition, the company raised capital by way of a rights issue that has not been put to work to avoid a dilution in returns on investment. With the fall in the price of Proven the stock is now IC Insider.com’ TOP 10 buy listed. At the same time, that the US issue has fallen the Proven Jamaica dollar listing still has a bid for 1,830 units at J$26.50 or almost 20 US cents.
Also dragging down the market is Sterling Investments US dollar listing that have fallen from 12 US cents to 8.55 US cents.
For the fiscal year to March, Proven reported US$5.68 million or 0.94 cents per share for shareholders versus $8.85 million in 2017. $8 million of the 2017 earnings was non-recurring, coming from gain on acquisition of a subsidiary. Importantly, the company suffered from the revaluation of the Jamaican dollar in the last half of the fiscal year, resulting in a loss of $444,000 but resulted in a $3.3 million turn from gains of $2.9 million in 2017. Even without the benefit of foreign exchange gains profit from ongoing operations was up nearly 100 percent from $6.6 million to $12.6 million for the year. The first quarter results that are expected to be released next week should show recovery from the FX losses. “All our segments are doing well and this year should be our best ever” Christopher Williams, President of the Company told IC Insider.com. “We await regulatory approval for the investment brokerage company in the Cayman Island,” Williams stated.
Margaritaville reported a loss of US$88.5 thousand in the February quarter, from revenues of US$1.8 million and US$4.06 million for the nine months period that delivered profit of $147,324 versus $339,122 in 2017.

Profit jumps 59% at Carib Cream

Caribbean Cream outlook.

Profit jumped 59 percent in the quarter to May, to $55 million from $35 million in 2017 from sales revenue that rose 29 percent to $412 million from $319 billion in 2017 for Caribbean Cream that trades as Kremi.
The improvement brings to an end falling profit for the past fiscal year when profit fell to $90 million from $176 million in 2017, from increased revenues and from profit of $164 million in 2016.
For the quarter, gross profit margin rose to 36 percent from 34 percent in the 2017, as input cost climbed 25 percent, compared over for the 2017 first quarter. The net effect, operating profit rose 37 percent to $147 million from $107 million.
Administrative expenses increased 25 percent to $76 million and marketing and sales expenses climbed 24 percent to $13 million. Finance cost was up to $3.4 million from $3.15 million.
Earnings per share came out at 15 cents for the quarter and should end the year around 70 cents, just slightly lower than the 80 cents forecasted at the end of the fiscal year.
According to Chairman Carol Clarke Webster and Managing Director, Christopher Clarke in their joint statement to shareholders, “these results are attributable to improved products supply as a result of greater production efficiencies, along with the introduction of a new range of novelties which are performing well in the market. In addition, we continued our sales and marketing thrusts to expand our market penetration and ‘Top of the mind” awareness of our product range.”
Gross cash flow brought in $65 million but growth in receivables, inventories, offset by payables reduced it to $44 million, in addition, fixed assets purchased for $101 million offset by net loan inflows of $65 million resulted in a cash increase of $8 million, pushing the cash and bank balances to $183 million. Shareholders’ equity stands at $693 million with borrowings at just $147 million. Net current assets ended the period at $221 million well over Payables of $134 million.
The stock traded at $4.90 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of just 7 times 2019 earnings leaving quite some room for a good bounce from the current price. The stock is one of the TOP 10 Junior Market listings.
The company declared a dividend of 4.8 cents payable on September 21 to shareholders on record at the end of September 7. The stock will traded ex dividend on September 6.

JSE majors 300 points from record

Jamaica Stock Exchange main market continues its slow upward climb as it eyes new highs ahead.

At the close of the trading on Friday, the All Jamaican Composite Index sits just 300 points and the JSE Index just 276 points from the record high reach on June 13, after rising over 1,200 points on Friday.
The All Jamaican Composite Index climbs 1,332.76 points to close at 336,390.30 while the JSE Index advanced by 1,214.30 points to close at 306,489.55.
Trading activity on the Jamaica Stock Exchange on Friday remained low, with an exchange of just 2,029,215 units valued at $42,587,552 compared to 4,036,088 units valued at $49,293,055 on Thursday.
Activities in the main and US dollar markets resulted in 25 securities trading including 3 from the US dollar market, compared to 27 securities trading on Thursday. At the close, the prices of 11 stocks advanced, 6 declined and 8 closed unchanged.
Thursday’s volume was led by Mayberry Investments that settled at $6.52, with 501,000 units trading, Scotia Group traded at $50.12, with 447,178 units and Sygnus Credit Investments traded 378,850 shares at $13.71.
Stocks with major price changes are, Berger Paints that rose 71 cents to $22, Grace Kennedy climbing $1.39 to $53. Jamaica Broilers lost 50 cents to end at $23, JMMB Group declined 40 cents to $29.50, Kingston Wharves lost 70 cents to end at $46.55 and Supreme ventures lost 40 cents in closing at $14.10.
In the US dollar market, 22,095 units valued at $2,546 as with Margaritaville traded 500 shares at 18 US cents, Proven Investments closed at 18 US cents with just 245 units changing hands and Sygnus Credit Investments ended trading 21,350 shares after rising 0.7 cent to 12 US cents. The JSE USD Equities Index inched 0.05 points up to 153.20.
Trading resulted in an average of 92,237 units valued at an average of $1,935,798 for each security traded. In contrast to 161,444 units for an average of $1,971,722 on Thursday. The average volume and value for the month to date amounts 167,222 units valued at $2,763,542 compared to 183,396 units valued at $2,264,736, on Thursday. June closed with an average of 250,168 shares with a value of $5,895,281, for each security traded.
IC bid-offer Indicator| At the end of trading, the Investor’s Choice bid-offer indicator reading shows 4 stocks ended with bids higher than their last selling prices and 4 closing with lower offers.

Derrimon hikes profit 45%

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Staff at Derrimon Trading.

Revenues for the Derrimon Trading first quarter March this year, climbed 27 percent to $1.94 billion above the $1.53 billion reported for the 2017 quarter and led to a big hike in profit.
The company reported a strong 45 percent jump in its first quarter results, from $35 million to $52 million or 21 cents per share to March this year, but profit could have been even higher had they not incurred finance cost which jumped 56 percent to $38 million from $25 million in 2017, in refinancing the preference shares they held previously at higher rates than the new ones. IC Insider.com is forecasting earnings per share of just over 80 cents for the current year.
This year is the last for profit to enjoy full tax free status, in 2019 profit will be taxed at half the usual 25 percent rate less payroll tax credits.
“The full quarter’s performance of the retail stores as well as the impact of the joint venture positively influenced the growth of the revenue during this reporting quarter,” Derrick Cotterell, the chairman reported to shareholders.
Gross profit for the period was $353 million representing 18 percent of revenues and was up from gross profit of $279 million in the 2017 period with a similar percentage of revenues. According to Cotterell there was improved margin in the core business resulting from “a combination of improvement in margins arising from strategies employed within both the distribution & retail segments of the business, the positive impact from the culled distribution portfolio and improved margins from growth of the supermarket portfolio.” Margins for the non-manufacturing arm rose to 17.2 percent from 16.94 percent in 2017.
The company’s equity position is $1.04 billion but borrowed funds stand at $1.22 billion, cash and investments amounts to $432 million thus negating some of the negative of the high leveraging of the group. With much of the cash and investments held by Caribbean Flavours, the larger portion is not readily available to Derrimon. Current assets amount to $2 billion and current liabilities at $413 million.
The company is proposing to do a major increase in the authorized share capital, with some being set aside to facilitate the 10 for 1 stock split. With the stock price having climbed to the $20 region, the company should take the opportunity to raise equity capital and retire some of the debt now being carried by the parent company.

10 to 1 stock split for Derrimon

Staff at Derrimon Trading.

Investors continue to be poorly served in a number of cases in the Jamaica Stock Market with inconsistent observance of rules and regulation.
Under the Jamaica Stock Exchange rules a listed company is to report to the JSE ahead of a meeting to consider a divined or changes to the share capital structure and to report within 48 hours of the meeting, the decision reached.
Derrimon Trading directors are recommending to shareholders a stock split but there has been no notice on the JSE website about the consideration at a board meeting or the results of the meeting. Yet in the annual report the company places a resolution to effect a split of the stock.
According to the annual report the company proposes to increase of authorised share capital from 800,400,000 shares to 8,200,400,000 shares by the creation of an additional 7.4 billion ordinary shares and to sub-divide the issued share capital of the Company into 10 ordinary shares with effect from the close of business on August 22, resulting in the total issued shares being increased from 273,336,067 to 2,733,360,670 ordinary shares. The company last traded at $16 with the bid closing at $18.40 on Tuesday.
Derrimon reported strong first quarter results gains from $35 million to $52 million or 21 cents per share to March this year.

10 to 1 stock split for Blue Power

Blue Power 10 for 1 stock split coming.

Shareholders of Junior Market listed Blue Power, are set to see much more liquidity in the shares as the board is recommending a 10 to 1 stock split to be voted on at the upcoming general meeting in August.
Approval of shareholders will be sought, for the board’s recommendation to be put to the Annual General Meeting to be held on August 14, to increase the authorised share capital of the company from 90 million units to 900 million shares of no par value and to split each existing share of the company into 10 shares of no par value, thus increasing the issued share capital to 564,990,000 shares.

Blue Power Group will pay a dividend of 19 cents per share on July 30, to shareholders on record at July 16. The stock will start trading ex-dividend on July 13.

Stock split for Blue Power?

Blue Power stock split to be considered by the directors.

A stock split could be coming for Junior Market listed Blue Power Group that is currently selling at $30. The directors of the company advised the Jamaica Stock Exchange on Wednesday.
The company also advised that a meeting of their Board will be held on July 2, will consider the declaration of a dividend and Whether the Board should recommend a stock split to the shareholders. IC Insider.com gathers from unconfirmed sources that the although the wording suggest that there could be a decision not to split the stock there is a strong possibility that the decision end up being being a 10 to 1 split.
Blue Power reported full year earnings to April with a fall from $122 million to $102 million as other income dropped from $8 million to $3.4 million and net finance income nosedived from $21 million to just $66,000, after revenues grew 8 percent from $1.4 billion to $1.5 billion and gross profit fell from $327 million to $323 million. The company reported strong growth in export sales of soap but say they are gearing for increased completion within the region including new soap plant in Jamaica. The increase in export sales over the previous year was 34% from $70 million to $94 million Dhru Tanna stated in his report accompanying the audited financial statements.
Earnings per share was $1.81 for the just concluded 2018 fiscal year.

Q2 profit doubles at CAC

CAC closed at a new high on Monday.


After a poor first quarter, profit at CAC 2000 more than doubled in the April quarter, to $59 million from $23 million in 2017. For the six months to April, profit was just ahead of the 2017 results and ended at $54 million from $51.4 million in 2017.
Sale revenues rose 45 percent for the quarter, to $384 million from $266 million and rose 10 percent for the year to date, to $623 million from $568 million in 2017.
Improvement in profit margin in the first half of the year, increased from 36 percent to 40 percent and in the April quarter to 43 percent from 37 percent in the 2017. The effect, gross operating profit rose a sharp 68 percent in the quarter to $167 million from $99 million and increased 23 percent for the year to date, to $249 million from $203 million in 2017.
Administrative expenses jumped a sharp 68 percent to $101 million in the quarter and increased 39 percent in the six months period to $179 million. Steve Marston, Managing Director, stated in his report accompanying the quarterly that the increase in administrative cost was primarily related in salaries, professional fees, including cost related to the recent preference share issue and travel related expenses.
Selling and distribution expenses declined by 11 percent to $9 million and fell by 9 percent to $17 million for the half year. Finance cost rose 33 in the quarter, to $5.5 million from $4.1 million in 2017 and rose 41 percent from $8 million to $11 million for the six months period.

Steven Marston,
Chief Executive Officer

Gross cash flow brought in $60 million but growth in receivables and inventories amounting to $109 million less a $33 million increase in amounts owing to creditors pushed cash flow into an outflow which was funded by net new borrowings leaving cash on hands at $261 million at the end of April. Cash funds on hand is expected to fall when $148 million in preference shares is repaid in July.
At the end of April, shareholders’ equity stood at $477 million with borrowings at $365 million. Net current assets ended the period at $1.1 billion inclusive of trade and other receivables of $591 million, cash and bank balances of $261 million. Current liabilities of ended the period at $489 million.
Earnings per share came out at 43 cents for the quarter and 42 cents for the half year could end the fiscal year ending to around $1.30 if the current trend continues. The stock traded at $9.05 on the Junior Market of the Jamaica Stock Exchange on Tuesday in reaction to the improved results and now boast a PE ratio of 7 times 2018 earnings. Net asset value is $3.70 with the stock selling at 2.45 book value.

Lower Q2 profit for Scotia Group

Scotia Group reported a 19 percent rise in half profit to $6.76 billion after tax, but that clouds the fall in profit for the second quarter to April that fell marginally thanks to a big jump in loan provisioning of $560 million compared to a small recovery of $6 million in the January quarter.
The half year earnings are bolstered by a gain on sale of subsidiary of $753 million.
Shareholders don’t have much to cheer about except that loan losses are within the range of that of 2017 along with a few other good developments. Net interest income fell to $6.2 billion from $6.5 billion in April 2017 quarter, Insurance revenues fell from $1.1 billion to $707 million. Cost were contained well, with salaries and benefits declining from $2.84 billion in 2017 to $2,46 billion in the April quarter while other operating costs, rose marginally from $1.76 billion to $1.86 billion.
Year to date, net interest income moved from 13.17 billion to $12.82 billion while loan impairment fell sharply from $975 million to $564 million. Net fee income declined from $4.4 billion to $4.1, but gains from foreign exchange trading activities delivered $1.66 billion versus $1.1 billion in 2017. While the half year figures show a bit of positive signs, investors should be focused on more recent developments, as these are more likely to point the way forward.
The group made modest progress in increasing loans, the most important asset for a bank. At the end of April, loans grew to $171 billion from $166.5 billion at the end of 2017 fiscal year, the increase is twice the growth rate between April last year and the year end. Investment securities rose from $120 billion at the end of October in 2017 to $131.6 billion and cash resources from $116.5 billion to $126.2 billion, at a  much faster pace than increased in lending. Deposits by the public moved from $260.6 billion to $383 billion.

David Noel new Scotia Group’s CEO.

Scotia ended with earnings per share of $1.08 for the quarter and $2.17 for the half year, including the one-off capital gains from sale of the former subsidiary. A dividend of 48 cents per share was declared by the board, payable on July 18.
The strongest positive for the group is that they currently lend out just about 52 percent of deposited funds by its customers, leaving much room to grow loans whenever that time comes around.
The stock traded on the Jamaica Stock Exchange and closed at $53 but with these results, further movement up is going to be very challenging in the short term and leaves NCB Financial as the banking group of choice for investors seeking growth in stock price.

Buy PanJam get Sagicor shares free

Stephen Facey Chairman & Paul Hanworth Chief Operating Officer

The market value for PanJam Investment at the end of Friday was $48 billion or just $1 billion more than the value of the group’s 31.56 percent investment in Sagicor Group.
In other words, investors can get all the real estate owned by PanJam along with the other assets for just $1 billion assuming the Sagicor shares were disposed of, an investment in PanJam becomes a great value play as investors are not valuing the company for much more than the profit contributed by Sagicor Group.
But the PanJam shares may become even more appealing as the group expand on an investment spree of sorts. In 2018, the group bought out its partners half holdings in the Oceana property in downtown Kingston and now owns it fully. It acquired property at Olivier Road, that neighbours the Manor Park Plaza owned by them. It acquired 6 acres in Montego Freeport and increased its investment portfolio of equity from $1.76 billion to $2.4 billion.
The company generated gross cash flow of $2 billion for 2017 and with such healthy annual inflows is not stopping the investment train anytime soon, especially with interest rates on Jamaican debt so low currently.
The group delivered flat profit attributable to shareholders of PanJam Investment for the quarter ended March 2018 of $827 million versus $830 million for the similar quarter in 2017. Net profit attributable to owners for the 2017 calendar year amounted to $4.1 billion, up from $4.05 billion in 2016, $3.19 billion in 2015 and $2.84 billion in 2014. Share of results from associated and joint venture companies continue to grow and dominate the group’s earnings with an increase of 6 percent in 2017 to $3.9 billion, from $3.7 billion in 2016. Sagicor accounted for $3.8 billion of the 2018 profit.
“During 2017, we increased our investment in Jamaica through a number of transactions, including our purchase of the Olivier Road property, the assumption of our former partner’s interest in Oceana, our increased stake in New Castle from 25 percent to 33 1/3 percent and the additional capital deployed in equity securities of locally-listed companies.”
“Our support for the development of local venture and private equity capital markets continues through our involvement in the First Angels Jamaica investor group and our participation in the Development Bank of Jamaica’s Jamaica Venture Capital Programme and National Business Model Competition,” the company’s management stated in their report to shareholders.
Investment assets at December 2017 stood at $4.8 billion up from $4.1 billion at the end of 2016. The 2017 portfolio mix reflected an increase in equity holdings, from 43 percent to 50 percent of the total portfolio, and in repurchase agreements and deposits, from 17 percent to 34 percent.
According to PanJam’s management, “Our equity portfolio is diverse, with investments in North and South American and Caribbean markets across a broad range of industries. The Company maintains a majority of its investment assets in foreign currency, mainly USD, though this has reduced in line with our view of improved prospects for Jamaican investments and the local currency. Looking ahead, we will focus on growing the size of our trading portfolio, with particular focus on the Jamaican markets and the increased number of new offerings. As always, we will leverage the expertise of our Investment Committee and adhere to the guidelines they provide.”
The acquisition of the Montego Freeport property is to house a business hotel, retail shops geared to the tourism industry and office spaces, Stephen Facey told shareholders at the recently held annual general meeting.