Market activity on Trinidad & Tobago Stock Exchange on Wednesday remains anaemic, with just over 50,000 shares trading, the lowest volume since the start of the month coming from 16 securities changing hands.
Trading closed with 4 stocks advancing, 5 declining, 7 holding firm as 50,488 shares traded at a value of $553,082 compared to Tuesday’s trades of 528,994 valued at $2,520,342 from 13 securities trading. At the close of trading 2 stock hit 52 weeks’ high and one ended at a 52 weeks’ low.
The Composite Index climbed 2.15 points to 1,277.73, the All T&T Index declined by 0.87 points to 1,743.27 and the Cross Listed Index gained 0.71 points to close at 109.49.
IC bid-offer Indicator| The Investor’s Choice bid-offer ended with 2 stocks with bids higher than last selling prices and 4 with lower offers.
Gains| The last traded prices of the securities rising are Grace Kennedy with gains of 5 cents, and closing at a 52 weeks’ high of $3.10 with 300 units changing hands. Guardian Holdings closed at $16.50, rising 50 cents in exchanging 13,670 shares, NCB Financial Group gained 10 cents, ending at $6 with trades of 10,300 units and Trinidad & Tobago NGL rose to a new 52 weeks’ high of $24.25, advancing 20 cents with an exchange of 2,650 shares.
Losses| Securities closing down at last traded prices are JMMB Group that lost 1 cent and closed at $2.09 with 1,975 shares trading, L.J. Williams B with a loss of 7 cents, traded at 70 cents with 1,650 shares, Republic Financial Holdings declined by 19 cents to settle at $101.50, after trading at a low for the day at $100.50 with 405 units exchanged. Sagicor Financial closed at $7.94, losing 1 cent with 1,175 shares and Unilever Caribbean lost 5 cents, falling to a 52 weeks’ low of $34.95 with 100 units changing hands.
Firm Trades| Stock with last traded prices remaining unchanged of the close of trading are Angostura Holdings closed at $15.05 with a mere 10 units, Clico Investment exchanged 47 units at $21, First Citizens trading 20 units at $31.95 and National Enterprises that closed at $9.70 with 508 units. Prestige Holdings closed at $10.75 exchanging 9,131 shares trading, Readymix ended at $11 with 618 units and Trinidad Cement closed at $3.95 trading 7,929 shares.
TTSE trading sinks to just 50,000 units
Lasco Distributors shocker
Lasco Distributors awarded $273 million by the court.
The company advised that the formal order was signed by Justice Vivene Harris and filed on November 24, 2017. LASD has further advised of the Company’s intent to file an appeal.
The amount awarded for damages and interest up to November 3, 2017, is way below the US$311 million the company claimed plus interest.
At the time of the Initial Public Offering in 2010 the prospectus stated “no provisions have been made in the Company’s accounts for the impact of the outcome of this decision and the accounts contained in this prospectus do not take it into account. It is the expectation of the Company, based on legal advice it has received, that its lost sales of the product to date (estimated to be $400 million) are likely to be recovered in the event that it succeeds in this matter but it is difficult to quantify the amount of damages that could potentially be awarded to the Company as they will continue to accrue until the matter is decided.
The amount awarded which should be profit that would have be lost as a result of the loss of sales may not in reality be far from the profit lost to 2010 but there would be loss of sales thereafter.
Last week, Lasco Distributors advised the Jamaica Stock Exchange that a director sold 2,042,774 shares on November 11, and on November 24 that a directors sold 21,054 shares during the period November 13-14, 2017.
VMBS Wealth heading to market
VM Wealth planning to list soon..
There was a time when there was a drought of listings on the Jamaica Stock Exchange with the advent of the Junior Market and its success there seem to be information on coming listings cropping up regularly.
Word reaching IC Insider.com is the VMBS Wealth Management will head to market in early 2018 to be listed on the exchange. Contacts make by this publication was wet with the response that they could not respond on such matters at this time.
For 2017 the stock exchange had confirmed about 16 potential listings for the year, inclusive of preference shares. The year will definitely close short of the target, but between December and the end of 2018 is setting up to be a bumper period that increase the listings to more than 100 for the very first time.
FosRich offer will open officially on December 4 to raise just over $200 million and is brokered by Stocks and Securities who confirmed that they are working on another listing but could not release the name of the company.
With Elite Diagnostics reconfirming their intention to go to market soon, the number of potential listings are climbing. Wisynco Group is expected to release its prospectus shortly with whispers suggesting by this week end.
More trading activity is expected in the future as a results of new listing and the impact of the fall in interest rates will have on trading activities. The exchange now has 92 listings with a few duplicated ones in the main market and US dollar market will see and there could be four on the exchange suggest before the year ends with three of them regarded as definite. Brokers say they are working on 8 new ones for 2018 currently, Marlene Street Forrest, Managing Director of the Jamaica Stock Exchange advised IC Insider.com.
The three are expected to be GWest, a medical complex out of Montego Bay, is expected to raise over $400 million, the company income will come from a combination of rent from the major part of the complex and fees from operating small short term medical facility. The complex currently has a number of blue chip clients as tenants.
NCB Capital Markets Manager, Origination and Structuring Stanley Thompson (left) exchanges laughs with Wisynco Group Limited Chairman William Mahfood also sharing are Wisynco Chief Executive Officer Andrew Mahfood and PriceWaterhouseCoopers Director Fiona Hyman
Wisynco Group is looking to raise for itself $1 billion but some of its current shareholders wanting to cash out. Information suggests that shares are to be offered to a wide array of persons including the 700 staff members as well as a large number of customers hence the shares from the IPO could be pretty scarce. Caribbean Insurance Brokers being handled by Mayberry Investments is the fourth possible 2017 listings. Mayberry is also working with Neveast Supplies but this seems to be a 2018 listing.
Others that should see their ordinary shares listed on the Jamaica Stock Exchange, include Jamaica Plumbing and Supplies, the government’s owned Wighton Wind Farms, Jamaica Public Service Company, with the government wanting to dispose of its shares in the power company, KIW International that has taken the decision to have the company relisted. UCC Online, a segment of University of the Caribbean was expected to have gone to the market this year but have been ironing out issues to facilitate the initial public offering, they could be ready in 2018 and Sygnus Capital Investments should list in the first quarter of 2018 on the main market of the exchange. Sygnus is relatively new company established to undertake loans or make medium term investments in medium size businesses. The company which is registered in St Lucia is managed by Sygnus Capital Management a Cayman Island based corporation. The company raised US$15 million in capital and is aiming for another $5 million when they come to market, which could be as early as January next year. According to our source they have so far lent out US$11 million and generated a higher rate of return that originally expected. The company has a good stream of potential users of its funds.
US$22.5m for Berger Caribbean
Ansa Coatings US$22.5 million in cash to acquire the holding company of holding the majority shares in Berger’s operations in Barbados, Jamaica, and Trinidad and Tobago in July 2017.
The amount was stated in the valuation report done by PriceWaterhouseCoopers for the Berger Trinidad. According to the report “ANSA represented to us that a total cash consideration paid for the investment in LBOH, of which US$2.976 million was allocated to the 3,613,011 BPTL ordinary shares (representing a value of TT$5.60 per share at a conversion rate of US$1 = TT$ 6.79). ASNA further represented that the purchase consideration was not derived based on an individual territory/ subsidiary basis but for the Caribbean operations as a whole.”
The payment places the consideration of shares in the Jamaican company, close to the price of $10.88 that was offered to the Jamaican shareholders.
According to the report the PWC reports state that “we understand that the offeror also obtained a valuation from an independent valuator as at 31 March 2017. This report estimated that the value of 100% of BPTL’s issued share to be within the range of $4.41 to $5.00 per share, with the best estimate being the midpoint of $4.70 per share.”
ACI made an offer to acquire the remaining minority shares at $6.76 per share, the price it paid to Cham Ramlal ltd. for 9.69% of the shareholding a huge premium over the traded price around $4.05. The cost to acquire the remainder of Berger Trinidad will be just over US$720,000.
The Directors recommended that the shareholders accept the offer. In doing so they took account of the fact that ANSA McAL exercises control and direction over approximately 80.86 percent of the issued and outstanding share capital of the Company. Consequently, the remaining shareholders will, in effect, have limited power to challenge any decisions of the offeror and its affiliates. Further, where the offeror, pursuant to the offer, acquires 90 per cent of the offer shares, there are statutory provisions which empower the offeror to acquire the shares of those shareholders who do not accept the offer.
They also considered the fact that the offer was well ahead of the historical price the stock traded at in the past and the poor profit performance in the past with more expected to come as well as the fairness opinion by PWC. All of that was done without trying to frighten shareholders into giving up their shares and is in complete contrast to the recommendations of Jamaican directors, using false information and withholding others pertinent information from the local shareholders, in trying to bully hem into giving away their shares. Warren McDonald a director of Berger Jamaica is one of the directors of the Trinidad company.
FosRich IPO fair value
FosRich Company is heading to the capital market to raise $200 million from sale of just over 100 million shares at $2 each. The general public have been allocated 10,070,111 units, Stocks and Securities, broker for the issue is allocated 50 million units, key partners and staff have 40,385,000 allocated to them.
Reserved shares, if not fully taken up, will be available to the general public. The issue opens on Monday December 4 and is scheduled to close on December 11 with the minimum application of 5,000 Shares.
The Board intends to use the proceeds of the invitation in order to expand the capacity of the Company to provide electrical and energy solutions to its customers and in particular, to expand its ability to provide industrial products. The Company will also pay down existing loans and pay the expenses of the Invitation.
The company has built up a name for itself by way of advertising through electronic media and will benefit further from the increased publicity that will be generated by listing.
Importantly, the company currently has interest debt of $300 million and carries a high level of inventories of just under a year’s supply. In 2014 the company booked through its equity reserves a mark down of $129 million for impairment of inventory and receivables. For the nine months to September this year gross cash flow $50 million before working capital needs and after it ended at a net outflow of $9 million. With those numbers bank financing for expansion is going to be challenging. The capital raised should go a long way in easing this constraint.
The Company major Jamaican wholesaler and retailer of a wide range of electrical, lighting and energy products, opened in November 1993 and it has operated at its flagship location 77-79 Molynes Road for over 24 years. The location serves as the Company’s headquarters and comprises a 25,000 square foot area including warehouse and office space and showrooms. FosRich currently has a staff complement of 84. Apart from its head office in Kingston, they also operates in Montego Bay and Mandeville.
Mark Croskery Managing director of Stocks & Securities brokers fro teh IPO speaking to Cecil Foster, Managing director of FosRich.
According to data presented in the prospectus the average annual growth in sales since was 15 percent and the average annual growth in gross profit over the same period was 20 percent.
Unaudited gross profit for the year to September 2017 was $360 million compared to $346 million for the same period in 2016, for an increase of $14 million. This improvement was mainly driven by improvements in selling prices, which compensated for the reduction in sales revenue by J$60 million to J$796 million compared to the same period in 2016 of J$856 million. The full year results should see the company generating sales of just over $1 billion and profit of approximately $40 million before taxation having made $31 million in pretax profit to September.
The historical record of profits are mixed with pretax profits at $42 million in 2012 rising to $60 million in 2013, in 
2014 they made $43 million, just $10 million in 2015 helped by bad debt recovery of $10 million and $35 million in 2016.
The directors are, Marion Foster, Steadman Fuller, Ian Kelly, Peter Knibb and Rosalyn Campbell.
Based on estimated earnings for 2017 of $40 million the shares are priced at 20 times 2017 earnings but when viewed against 2018, that will benefit from lower interest cost and some pick up in sales, profit could reach $108 million or earnings of 22 cents per share. Based on 502 million shares in issue after the IPO, the PE would be 9, on this basis, the price could deliver a 120 percent rise in 2018. The stock is priced at just over 2 times net book value and would be one of the lower valued Junior Market company based on net asset value.
Profit at Jamaican Teas rise 58%
Jamaican Teas CEO, John Mahfood addressing the company’s last AGM in 2017.
Jamaican Teas enjoyed strong growth of 86 percent in profit after corporate taxes for the quarter to September amounting $39 million up from $21 million in the previous year.
Profit before taxation rose to $54 million compared to $44 million an increase of 22 percent. For the twelve months to September, profits after taxation is up 58 percent to $186 million after the booking of some material one off cost and income in arriving at outcome for the year.
The Group enjoyed positive performance from continued improvement in core business at Jamaican Teas with increased exports sales of 24 percent for the quarter and 26 percent for the year as well as good growth in the sales at the supermarket in Kingston for the twelve months to Sept 2017 resulting in a strong increase of 19 percent in overall group sales as sales increased by 5 percent from $342 million to $358 million, during the final quarter of the fiscal year. For the year sales revenues rose to $1.53 billion from $1.29 billion in addition the group recorded other revenues of $94 million versus $61 million in 2016 and $44 million versus $21 million in the quarter.
Although the group realized gains on investments of $60 million during the year the report shows more than $37 million in unrealized gains on investments at the end of September.
The results represent another good year for the group coming off 2016, with growth in sales and profits from continuing operations of 9.5 percent and 103 percent respectively.
FINANCIAL POSITION|Shareholders’ equity continues to expand, exceeding the $1 billion market for the first time. Quoted investments and cash stood at $304 million at the end of the quarter. Working capital amounted to $529 million and includes borrowings of $167 million while long term borrowings ended the period at $70 million.
During the year, the group acquired 43 percent of the issued ordinary shares of KIW International, the company results, assets and liabilities are consolidated in the groups’ accounts.
Subsequent to the year end the directors approved a dividend of 3 cents per share payable on December 19, on the increased number of shares in issue of 682 million units. During the year the shares were increased based on a 2 for 1 stock split with the stock price rising from $1.95 to $4.10 presently the second consecutive year with gains of more than 100 percent in the stock price.
The new fiscal year has started off very well. According to management in commenting on the post quarter sales performance, “in October 2017 we doubled our export sales while our local tea sales increased by 26 percent and our supermarket sales by 8 percent. The group’s future prospects for the remainder of the quarter look favourable.”
John Jackson is acting Chairman of the group
Unilever shareholders’ pain
Unilever stock is set for huge drop on the Trinidad & Tobago Stock Exchange
Unilever shareholders face a torrid time as very poor profit result in 2017 drove the stock price vastly lower than in 2016 and the price is poised to sink even lower as profits for the year cannot support the relatively high stock price.
Unilever profit peaked in 2013 and declined each year since but the stock price kept on rising and peaking in December 2015 at $68.30. Infrequently traded, the stock has been on a slide from 2016, but limited trading and the deep fall in profit made the downward price adjustment long and drawn out as many investors don’t like taking losses, hoping that tomorrow will be better.
Profit of Unilever Caribbean has almost evaporated in 2017.
Unilever reported profit of $3 million for the June quarter or 11 cents per share and $6.8 million for the half year suggesting profit around 60 cents for the full year but the September quarter saw profit falling to just $169,000 with year to date profit of $7 million compared to $30 million for the nine months to September 2016. Full year results are unlikely to exceed the $7 million mark by much. The earnings per share which is 27 cents at September should end the year around 30 cents. The stock which last traded at $38.75, is priced at a PE ratio around 130 times 2017 earnings, the clearest indication of a huge fall in the price to come.
Profit peaked at $70 million in 2013 slipped in 2014 to $47 million in 2015 and $42.5 in 2016 and looks set to plummet in 2017 as indicated above as revenues has fallen sharply during the year. Fortunately, the company cut back on cost in the September quarter with administrative expenses falling from $7 million to $5.5 million and selling and distribution cost was $8 million lower than in 2016.
Revenues reached a high of $588 million in 2014, dipped to $549 million in 2015, recovered a bit in 2016 to $566 million and is set to hover under $500 million for 2017, with nine months inflows of $410 million and $109 million for the quarter compared to $136 million in 2016. To be fair to the company, the impact of hurricane on some of the countries they sell to affected sales in the latest quarter, making an already bad situation worse.
Part of the austerity plan effected was a cut in dividend which was slashed from a high of $1.95 in 2013 it fell to $1.77 in 2014 then to $1.20 in 2015 and rose modestly to $1.25 in 2016.
Investors should keep a keen eye on the stock when it hits a low under $20 that it seems to be heading for as it could then present a good opportunity for recovery when the time is right.
CrediScotia buyout to boost LasFin’s profit
Lasco Financial
Lasco Financial Services doubles its $500 million loan portfolio with the acquisition Scotia Jamaica’s Micro Finance Company Limited which trades as CrediScotia. According to a release from Lasco “the deal was executed on Monday November 13 upon the signing of the share purchase agreement.”
CrediScotia is a wholly owned subsidiary of Scotia Group Jamaica which entered the Microfinance sector in November 2011 and currently serves its customers from its seven branches islandwide.
Jacinth Hall Tracey, Managing Director of LFSL explains that the move is part of a larger strategic plan for Lasco Financial to continue its focus on expanding its loan portfolio.
“It is a great opportunity for Lasco Financial Services. We have been developing opportunities incrementally to serve our customers who are in need of micro financing, this move immediately gives us the reach and scale as we will immediately double our loan portfolio and number of clients as well as branches across the island. This merger allows us to maximize on the synergies of both companies and will create one formidable company.
CreditScotia will become a wholly owned subsidiary of LASCO Financial Services and will continue to operate independently of the LFSL Group.
Lasco Financial profit jumped sharply for 2017 Q2.
As such, the acquisition will not see any disruption to the business, employees or clients, the release from Lasco stated. That will only be for a while to allow things to settle, eventually, the attractiveness of economies of scale and the savings to be reaped will be too enticing to be ignored.
The consideration was not announced but could be in the region of $500 to $1 billion.
Lasco Financial recently reported profit of that more than doubled in the September quarter, from $44 million to $100 million with the six months results showing profit of $167 million versus $102 million in 2016. The company saw revenues rising to $396 million form $272 million in the second quarter and $715 million for the half year, from $533 million in 2016. While revenues grew rapidly in the period cost were contained well below increases in revenues. For the full year to March 2017, Lasco made net profits of $192 million.
IC Insider.com forecast was for earnings of 30 cents for this year and 60 cents for the next fiscal year, but this latest move would push earnings higher with 2018/19 enjoying a full year of benefits. At the end of September Lasco had loans and receivables of $1 billion on its books and cash funds amounting to $480 million.
Lasco’s stock closed trading at $4.90 on the Junior Market of the Jamaica Stock Exchange on Tuesday.
Grace Q3 results show some progress
Grace Kennedy Head Office
Grace Kennedy results for the third quarter showed some progress with the net operating profit before other income growing an attractive 26 percent in the September quarter compared to just 4.6 percent year to date.
In the June quarter operating profit before other income declined from $977 million to $956 million and year to date $1.876 billion down from $1.96 billion. Net profit for the quarter to September, rose $568 million or 57 percent to $1.56 billion. Importantly, the result includes one off gains of $419 million, excluding this gain, profit would have been up just 15 percent.
The big question, can these gains be sustained, if not accelerated going into 2018?
An increase of $51 million resulted in net profit of $3.75 billion for the nine months period from revenues of $69.3 billion, up 4 percent or $2.6 billion over the same period in 2016 with $66.65 billion. Revenues for the quarter, ended at $22.93 billion versus $22.53 billion in 2016.
Earnings per share for the quarter came in at $1.43 inclusive of the one off gain and $3.34 for the nine months the same as in 2016 a period that had large one off gains.
The third quarter shows much progress
“We have been steadily executing our strategy and are seeing the results. We are pleased with the performance of the Group and expect to finish 2017 on a strong note. With our customers at the focus of our entire operation, innovation, convenience and new technology are shaping our view of the future and how we deliver our goods and services,” Don Wehby, Group CEO said.
Group Chief Executive Officer, Don Wehby.
“We are quite optimistic about Consumer Brands and its capacity to add value to our shareholders. We have made, at the outset, a non-recurring gain of $418.5 million on the acquisition. We expect the business to continue to do well, given its knowledgeable and competent team and the Proctor and Gamble portfolio of products,” Wehby stated.
“In 2016 a non-recurring gain was attributable to the liquidation of non-operating subsidiaries. In 2017, we recorded $455 million in non-recurring gains due to liquidation of non-operating subsidiaries and an acquisition. Without these gains, net profit would have been higher than the corresponding period of 2016 by 0.7 percent. For Q3 2017, without the one-off gains, net profit for the three months ended September 2017 would have increased by 14.6 percent over prior year,” Frank James, the group’s Finance Director said.
He added that: “Shareholders will receive a dividend of .45 cents per stock unit, bringing dividends year-to-date to $1.13, an 11 percent increase over the corresponding period.”
Management commented on the various regions and divisions within the group. According to them “The Food Trading segment, which includes operations in Jamaica, Canada, the USA, the UK and Ghana continues to perform well. Some highlights include growth in the Florida and Georgia markets for GraceKennedy Foods (USA) and expanded relationships with CostCo Wholesale and other retailers in Western Canada for Grace Foods Canada.
Some of Grace Kennedy’s products.
While Grace Foods (UK) experienced lower sales than projected, a bold campaign featuring Daniel Sturridge as the new brand ambassador for the food drink Nurishment, is expected to have a high impact.”
“Grace Foods Latin America & Caribbean continues to be affected by the slow recovery of corned beef sales following a ban on the sale and distribution of corned beef in several markets in March 2017. Additionally Hurricanes Irma and Maria disrupted operations on the islands of St. Maarten, British Virgin Island and Dominica. Distribution partners in those countries continue to work toward restoring normalcy to their operations.”
“First Global Bank (FGB) experienced growth driven mainly by net interest income and higher gains on securities sold when compared to the same period in 2016. Lower provisions against loan losses also contributed to the favourable performance as the bank continues to focus on delinquency management. FGB’s new direction, includes branch expansion through FGB Money Link. Money Link will see 28 new mini branches being established in locations across the island by 2018.”
The Money Services segment through Grace Kennedy Money Services (GKMS) reported growth in both revenue and pre-tax profit over the corresponding period of 2016. This is due to increased transaction volumes in the remittance business most notably in Trinidad and Tobago, Cayman and Guyana.
The Insurance segment declined in both revenue and pre-tax profit when compared to the corresponding period of 2016. This outcome was influenced by reduced investment returns and increased claims activity from Caribbean territories that were affected by hurricanes in September. The potential impact of claims relating to these hurricanes is still being assessed. GK General Insurance continues to maintain a robust reinsurance programme with highly rated international reinsurers which will lessen the impact of these claims.
Grace shares closed trading on the Jamaica Stock Exchange on Friday at $42.70 and is one of the cheaper priced stock on the market with a PE ratio around 10 times 2017 earnings.
67% premium for Berger T&T
Minority shareholders of the Trinidad and Tobago listed Berger Paints are set to get a 67 percent premium on their shares, with Ansa Coatings offer of TT$6.76 for the shares.
The shares were trading at TT$4.05 on the last trading day, prior to the public announcement of the takeover by the Ansa Coatings.
On July 31, Ansa completed the purchase of 500,000 shares from Chan Ramlal Limited being 9.69 percent of the issued shares at the price of offer price. The transactions triggered an obligation by the Group to make a mandatory bid for the remaining shares at the price paid for the Chan Ramlal shares.
According to Ansa, “a consequence of the LBOH Acquisition and the purchase of the Chan Ramlal shares, ACI is the beneficial owner of 3,613,011 Shares and the registered owner of 500,000 Shares amounting in total to 4,113,011 Shares and together with the 60,606 Shares owned by Sissons Paints Limited, ANSA McAL is the deemed beneficial owner of and controls approximately 80.86 percent of the issued share capital of Berger.”
Berger Paints’ Jamaica minority shareholders were offered a negative price to that at which the stock was trading at locally, which was rejected by shareholders, holding 94 percent of the minority shares.