Jamaica enjoyed a reduction in its trade for the first four months of this year, compared with the same period in 2013. The trade deficit amounted to US$1.34 billion, down from US$1.46 billion in 2013.
The country imported goods valued at US$1.86 billion for the January to April 2014 period, a decrease of US$199 million or 9.7 percent and exported US$77 million or 12.9 percent less for the January to April 2014 period, representing a big improvement over the change to March. Total exports for the 4 months came in at S$521 million, down from US$598 million in the similar period in 2013.
For the three months to March this year, imports fell by US$281 million and exports were down US$111 million to US$358 million, down from US$469 million in the 2013.
11 stocks rose as Market index jumps
Broker house, Scotia Investments was the only buyer of the 875,724 Scotia Group shares that change hands in Friday’s trading, on the Jamaica Stock Exchange. The prices of the stock rose, to close at $20, but traded as high as $20.99.
In the overall market, the prices of 11 stocks rose and 8 declined, as 26 securities changed hands, resulting in 5,240,852 shares trading, valued at $35,553,505.
Main Market| The main indices closed sharply higher in Friday’s trading as heavily weighted Scotia Group jumped to close higher by the end of trading. The JSE Market Index jumped by 1,598.01 points to 71,711.80 and the JSE All Jamaican Composite index climbed 1,786.85 points to close at 78,895.01.
Gains| Stocks with gains, volume and last traded prices, at the end of trading in the main market, are Cable & Wireless with 210,772 shares up 4 cents to 30 cents, Carreras 317,256 units, gaining 15 cents to $34, Jamaica Broilers 308 units, up 4 cents to $4.61, Jamaica Money Market Brokers with 10,000 ordinary shares, up by 5 cents to $7, National Commercial Bank that released results after trading on Thursday, closed up by 6 cents at $18.06 while trading 51,599 shares. The stock closed with the bid of $18.11 to buy 116,978 units. Pan Jamaican Investment with 1,313 stock units, gained 8 cents to $48.10, Sagicor Real Estate Fund traded 10,000 units and gained 1 cent to $6.36 and Scotia Group gained $1.30 to $20.
Firm| The stocks with volume and last traded prices in the main market to close without a price change, are Caribbean Cement with 1,600 shares at $2.50, Desnoes & Geddes 646 shares at $4, Jamaica Producers with 5,367 shares at $17.51, Sagicor Group 121,247 units at $9, Seprod 1,276 shares at $10.50 and Supreme Ventures 12,020 units at $1.95.
Declines| The stocks with losses, volume and last traded prices at the end of trading in the main market, are Gleaner with 10,300 shares, down a cent at $1.11, Grace Kennedy with 5,000 shares, lost $1.05 to end at $55, Hardware & Lumber 800 units, down 15 cents at $9, Mayberry Investments 4,080 units at $1.55, for a 1 cent fall.
Preference| Jamaica Public Service 5% C preference share traded 42,102 units and was up by a cent to $3.
Junior Market| The JSE Junior Market Index declined by 21.99 points to close at 627.28 as 7 stocks traded with 2 advancing and 4 declining.
Gains| Stocks recording gains at the end of trading in the junior market, with the closing prices, are Blue Power 5,320 shares and the price was up by 5 cents to $9.10 and Lasco Manufacturing with 3,091,640 shares the price gained 10 cents to $1 but it traded at a 52 weeks low of 85 cents before recovering by the end of trading.
Firm Trades| The stock in the junior market that traded to close at the same price as the day before is General Accident with 99,982 shares at $1.46.
Declines| Stocks declining in the junior market at the end of trading with the closing prices are, Caribbean Producers with 430,000 shares with a 5 cents loss to $2.45, Honey Bun with only 100 shares to fall by 60 cents to $2.30. This stock was poised to fall sharply after it released disappointing third quarter results and the offer gradually melted away, as bids were at very low levels. Lasco Distributors with 25,000 shares lost 9 cents to end at a new 52 weeks low of $1.10 and Lasco Financial with 7,400 units was down 8 cent to 92 cents, after the company posted a 20 percent increase in its first quarter results to June.
IC bid-offer Indicator| At the end of trading the Investor’s Choice bid-offer indicator had 7 stocks with bids higher than their last selling prices and 5 stocks with offers that were lower.
NCB Profit grows set for $4.80 EPS for year
National Commercial Bank reported impressive results for the nine months ended June 2014 compared with the nine months ended June last year. Net profit reported is $8.8 billion, an increase of 29 percent, or $2 billion for the nine months. For the latest quarter, net profit of $2.9 billion was made, an increase of 29 percent, from $2.27 billion in June 2013.
Earnings per stock unit amounted $3.56 and is set to get to $4.80 per share for the full year. Gross revenues of $42 billion increased 17 percent, or $6 billion from $36 billion generated in 2013.
As impressive as the results may appear two things have to be borne in mind, one is that in 2013 a large charge was incurred flowing from government of Jamaica debt swap, and the segment accounts show a mixed picture with just four out of the seven segments contributed to the improvement, as the others, recorded declines for the nine months. On the plus, was a $550 million reduction in loan loss provision, from $1.78 billion to $1.24 billion, with this year’s June quarter being $357 million or roughly half of what it was in 2013.
Staff cost a bit item, is up a bit, year over year, but part of that was due to the general insurance company coming into the group, for a part of the year. A more telling picture is seen form the quarter over quarter figures of $2.86 billion versus $2.7 billion for June 2013 quarter, which was marginally up.
Loans| Loans and advances, totaling $152 billion net of provision for credit losses at June 2014, grew by 12 percent, or $16.8 billion, compared to the loan portfolio as at June 30, 2013. Non-performing loans totaled $7.8 billion as at June 2014 ($6.6 billion at June 2013) and represented 5 percent of the gross loans compared to 4.8 percent as at June last year.
Deposits| Customer deposits were $205 billion, up 19 percent or $33 billion over the prior year. The increase was driven by growth in fixed deposits and savings portfolios, which increased by 65 percent and 10 percent respectively, over the prior year.
Capital| The Group’s stockholders’ equity stood at $78 billion, up 12 percent over the prior year.
The stock traded last at $18 and puts the PE ratio, at just 3.7 times the current year’s results. NCB declared another dividend of 35 cents per share, bringing the total in the last twelve months to $1.18. NCB remains a strong IC Insider buy rated stock.
Sweet River Abattoir & Supplies is not that sweet
Sweet River Abattoir & Supplies Company Limited is a company the majority of Jamaican are unlikely to know. Well their profile will get a lift, with the release of a prospectus offering up to 46,633,000 Ordinary Shares to the public, at the invitation price of $3.86 each.
The subscription will open on Tuesday 12th August and is scheduled to close on Tuesday 26th August 2014 .The Company is seeking to raise $180 million from the IPO, to be used in reduction of bank loans, construction completion of the new factory facility in Westmoreland, installation of a solar energy generation system, working capital; and payment of the expenses of the Invitation. The minimum amount to be raised to facilitate listing on the junior market of the Jamaica Stock Exchange, is $50 million
Up to 20,763,000 Reserved Shares in the Invitation are for priority applicants. Brokers and advisor for the deal are, MoneyMasters Limited and VM Wealth Management Limited.
The prospectus states that the majority of the shareholders of the Company are pig farmers, some with capacity to substantially increase through-put.
Sweet River in 2012, took a strategic decision to modernize the plant. The Company acquired lands in the Sweet River area of Westmoreland to establish a state of the art abattoir with expanded capacity along with administrative offices and warehousing facilities.
Sweet River planned factory facilities nearing completion in Westmoreland
The company indicates that they are the third largest supplier of pork within the market with approximately twenty-four percent (24%) market share. The Company’s main customers include Grace Food Processors Limited, Caribbean Producers Jamaica Limited, and Hamilton’s Smoke House (a subsidiary of Jamaica Broilers Group).
A pig has the capacity to provide between twelve and eighteen cuts. Currently Sweet River produces twelve cuts from each pig. The Company sources approximately 60 percent of its pigs from ten contract farmers with the remaining coming from some 395 small farmers across ten parishes in Jamaica.
Profit & revenues|In the first year of operations as at March 2010, Sweet River generated revenues of $239 million. For the financial year ending March 2011, revenues fell to $181 million, which is attributed to a shortage of pigs which affected the company’s ability to supply the market. By March 2012, the company enjoyed revenues of $207 million. Revenues rose to $311 million for the financial year to March, 2014.
Profit before taxes increased from $564,000 for the year ending March 2010 to $21 million at March 2014 and was flat with the $22.6 million generated in 2013.
With 51 million shares in issue currently earnings per share works out at 40 cents, placing a valuation of 9.4 times historical earnings. This is well above the junior market valuation. Value based on a book value works out at 3 times book, again a very high valuation. There are other weaknesses. The unknown company and the vast majority of the directors, a one man auditor that is unknown to the investing public and the absence of audited accounts for the March 2014. Serious investors are unlikely to be drawn to this issue for sometime.
Lasco Financial profit up 20%
Lasco Financial Services is reporting improved profit of 20 percent for the June quarter this year, compared with the year ago period. The improvements emanate primarily from a 23 percent growth in revenues.
Profit for the latest quarter ended at $47.3 million up from $39.3 million in 2013, with revenues coming out at $177.57 versus $145 million. Expenses grew by 23.6 percent, due mainly to a 32.6 percent increase in selling and promotional expenses that ended at $76.4 million, in the quarter. For the last fiscal year to April, Lasco reported $176.7 million in profit, from revenues of $629 million. Profit for the current year should end up around $250 million or 20 cents per share, with increased revenues and reduced marketing cost.
Last fiscal year the company increased its marketing spend considerably over the previous year, the added cost contained the level of profits that would normally have been made. “Advertising cost this year is expected to decline from the high of last year, since we will not require as significant an investment to drive growth for this period” Jacinth Hall-Tracey, Managing Director stated in a release with the result.
The company has assets of $880 million, up from $690 million at the end of June last year and $812 million at the end of April this year.
The stock remains Buy Rated. With the present price around a $1 per share and the earnings above should put a potential price of $1.60 within reach.
Treasury bill rates edge down
The Government of Jamaica Treasury bill offer for the period Friday, July 25 maturing on Friday, October 24 this year for duration of 91 days, attracted bids of $732,981,900 for the $400,000,000 available.
The yield cane out at an average of 7.63643 percent. The result represents a small reduction from the 7.65893 percent yield, emanating out of the previous issue of a similar duration in June. In May, the rate was 8.2 percent for the Treasury bill of same duration. $832,672,600 went after the 400,000,000 Treasury bill instrument on offer. The offer which is of 182 days duration, matures on January 23 next year and will generate an average interest rate yield of 8.21982 percent versus the 8.36502 percent for the June issue of the same duration. At the May Treasury bill auction, the rate came out was 8.932 percent.
Is the real estate price right?
In the heady days when Olint, the forex trading company was around, and many clients of that entity were reaping 10 percent per month, persons were paying almost as much for used residential units as new ones.
Apartment complex at East Oakridge in Kingston 8
How can an investor get a good idea if the price is about right? Be like a valuator, do comparison pricing. A good place to start getting information on selling price per square foot are ads selling properties, especially new ones. Houses are of different sizes and make up, but by and large they have one thing in common, that is square footage. If the square footage is known, the value per square foot should be computed for all units, then prices can compared, because there is a common measuring rod. Without reducing values to a common measure, it becomes difficult to determine if one property is appropriately priced or not.
Interior of Model unit at East Oakridge apartment complex
Some advertisements and a news item in the newspapers, provide some useful information as to where values are in the local market currently. Location of course is an important element of pricing, this is not factored in here. The information gleaned have values per square foot, ranging form a low of $10,000 for lower income units to a high of $25,000 per square foot for a Montego Bay waterfront property. The typical upper income units seem to be price around $22,000 per square foot for units of 600-700 square feet to $16,000 to $20,000 on the upper end for larger units. Older units would normally be valued based on be discount from the current selling prices of new units for their age, at around 2 percent per annum.
According to a Sunday Gleaner publication on July 20, 2014 Real-estate developer Matalon Homes is investing in a residential project called Welwyn. Construction of the luxury townhouses and apartments at Millsborough in St Andrew is to last a year. The units are priced at US$210,000 for the apartments of 1,100 square feet and US$420,000 for the townhouses comprising 2,100 square feet or approximately $23.6 million and $47.3 million respectively. The selling price works at $21,570 and $22,250 per square foot respectively.
Apartment unit at Montego Freeport, priced at $25,000 per sq. Ft.
In East Oakridge, Kingston 8 area, there are 1 and 2 bedroom apartments of 986 and 1,486 square foot, priced at $19 to 24 million or $19,250 and $16,150 per square foot respectively.Over in Montego Bay, The Landings at the Spring Gardens, have studios of 872 square foot going for US$131,000 to US$137,000 or J$17,000 per square foot and 2 bedrooms of 1,575 square foot, going at US$219,000 t0 $229,000 or $15,700 per square foot. There is the requirement for 35 percent deposit in two tranches. Over at Montego Freeport, there are also units selling at $25,000 per square foot. While, properties in the main cities are going at the above prices for new units, out in rural Jamaica, smaller units of 800 square feet are priced around $10,000 per square foot. Many of these tend to be built on cheaper lands than say in Kingston, they are also benefit from the fact that the developers are building hundreds of them in one community thus enjoying economies of scale.
Why NCB deserves a look now
National Commercial Bank (NCB)shares may not be trading in droves recently with the price tending to trade around $17 since early May but investors may be missing a great buying opportunity with a stock that is seriously undervalued.
In Trinidad the stock closed as low as TT$1.04 recently but has moved up to $1.10 on Friday and seems poised to go higher. The bid in Trinidad on Friday close was $1.10 (J$19.20) to buy 22,933 units with an offer of 26,000 units at $1.14. On Wednesday the stock traded 69,456 units at $1.08 and gained 2 cents in the process. On Friday 21,322 traded in Jamaica at $18.01 each and 1,396,013 on Thursday between $17 and $18.03. Wednesday saw 21,595 units being traded between $17.30 and $19. One important factor is that the stock is not in great supply.
But it’s the order book on the Jamaica Stock exchange that is sending a strong message to buy coupled with is a year when the results should help stimulate the stock price higher. There are only 280,000 shares on offer in the market but the buying interest is not particularly strong. With the pickup in trading in Trinidad, the price in Jamaica could get a lift and with third quarter results to June which are due in the last week in July, that could strengthen investor’s appetite for the stock and give it a badly need push.
IC Insider forecast earnings of $5 per share for the current year, so far NCB reported earnings of $2.38. For the first 6 months of the fiscal year.
FIFA incredible ranking system left wanting
The world cup finals are making a mockery out of FIFA ranking system for its members. For years FIFA has been using a system of moving nations up and down the ranking ladder based on results of games played. Unless there are regular interchange of teams globally so that there is a good comparison that can be done internationally, the ranking system is likely to be flawed which is exactly what the June rankings and the world cup outcomes indicate. Commentators have been caught out as well as they have in many cases limited information to compare one team with another. The results many have been confounded by the results of world cup 2014.
FIFA number 1 team Spain won just one match but only after they were eliminated from this year’s world cup finals, the number 10 team England never even won a match, their no 9 ranked team managed just one win and bowed out of the tournament at the end of the preliminary round. The number 4th ranked team Portugal is in with a chance of staying in the top 16 but may well not make it.
The 28th team Costa Rica won all their matches against the 7th, 9th and 10th ranked teams, the team that was ranked at 44 is in the top 16. Korea Republic that was ranked at 57 did better than many ranked above them and so is the case with Iran that was ranked at 43, Ghana was ranked at 37 and is close to being in the top 16.
Something must be terrible wrong with a system that gets the ranking so wrong. FIFA needs to revisit this system if it to have credibility as the present system has little. But this is not the only thing that FIFA a body of mostly well aged men control. Cricket has moved to let technology help in determining the accuracy of developments during a cricket match, tennis has done so for years but FIFA has refused to move into the modern era except belated for goal post technology. The present series and past ones have had so many bad calls that the time has long gone for football to move fully into the modern world and let technology assists the referees on the field.
Inflation jumps 1% in May
Inflation jumps 1 percent in May, the Statistical Institute of Jamaica (Statin) stated in a release today, compared to the index for April. An increase of 0.7 percent in ‘Food and Non-Alcoholic Beverages’ and 3.6 percent increase in the index for the division ’Housing, Water, Electricity, Gas and other Fuels’ were the major reasons for the sharp climb. The movement in the index for May 2014 resulted in a calendar year-to-date inflation rate of 2.4 percent. Inflation declined in April by 0.7 percent compared to March this year.
According to Statin, the division ‘Food and Non-Alcoholic Beverages’ was impacted by increases of 1.9 percent and 1.6 percent in ‘Bread and Cereals’ and ‘Milk, Cheese and Eggs’ respectively. There were declines of 0.4 percent and 0.3 percent for the classes ‘Fruit’ and ‘Vegetables and Starchy Foods’ respectively. Within the division ‘Housing Water, Electricity, Gas and Other Fuels’ the advance in the index for ‘Electricity, Gas and Other Fuels’ of 7.3 percent was moderated by the fall of 3.4 percent in the index for ‘Water Supply and Miscellaneous Services Related to Dwelling’
The other divisions that recorded increases in the All Jamaica ‘All Divisions’ index were: ‘Alcoholic Beverages and Tobacco’ 0.5 percent, ‘Clothing and Footwear’ 0.2 percent, ‘Furnishings, Household Equipment and Routine Household Maintenance’ 0.5 percent, ‘Health’ 0.2 percent, ‘Transport’ 0.4 percent, ‘Recreation and Culture’ 0.1 percent, ‘Restaurants and Accommodation Services’ 0.5 percent, and ‘Miscellaneous Goods and Services’ 0.5 percent.
