Feature Stories — Page 498

BOJ intervention squeezes buying

May 26, 2014 by IC Insider.com

Trading on the forex market did not match or come close to the levels of funds traded in the market on Thursday last week, the last day of the holiday shortened week. For Monday, dealers bought the equivalent of US$25,375,062 compared to US$72,581,952 on Thursday and sold the equivalent of only US$22,862,624 versus US$71,142,957 last week Thursday. In spite of the lower purchases all the spot rates fell against the local currency except for a one cent rise in the selling rate for the Canadian dollar. “Bank of Jamaica intervened in the market last week Thursday selling dealers all the forex funds they needed” IC Insider source indicated as to the reason for the big increase in trading on that day. The big amount bought on Thursday may be the reason why buying on Monday after the holiday was so low. The purchase on Monday was in contrast to nearly US$45 million bought on the previous Monday as well as the week before.

Dealers bought US$20,649,053 compared to US$68,621,498 bought on Thursday as the buying rate for the US dollar declined by 76 cents to $110.15 and sold US$19,573,771 versus US$67,344,895 on Thursday with the rate closing 2 cents lower to $111.17. The Canadian dollar buying rate fell 2 cents to end at $100.40 with dealers buying C$1,928,329 and selling C$1,600,232 with the rate rising by a cent to end at $101.97. The Pound closed at $184.25 for the purchase of £1,651,343 with the rate declining by 91 cents while £908,165 was sold with the rate declining by 87 cents to $186.96. Other currencies bought amounted to the equivalent of US$206,180 while selling accounted for the equivalent of $293,819.

Highs & Lows| The highest and the lowest buying rates for the US dollar and the highest selling rate remained unchanged at $111.70, $90.18 and $115.56 respectively but the lowest selling rate fell by $2.14 to $90.18.

The highest buying rate for the Canadian dollar lost 30 cents to $102.30, the lowest buying rate was unchanged at $80.43. The highest selling rate rose by 50 cents to $104.29 and the lowest selling rate fell $2.10 to $96.90.

The highest buying rate for the Pound fell 10 cents to $187.40 while the lowest buying rate rose by 29 cents to $149.44. The highest selling rate declined by 27 cents to $192.65 while the lowest selling rate fell $3.20 to $180.05.

Filed Under: Feature Stories, FX Market

Dolphin Cove added to Buy Rated list

May 21, 2014 by IC Insider.com

Dolphin Cove is now added to the Buy rated list hiving produced a healthy 26 percent jump in earnings for the March quarter with indications that earnings could hit $1.20 for this year at just over $8 the price could jump in the months ahead.
Trinidad’s National Flour is added to the watch list and AMG Packing was moved earlier from Buy Rated to the Watch list. Access Financial which had been put back into the Buy Rated list when the price fell back to $8 has risen in price but remains on the Watch list until the directors’ dispute is resolved.
Caribbean Cement remains in the buy list but the price could pull back some more with the unimpressive March quarter results. Investors should await the pull back to buy. One Caribbean Media has climbed in price and is losing some of its attractiveness as such, investors should be careful with this one unless their objective is for a longer term investment.
Some of the Junior market listings have not had a great first quarter in reporting profits but prices have pulled back and have helped to make them attractive buys with the hope that profit will improve going forward. The reality is that in the March quarter government operated at a surplus and this would have pulled funds out of the system and squeezed purchasing power from consumers thus affecting the smaller companies.
A number of the main market companies in Jamaica reported strong first quarter growth in profits that points to the possibility of overall growth in 2014 profits for them. Outstanding results were reported by Hardware and Lumber with IC Insider 2014 forecasted earnings put at $5.40 which means strong increase can be expected in the stock price. Grace reported 21 percent increase in March quarter results but some of this comes from losses incurred in 2013 from the debt exchange and restructuring of the general insurance arm with no such losses in 2014 rather than from totally ongoing improvement in its operations. Pan Jam also reported strong increases in profit both from continuing improvement in operations as well as recovery form one off losses in 2013.

Filed Under: Company News, Feature Stories, Stocks to watch

2013 Remittance inflows top $2B

March 7, 2014 by IC Insider.com

Total remittance inflows into Jamaica for 2013 hit a record of US$2.07 billion, US$23 million more than the amount received in 2012, which was the previous record year at US$2.043 billion according to data from the Bank of Jamaica. Net remittances for January to December 2013 were US$1.82 billion, an increase of US$49 million compared to 2012.

The out-turn for December reflected an increase in gross remittance inflows and a contraction in outflows with net remittances for the month reaching US$176 million, an increase of US$2.2 million over the similar period of 2012. Gross remittance inflows for the month were US$195 million, a decrease of US$1.7 million relative to December 2012.

Image courtesy of Boaz Yiftach/FreeDigitalPhotos.net

For the fourth quarter of 2013, net remittances were US$476 million, an increase of US$27 million or 6.0 per cent relative to the corresponding quarter of the previous year resulting from an increase in gross remittance inflows and a contraction in remittance outflows.

Total remittance inflows for the December quarter were US$533 million, representing an increase of US$16 million or 3.0 per cent relative to the corresponding quarter of the previous year.

Related posts | Remittance inflows continues up | October remittances up

Filed Under: Breaking News, Economy, Feature Stories Tagged With: BOJ, Economy, Remittances

Margaritaville, down the road with risk

March 2, 2014 by IC Insider.com

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Come Monday March 3, the Margaritaville Turks IPO opens to the public with 21,156,555 ordinary shares on offer at a price of 10 US cents per share payable in US dollars. The IPO aims to raise US$2 million through the issuing of 5,260,740 new shares with the company pocketing the net proceeds. The remainder are existing shares being sold by the parent company Margaritaville Caribbean.

If the issue is successful in selling the minimum amount of 13.5 million shares, they will be listed on the main market of the Jamaica Stock Exchange. The company, incorporated in the Turks & Caicos Islands, now has 62,239,259 issued Ordinary Shares to Margaritaville Caribbean. After the issue, it is expected that the issued shares will climb to 67.5 million units and the ownership of the parent will fall 69 percent. The company is a small one with equity of US$3 million but the only debt are amounts due to creditors of $725,000 and current assets of only $841,000.

Value | For the six months to November 2013, revenues climbed by a strong 38 percent to hit $2.74 million with profit more than doubling to $442,000 and should be approximately US$900,000 for the full year to May 2014. For the year ending May 2013, revenues fell to $4.5 million from $4.79 million in 2012 with profits of $598,000 down from $880,000 in 2012.

Revenues were $4.86 million in 2011, $4.3 million in 2010 and $3.55 million in 2009. Profits during this period have not grown in line with revenues, with profit of $842,000 in 2011, $943,000 in 2010 and $1 million in 2009. No doubt the global downturn had a negative impact on the operations. The worsening profit out turn is tied to slipping margins, which was mostly in the 170 percent range between 2010 and 2011 but fell to 143 percent in 2012 and 105 percent in the 2013 fiscal year, and a recovery to 156 percent in the latest six month period as at November 2013. The level in the November quarter slipped to 149 percent.

The six month earnings to November 2013 work out at 14 cents per share with the PE ratio at 7 times earnings, a bit rich for main market companies. This is like a junior market listing. As such, the valuation is in keeping with those smaller companies.

US$ earnings | As the earnings are in US dollars, many investors may see much more in the IPO than the real numbers suggest. The shares are priced at 2 times book value, which is not out of line with many companies of similar size on the market. In fact, the net book value valuation is below several junior market companies and is selling at roughly one times sales, which seems to be on the high side compared with the majority of listed companies. The above suggests that investors may have to wait sometime for a rich payoff.

There is added risk | For one, the company has managed to cut cost of sales by what it says is “renegotiated price from suppliers” but this cannot go on forever. A positive is that revenues are up in 2013. Income is highly dependent on one location in a small territory, the Turks & Caicos, and continuity is subject to lease arrangements with Carnival Cruise Lines, the only cruise line doing stopovers at that location. The success of the business is highly dependent on visitors coming to the island by cruise ship and the facility is only open on those days that ships are in. In other words, absent the ships, absent the business.

The company appears to have business interruption insurance coverage for a major catastrophe, but it’s unlikely to cover any downturn flowing from less customers going on cruises. This doesn’t seem to be a problem in the short run with the increased revenues generated to date and the promise of increased visitors in 2014, but could occur at any time.

The Directors are planning to roll out a new Margaritaville menu early in calendar year 2014, which aims to increase average consumption per customer. The Directors also anticipate growth in the Company’s revenues in future, given the following factors:

A continued increase in the number of ship calls to the Grand Turk Cruise Centre destination.
Increase in the number of passengers visiting the Cruise Centre. Data received from the Carnival Corporation show an estimated 750,000 passengers sailed to Grand Turk and the number is expected to reach 1 million in calendar year 2014 based on pre-bookings.
The addition of 4 new bars, and the upgrading of existing bar outlets, the addition of a new revenue centre with introduction of the new casual “Grab N Go” convenience dining concept, the opening of the South Beach Bar and Grill, which the directors anticipate will provide an alternative option for passengers who prefer a more sedate dining environment to that of the Company’s main restaurant, Margaritaville.
The expected improvement of the Company’s average customer spend resulting from upgrading of remote point of sale (POS) system introduced in calendar year 2013, that facilitate the order process for customers’ convenience.

The Company is a part of the Margaritaville Caribbean Group and a wholly owned subsidiary of Margaritaville Caribbean. The Group operates the Margaritaville chain of restaurants in various Caribbean destinations, inclusive of the flagship restaurant in Montego Bay. The IPO listing will only offer shares in the Grand Turks-based cruise pier operation.

The stock may not take off big time in the short run, but it provides a means for investors to diversify their portfolios if they are prepared to accept what appears to be higher risk.

Filed Under: Company News, Feature Stories, Initial Public Offers, Stock Market Tagged With: Jamaican Stock, JSE Company, Margaritaville

Blue Power profit slips

February 28, 2014 by IC Insider.com

Blue Power profits slipped for the quarter to January this year as the profit margin got squeezed resulting in profit of $15 million compared to $23 million in the same period in the previous year. The Lumber Depot division contributed under $8 million and the Blue Power division added just over $7 million to the profit.

Profits for the nine months stood at over $70 million compared to $67 million in the same period last year, an increase of just over 5 percent. The contribution of Lumber Depot division was over $37 million, while Blue Power division added $33 million.

Earnings per stock was $1.25 for the nine months compared to $1.18 in the previous year.

Sales for the nine months ended January, 2014 were $780 million compared to $706 million for the same period last year, an increase of $74 million or 10 percent. For the period, sales for the Lumber division amounted to $543 million versus $466 million the previous year, an improvement of 16 percent while Blue Power soap division remained basically flat with sales of $237 million against last year’s $239 million.

Sales for the quarter ended January this year were $259 million versus $266 million for the comparative period in 2013. For the third quarter, Lumber Depot division achieved sales of $176 million versus $178 million the previous year, while Blue Power moved down from $88 million to $83 million.

Reasons for fall | “Small declines in sales in both divisions reflect the tightness in the economy, which is being experienced by our customers, and which has also resulted in downward pressure on prices and margins. Our response to these challenging economic circumstances is to focus on keeping, as much as possible, a lid on price increases, reducing costs especially by investing in solar technology, improving packaging and quality to get greater market share, introduction of new products and bulk-buying to obtain better prices.” the company’s management stated in their release to shareholders.

Blue Power was able to hold administrative cost slightly below that of 2013 at $34.5 million for the January quarter. In 2013, cost in this area was $35.7 million and in the nine months $99.4 million, which fell to $96.8 million in 2014.

Other revenues almost doubled from $5.7 million to $10.8 million for the nine months and helped to keep profits up.

Margins | Gross profit slipped to 22.17 percent in the latest quarter from 28 percent in the 2013 period and ended pulling down the year-to-date margin to 25.54 percent compared to 30 percent enjoyed in 2013 and 28.6 percent in the full year to April 2013.

It is quite likely that with government slashing the fiscal deficit from $54 billion in 2013 fiscal year resulted in increased tightness in the economy. Much of the measures that led to the wiping out of the fiscal deficit would have been increased taxes and a sharp cut in interest cost. There is no new tax take for the 2014/15 fiscal year and the economy should be freer to function with some amount of growth. As such, the environment should start to look better in the latter part of this year for companies such as Blue Power.

Finances | The company’s finances are in a very healthy state with no borrowed funds and working capital increasing to $356 million from $302 million at the end of April 2013. Cash funds on hand amounts to $133 million. Amounts due to creditors is only $59 million. while receivables amounts to $77 million but inventories are at $203 million up from $177 in April 2013.

Stock outlook | At the time of writing, the stock was in strong demand by one broker at the $9 level. The weakness shown in the latest quarter sends cautionary signals which may be temporary. We see the current quarter continuing to reflect some of the weakness of the January quarter and we are forecasting earnings of $1.50 per share for the year ending April 2014 and $1.80 for the 2015. We leave the stock as a cautious Buy Rated around the $9-10 region based on the tendency for limited supply and strong current demand for it.

Filed Under: Company News, Feature Stories Tagged With: Blue Power, Jamaican Stock, JSE Company

D&G, Carreras & C&WJ now Buy Rated

February 17, 2014 by IC Insider.com

IC Insider has added Desnoes & Geddes, Carreras and Cable & Wireless Jamaica to the Buy Rated list.

Desnoes & Geddes reported gains of 21 percent for the six months to December, earnings excluding one-off items and is poised to earn 80 cents for the full year ending in 2014. Forecasted earnings for the 2015 year is $1.10.

For Carreras the worse seems to be over with the last set of interim figures showing sales starting to recover from the impact caused by the price increase and the stock piling of cigarettes in the 2012 December and March 2013 quarters. IC Insider’s forecast is for earnings of around $5 per share for the year to March 2014.

Cable & Wireless’ sharp increase in cellular revenues and cost cutting will change the bottom-line markedly going forward.

Berger Paints Jamaica has been added to the market watch list flowing from a revival in earnings for the March 2014 year.

Image courtesy of suphakit73/FreeDigitalPhotos.net

Filed Under: Company News, Feature Stories, JSE Main Market, Stock Market, TTSE Market Tagged With: Berger Paints, C&WJ, Carreras, D&G, Jamaican Stock, TTSE

GOJ’s program for reduction & growth

January 26, 2014 by IC Insider.com

The principal objective of the Government of Jamaica’s programme is to reduce the national debt and raise the sustainable growth rate of our national output.

The governor of the Bank of Jamaica, Bryan Wynter, stated in a recent address at a JMA’s 2014 Economic Forum, that the Government has committed to implementing revenue, expenditure and debt management measures to ensure that the debt goes down in relation to GDP. This commitment entails the achievement of annual primary surpluses of 7.5% of GDP over the life of the programme. The governor went on to outline other measures that are to be put in place to achieve the main objectives.

“With this,” he stated, “the borrowing need of the Government has fallen sharply, which is leading to a steady reduction in the debt to GDP ratio to below 100% by 2020. Government intends to make the current fiscal responsibility framework stronger by developing binding fiscal rules. This will increase transparency, lock in the gains of fiscal consolidation and ensure that budgets will be sustainable even beyond the end of the four-year IMF agreement.

Image courtesy of arztsamui/FreeDigitalPhotos.net

“A central plank of the programme is the implementation of structural reforms aimed at creating an environment supportive of economic growth. One of the main structural reforms to which the Government has committed is the improvement of the tax system, including tax administration.

“Fiscal incentives legislation was also passed in December which overhauls and simplifies decades of tax law to the advantage of productive businesses.

“To kick-start growth, the government has started to implement catalytic, strategic, public-private investments. Already, the government has initiated production in six agro-parks, aimed at import substitution. The objective is to develop a total of nine such parks by the end of 2014.

“The GOJ is also committed to improving the competitiveness of the economy through legislative and administrative changes. Additionally, amendments to the Companies Act were passed which streamline the business registration process through the use of a multi-purpose registration instrument. A bill to modernise our bankruptcy rules, the Insolvency Bill, was also tabled in Parliament.

“The Government is in the process of establishing a Port Community System to electronically integrate and streamline export and import procedures. It is also moving to establish more flexible work arrangements and improve access to skills training. Furthermore, initiatives to achieve energy diversification and conservation are in progress.

“Supporting these reforms will be the preservation of a stable macroeconomic environment through sound monetary and fiscal policies. Inflation is expected to decline over the medium term towards our long-run objective. This decline in inflation, in conjunction with a more competitive exchange rate, will foster increased price competitiveness of Jamaica’s exports of goods and services.

“Lower inflation will also allow Jamaican businesses to finance investments at lower interest rates. The reduction in fiscal deficits and the public debt will make more resources available to the productive sector and will complement Bank of Jamaica’s thrust to maintain single-digit inflation.

“The Government also committed to undertaking reforms which will increase the efficiency and competitiveness of the financial system and credit market. You may have seen in the media recently, where we committed to a timetable for raising the cap on investments in foreign securities from 5% of assets to at least 25% by end-2015 and removing it by end-2016, unless extraordinary circumstances require a reassessment. The drafting of Jamaica’s Omnibus Banking statute, which includes regulations to give consumers increased protection and to underwrite the regulatory basis for agency banking, is far advanced.

“We are confident that we will be successful with the December test both with respect to the structural benchmarks and the quantitative performance criteria. More importantly, the Government is already looking ahead to the coming fiscal year with a view to crafting policies and commitments aimed at further improving the business climate in Jamaica and securing stronger growth.

“The economy began its recovery during the September quarter, registering growth of 0.5 per cent. We expect that growth of a little under 1.0 per cent will materialise for the fiscal year, in line with our projections.

“As the economy stabilises, the fiscal and external balances improve and the debt ratios are brought down towards sustainable levels, we should see the Government being able to address more effectively important social and developmental issues such as education and training and crime and social peace.”

Filed Under: Economy, Feature Stories Tagged With: BOJ, Economy, GOJ, IMF

First Citizens staff lose huge payday

January 5, 2014 by IC Insider.com

Several staff members of Trinidad’s First Citizens Bank lost out on the huge return investors got when the bank offered shares to the public and allocated shares to the staff in August 2013.

The shares, which were very attractively priced at $22 and at an attractive PE, exhibited all the signs of a big pay day. So attractive was the issue, that IC Insider immediately placed the stock on our Buy Rated list from the IPO opened. Surprisingly, information obtained from the Trinidad & Tobago Stock Exchange was that a large percentage of the bank’s staff never bought shares that were allocated to them. As such, the excess was made available to the public who clamoured for more shares. Employees of the bank bought only 3.78 million units accounting for 7.8 percent of the amount offered and just more than half of their entitlement.

The stock price has since hit $40.63, a gain of on 84.6 percent. In addition the bank declared a $1.09 per share final dividend that will be paid January 24, 2014 to shareholders on record as of December 31, 2013. The dividend is equivalent to a 12 percent rate of return on the IPO price. When the dividend is added to the return of the stock price, the result is a 96 percent gain on investment in just five months.

Based on the 2013 results, IC Insider returned the stock to the Buy Rated list and projects the stock price to exceed $50 per share during the course of 2014. Those are huge returns in a country where interest rates on money market instruments are below 5 percent.

The IPO was heavily subscribed as $3.3 billion chased $1 billion of shares that were on offer leading to a massive oversubscription for the 48 million First Citizens Bank shares. While the staff only picked up a portion, there were 12,435 applicants who got less shares than they wanted.