6M Berger shares taken up?

Trading in Berger Paints shares are now trading after trading was suspended two Thursdays ago.

Trading has resumed in Berger Paints after it was suspended ahead of the closing date for the offer by Ansa Coatings to acquire the minority shares at $10.88.
Trading took place between $11 and $11.50 with 213,774 units changing hands. So far the company has not released information on the number of shares that were offered as a result of the offer. IC Insider.com gathers that the take up is around 6 million units, if so it would represent around 3 percent of the issued capital of the company.
this would be in keeping with some of the to minority shareholders coming out publicly against the offer price and with more than 31 percent of the holdings held by entities that were not in support of the offer.

KIW rises from ashes set to relist

KIW international holds its annual general meeting on Wednesday 18. The company that was previously listed on the Jamaica Stock Exchange is planning to seek relisting by 2018.
In preparation of relisting the company is recommending a 15 to 1 stock bonus for approval at the general meeting to facilitate the issued capital reaching just over $50 million. If approved, the resultant effect is for the number of issued shares to increase from just under 16 million units, to 255.45 million shares.
In addition, the directors approved a dividend payment of 60 cents per share to cost approximately $10 million and payable later in the year.
The company suffered from liquidity problems in the 1990s, but gradually clawed its way back with a combination of moderate rental income from leasing the property at Spanish Town Road and in more recent years, income and gains from a growing investment portfolio.
Internal results show a profit of $24 million to March 2017 compared to $31 million in 2016 as gains on investments slipped in 2017 to $21 million from $28 million previously.
The Company is estimated to have assets of approximately $220 million at March this year. The assets include Jamaica Stock Exchange listed stocks, valued around $65 million and benefited from growth in portfolio from $13 million in 2013.
In April the Government of Jamaica sold their interest of approximately 43 percent in the company to Jamaica Teas.
Subsequent to the acquisition of the above shares the board was expanded and reviewed the options for continued ownership of the property at 138 Spanish Town Road. A decision was made to dispose of the property, having received an attractive offer. The proceeds of the sale are expected to be put into investments as the company embarks on a deeper involvement in the investment arena.
The directors of KIW are John Jackson, Chairman, John Mahfood, CEO of Jamaican Teas, Kemillee Mclymont, Attorney at law, Karl Wright, former president of Victoria Mutual Building Society and David Stephens CEO of Apex Perimeter Protection Ltd.

Increased cost squeezes Kremi’s profit

Caribbean Cream delivered better results in the August quarter than in May period with an increase in revenues of 18 percent versus a 1 percent increase in the first quarter.
Profit declined in the latest quarter but by 23 percent, to $35.6 million versus a 40 percent fall in for the six months to $70 million, down from $117.6 million. Cash generated from operations came in at $98 million but Kremi spent $102 million on acquisition of fixed assets.
Gross profit declined by just 4 percent in August quarter versus 14 percent in the May quarter as increase of direct cost outpaced the rise in revenues. In the end revenues came in at $354 million in the August quarter up from $319 million in the May quarter and $300 million in yin 2016 and for the six months $673 million from $615 million in 2016.
Administrative, selling and distribution expenses increased moderately from $71 million to $76 million in the quarter and form $136 million to $147 million for the half year.
At the end of August cash and equivalent amounted to $175 million and borrowed funds $90 million. Shareholders’ equity stands at $662 million.
Earnings per share for the half year is 19 cents and 9 cents for the August quarter. IC Insider.com is forecasting earnings of 50 cents for the full year to February 2018 and 75 cents for 2019. The stock last traded at $6.70 for a PE of 13.4 which is in line with the Junior Market valuation.

Stinking Berger behaviour

There are some strange and shocking developments regarding the offer by Ansa Coatings International to purchase the minority shares in Berger Paints Jamaica.
First the directors in recommending that shareholders accept the offer made critical claims that are not back up by facts and they offer no information to support same. Secondly, the shares have been suspended in questionable manner and without adequate reasons.
The directors in recommending that shareholders accept the offer said,” in your directors view, it is highly likely that acceptance of the offer will take the aggregate holdings of ACI beyond 80 percent. Under the rules of the Jamaica Stock Exchange, where one shareholder either individually or collectively with concert parties holds more than 80 percent of the listed shares of a company, the stock exchange has the right to de-list such company. In fact the offeror has made it clear its intention to delist the Berger Shares.” The directors’ recommendation goes on to quote ACI statement that they will seek delisting if they acquire an additional 29 percent of the shares. “It is therefore clear that Berger Jamaica shares will in all probability be delisted from the JSE,” the directors’ statement concluded.
According to the directors, Ansa Coatings International controls 51.01 percent of the issued Berger Jamaica’s shares and as a result of this Offer, its holding will most likely exceed 75 percent.
It seems that for the recommendation to shareholders to be substantially based on the “highly likely that acceptance” taking the holdings of ACI beyond 80 percent and most likely exceed 75 percent, is highly flawed. Where did the directors get that information from and why did they not disclose the source in the recommendation. Why they did not think it appropriate to disclose the interim results figures up to August in the report?
At $10.88 per share, Berger is priced at 5 times the current years’ earnings against more than 13 for the main market, on what basis could it be regarded as a fair price?
The situation gets more curious and raises a huge question, is someone is trying to manipulate shareholders in giving away their shares at less than a fair price? That is the only conclusion to be arrived at, when without notice, the shares of Berger were without notice, suspended by the Jamaica Stock Exchange on Thursday, October 5, 2017 and is to remain suspended to Friday, October 13, 2017. According to a release late on Thursday, “this is to facilitate the processing of the transaction in respect to shareholders of the Company who have agreed to sell their shares to Asna Coating, as a part of their Takeover Bid of Berger.” That of course is a load of crap. Trading shares of Desnoes and Geddes a much bigger company was never suspended when Heineken acquired the minority shares in 2016, Hardware and Lumber shares were never suspended either, nor was Scotia Investments’ in Scotia Group’s recent acquisition of the minority shares. Why is there a need to prevent Berger shareholders who want to trade the shares if they so desire? Worse why is there need to suspend it beyond Monday?
The capital market cannot prosper as well as it should if the above abuses continue to take place without corrective action being taken. The Jamaica Stock Exchange and the Financial Services Commission should have intervened when the directors’ recommendation included information that was not backed up by facts and should have intervened and prevented the unwarranted suspension of trading in the company’s shares.

Berger shares suddenly suspended

Trading in Berger Paints shares surprisingly suspended on Thursday

Trading in shares of Berger Paints Jamaica has been suspended effective with the opening of the market on Thursday, October 5, apparently based on a request from the company on Wednesday and to the surprised of investors.
Information gleaned is that the request if for the shares to be suspended up to and including Friday, October 13. The request is very strange and unusual, with the buyout offer set to expire on Monday October 9. IC Insider.com gathers that, Rule 411b of the Stock Exchange states that a listed company may make application in writing and accompanied by certified copy of the resolution of the board requesting the suspension stating in writing the reasons for the suspension.
It unclear, to what extent the above rule was complied with. IC Insider.com gathers that the regulatory arm of the exchange had several calls on the matter and are seeking clarification on the matter.
With most shares kept in an electronic form the need for suspending trading is not warranted and worse for the request to go beyond Monday is unnecessary. Persons making the request are not taking in consideration investors and the need to keep trading in the share open for their convenience. The suspension request is raising concerns that there are persons who want to unduly influence investors to dispose of their shares to Ansa Coatings, even when there is no evidence that the shares will be well accepted and lead to delisting of the company.
The offer to buy the minority shares of Berger followed Ansa Coatings gaining majority shares when they acquired to parent company and resulting in a mandatory offer for the rest. The price offered is $10.88 per share but the stock has consistently traded above this level since March this year.

Trinidadian set for biggest share in SVL

Supreme Ventures set to be controlled by Trinidadian company.

Zodiac International Investments and Holdings Limited, a Trinidad & Tobago based corporation is making plans to take controlling interest in Supreme Ventures, IC Insider.com has gleaned from a reliable source.
Zodiac International indirectly owns half of the 49.90 percent of Supreme Ventures shares controlled by Intralot Caribbean Ventures. Zodiac International is seeking to acquire the remainder of the shares it does not already owns, making them the largest single shareholder if they succeed with the acquisition.
This publication understands that the company has engaged a leading local investment house to raise privately US$40 million to fund the acquisition. There are no indications that Zodiac intends to move the holdings beyond 50 percent and they may well sell of a portion to take it lower.
Supreme Ventures traded at $11 on the Jamaica Stock Exchange on Tuesday putting the value at $29 billion or about US$220 million.
Profit for Supreme Ventures surged 41 percent from $649 million to $918 million after tax, with second quarter profit jumping by a lesser 34 percent to $502 million from $374 million in 2016. Caymanas Park conducts live horse racing in Jamaica and was acquired earlier in the year by Supreme Ventures and is yet to start contributing to profits of the group.

Key Insurance big management changes

Profit doubles at Palace

Palace Multiplex in Montego Bay.

Movie house, Palace Amusement doubled profit after tax for the year to June 2017 from an 11 percent rise in revenues for the year and profits could well double again in the 2018 fiscal year, IC Insider.com’s forecast shows.
After accounting for $9 million in taxation, the company ended with nearly $33 million in profit or $22.97 per share. The operation generated $72 million in cash for the year, an improvement from $48 million in 2016.
Revenues from box office, rose by 7.5 percent at the Carib cinema, 8.3 percent at Cineplex and 10 percent at Montego Bay Multiplex. Overall revenues from box office, confectionaries sales, screen advertising and others rose a strong 14.5 percent at Carib, 9 percent in Montego Bay and 7.2 percent at Cineplex, all ahead of inflation of 4.4 percent for the period. Based on the trend in revenue growth, fiscal year 2018 should see $100 million increase and profit per share rising to $50, assuming good quality box office offerings during the period. Pickup in economic activity is great for the company, as its patrons will have more disposable income from increased employment and the recent reduction of taxation on their income and relatively low inflation.
Depreciation remained relatively steady at $33 million while administrative cost grew a mere $3 million to $171 million.
At end of June, Palace had cash funds of $141 million and quoted equity of $16 million, up from $100 million and $15 million respectively in 2016. Only $29 million is in borrowed funds while working capital stood at $122 million, a great improvement over the $76 million at June 2016.
The stock is listed on the Jamaica Stock Exchange and last traded at $550, earlier this year and now boast a price earnings ratio based on the above forecast of 11.

Buy Berger – Sagicor Investments

Berger Paints is worth more than $20 per share.

While the directors of Berger Paints are recommending minority shareholders accept an abysmally low $10.88 for the shares with one condition that the bidders as a result of the Offer its holding will most likely exceed 75 percent of the holdings.
No information was given as to how this was possible. Interestingly two entities that control more than 25 percent of the total shares in the company don’t appear ready to sell at least not at the low price offered.
Sagicor Investments, a subsidiary of Sagicor Group who controls more than 10 percent of Berger Paints shares have issued an analysis of the company and the fairness of the offer. They are advising investors to hold or buy more shares at the current low price. It would be an odd situation that the subsidiary of the group are recommending a buy or hold recommendation and the parent did the opposite. A fair conclusion is that they will not sell, in which case the offer fails as most investor thing it will.
Sagicor Investments concluded, “the business has made significant strides in the past three years. This has resulted in the company achieving phenomenal financial success as the company implemented its strategic goals. With a solid foundation established operational and financial performance should continue to improve over the medium term. Though the attractive dividend policy may change, the future earning potential should see the stock trading at a price to earnings ratio within the range of 10X – 12X. The stock is currently trading below this range.”
“Having considered the anticipated economic outcome along with challenges facing the company, including the strengthening purchasing power of domestic consumer, the growth trend in the construction industry and moderate growth in overseas market, the 12 month price target is within a range of J$17.05 to J$20.46.”

Carib Beer brewed in Trinidad by Ansa McAl Group

“Given the price expectation, the current offer of $10.88 is at a significant discount to the value of the company’s shares. Investors would better serve maintain the current position or take the opportunity to increase the position in the stock given the fall-off in the current market price. While there are risks, relating to changes in the management agreement and delisting, the future earning potential of the company should compensate for holding the stock.”
IC Insider.com got wind of a letter by Ideal Group of companies that commented a possible delisting Berger, “we are the largest minority shareholder in Berger Paints at 12%+ of the Company. We find the offer price of $10.88 by ANSA McAL to be woefully-inadequate and have chosen to reject the offer. In fact, given that the share price is now on or around $11 per share, we are buying Berger at this attractive price level, not selling.”
The letter goes on to say, “we are also aware that another leading minority shareholder, shares our views and has also rejected the offer. In fact, they are buying via the Jamaica Stock Exchange (JSE). Both parties between themselves own around 25 percent of BRG’s issued share capital.”
On investors on Monday bought 60,411 of the company’s shares, on Tuesday 153,142 units, on Wednesday 129,140 shares and on Thursday 148,982 units around or above $11 per share, a clear enough indication that the smart money is not buying into the Berger directors unfortunate recommendations.

Profit jumps 69% at Main Event

Main Event should earn 50 cents per sahre for 2017.

Revenues at Main Event, rose 14.8 percent in the July quarter, to $290 million, compared to only 10 percent for the year to date to reach $942 million.
The strong growth in revenues coupled with reduction in cost in some areas resulted in a loss of $4.7 million in the 2016 quarter, transformed to a profit of $26 million in this year’s third quarter and $101 million for the nine months, versus $60 million in 2016, for a strong increase of 69 percent.
Revenues in the quarter to April was flat, at $319 million compared to the 2016 period, but contributed $25 million more profit than the July quarter. Direct operating cost as reported were $147 million in both quarters in 2017, as a result, gross profit margin in the July period was less than in April. In the July quarter, administrative cost ended at $92 million, the same as in the April quarter but depreciation rose to $22 million, from $16 million, as the company acquired more equipment for its own use rather than hiring them.
Assuming the growth level in revenues for the third quarter continues, the company seems heading for profit of 50 cents per share for the 2017 fiscal year to October and 70 cents for 2018, providing room for the stock to deliver a good return for investors who get in at the right price.

Three directors of Main Event, including the mentor who is respossible to ensure compliance with the JSE rules.

“We remain very confident in our strategies and the company’s prospects for further growth and new business opportunities,” the company’s Chairman, Ian Blair and CEO, Solomon Sharpe stated in their comments on the nine months results.
The balance sheet shows fixed assets growing to $420 million from $342 million at July 2016 and improved working capital of more than $100 million versus just $12 million in 2016, while borrowings have declined from $156 million to $122 million. With increasing profit, the finances should be looking better by year end and into 2018.
The stock is BUY RATED but closer to the $5 level currently and for a limited time, as it may not trade back down there.

The stock is listed on the Junior Market of the Jamaica Stock exchange and is trading at $5.60, just over a PE of 11 compared to 13.7 for the junior market.