New IPO set for mid-April

Investors in Jamaica will get another opportunity to vote come mid April, on the merits of a new public share offer.
IC Insider.com has confirmed that Everything Fresh is set to issue their prospectus around the middle of April. Brokers for the issue is stocks and Securities. The company imports and distributes products including diary, seafood and meats with the hotel sector a major customers. The business operates from 78 Marcus Garvey Drive, but he hopes to acquire additional premises, to be financed from the initial public offering (IPO) of shares, the chairman Gregory Pullen was quoted as saying in 2017.
“You have to expand the warehouse after a while, and I see us getting a bigger place for storage, but I don’t believe in these super-huge warehouses where you store goods forever,” he said,” Pullen was reported as saying last year.
The company has a large nine-member board chaired by Gregory Pullen, Courtney Pullen, Melene Pullen, Garret Gardener, Nesha Carby, financier Mark Croskery, ex-banker Donovan Perkins, attorney-at-law Vivette Miller and Chartered Accountant Jennifer Lewis.
Everything Fresh seems set to be the second initial Public offer to hit the market in 2018, and is one of about nine that is expected to go public this year. Sygnus Credit is expected to come to market within weeks having sent the prospectus to the authorities for vetting in February.

Elite shares start trading on Tuesday

The latest initial public offer to hit the capital market, Elite Diagnostic,will be listed on Tuesday on the Junior Market of the Jamaica Stock Exchange and will bring the number of listed companies to 35.

The issue that was heavily oversubscribed could see trading taking place at the maximum allowable on the first day which is 30 percent above the IPO price of $2 up to $2.60.
On Wednesday, the price could surged above 30 percent if the bid were to close above $2.60 on Tuesday but not exceeding $3.38 which could result in the price hitting $4.39.
The company offered 70,680,000 Ordinary Shares to the public which were aggressively taken up by investors with applications for 614,190,600 units were received from 3,346 investors with a value of J$1,228,381,200. The public offer was oversubscribed by more than 10.5 times.
A total of 3,257 Application for Shares were received from the general public who will receive the first 15,000 units with the balance in excess, allocated 3.383 percent.
IC Insider.com forecasts profit of 22 cents per share for the current year to June and 35 cents for 2019. With the heavy demand for the stock and the sharp fall in Treasury bill rates the prospects of the price reaching $4 should not be ruled out.
Sagicor Investments and NCB Capital Markets were the brokers to the issue.

$1.22 billion chased 71M Elite shares

Elite Diagnostics could be in the Junior Market TOP 10 by the end of 2018.

Elite Diagnostic initial public offer of 70,680,000 ordinary shares were aggressively taken up by the General Public and place the issue as the one to have attracted the largest number of subscribers.
Applications for 614,190,600 units were received from 3,346 investors value of J$1,228,381,200.
The public offer was oversubscribed by more than 10.5 times and only one category of reserved shares was fully subscribed to, with 6,160,000 shares reserved for Medical Practitioners, receiving 54 applications. Applications from this group covered 19.046 million shares valued at $38,092,600, the first 70,000 units were allotted in full with balance getting 10.062 percent.
A total of 3,257 applications for shares were received from the general public who will receive the first 15,000 units with the balance in excess, receiving 3.383 percent.
A total of 12 applications for shares valued at approximately 1.555 million shares were received from Directors and Employees of the Company for the 4,060,000 shares reserved.
Five Affiliated Doctors applied for 142,000 out of the 700,000 shares reserved for them, two Affiliated Entities applied for just 56,000 of 420,000 shares reserved for them. Eight Referring Doctors Tier 1 applied for 2,240,000 of the 6,160,000 shares reserved. Applications from Referring Doctors Tier 2 applied for 1.011 million shares from the 1,900,000 shares reserved for them.
Sagicor Investments and NCB Capital Markets were the brokers to the issue.

Elite IPO is now closed

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Elite Diagnostics initial Public offering of 70.68 million shares to raise just over $141 million, is said to have been closed at midday on Monday, the new opening date.
The level of subscription is unknown presently as the brokers have to be collecting applications from various locations throughout the country. The issue was delayed due to errors in the prospectus that had to be amended before it could reopen. The shares which were priced at $2 each are expected to list on the Junior Market of the Jamaica Stock Exchange and will enjoy 10 years of tax concession that will result in no corporate taxes in the first 5 years and then for the next 5 years at 50 percent of the normal tax rate. the listing will bring to 35 the number of ordinary share listings on the Junior Market.
IC insider.com projects earnings to just over 25 cents for the current year to June and 35 cents for the next fiscal year.

Elite IPO fully subscribed

Elite Diagnostics could be in the Junior Market TOP 10 by the end of 2018.

Word reaching IC Insider.com from usually reliable sources, is that the much delayed Initial Public Offer for Elite Diagnostics was oversubscribed before the revised prospectus was posted on the Jamaica Stock Exchange on Monday. 

The company is issuing just over 70 million shares at a price of $2 each and a PE ratio around 9 times estimated 2018 earnings and just under 6 times 2019 estimated earnings. The shares were to have officially opened on Monday January 22, but was put off until Wednesday 24, following amendment to include depreciation that was omitted from interim results to September, and then was pulled to correct errors in the interim results balance sheet and cash flow statement. The issue will now officially open on Monday February 5 and is expected to list on the Junior Market of the stock exchange that will see profit being tax free for 5 years and at half the regular rate for the second 5 years. Brokers for the issue are NCB Capital Markets and Sagicor Investments.

Elite Diagnostic IPO opens February 5

Elite Diagnostics could be in the Junior Market TOP 10 by the end of 2018.

Elite Diagnostic initial Public offer that was put off due to errors in the prospectus seems set to open this week, according to the brokers for the issue an advertisement in the Sunday Gleaner states.
According to the advertisement, the issue will open on Monday February 5 and is scheduled to close on February 12. The updated prospectus is expected to be posted on the Jamaica Stock Exchange website this Monday.
The issue was slated to have opened on January 22 at a price of $2 per share with the share and was scheduled to close on January 29 for a total of 70.68 million shares being offered to raise $141 million. Omission of depreciation charge from the profit statement, resulted in an overstatement of the profit for the September quarter resulting in an addendum to the report being released. The addendum did not address errors in the balance sheet relating to fixed assets and some other items, resulting in the cancellation of the opening of the issue. IC Insider.com gathers that the Jamaica Stock Exchange and the Financial Services Commission were reviewing the report last week to ensure that it reflected the correct position.
Of the shares available for subscription in the IPO, 18 million units are reserved for subscription at $2 each. The company currently has 282 million issued shares. The proceeds of the IPO will put the company in a position to repay a substantial part of the debt due lenders amounting to $202 million.
For the financial year ended June last year, the audited financial statements show revenues increasing to $263 million and net profits moved to $44.2 million from $29 million in 2016. Gross Profit margin is very attractive at 67 percent for the 2017 fiscal year with administrative expenses at 31 percent of revenues, excluding depreciation.
Notwithstanding the errors in the interim figures, Elite shares remain BUY RATED with IC Insider.com forecasting profit of 22 cents per share for the current year to June and 35 cents for 2019. The shares are expected to be listed on the Junior Market.

Elite IPO put off for now

The initial public offer of 71 million shares in Elite Diagnostic that was to have opened to the public on Monday January 22 but put back to Wednesday January 24 has been put off once again.
The prospectus that was originally planned for release in early December included results for the first quarter of the current fiscal year to September with errors that lead to an understating of expenses and over stating of profit as well as errors in the amounts relating to fixed assets in the cash flow and balance sheet.
According to a recent release from the company, “Elite, after consulting with its Financial Advisors, has decided to update certain statements made in its prospectus dated December 11, 2017 and Addendum dated January 17, 2018. The revised statements and the new Opening and Closing Dates will be published on the JSE’s website as soon as possible.”
IC Insider.com who first brought the errors in the report to the public had written after the addendum was released that the company needed to withdraw the prospectus and have the figures properly checked and audited before releasing it again to the public.

Elite still BUY RATED regardless

Elite Diagnostics

Elite Diagnostics put out a prospectus that has erroneous interim results for the first quarter and even after sending out an addendum there are still errors in it that best the question as to credibility of the figures in the report, more importantly, the profit reported.
The question has been asked that in light of the errors and lack of credibility in the interim figures if the stock is still a buy.
First, the audited figures to June appear in order with earnings of 16 cents per share, while revenues 36 percent in the year to June over 2016. The report for the September quarter shows growth in revenues of 23 percent which appears credible when viewed against the increase for the 2017 fiscal year. Expenses for the quarter appear in line with what can be normally expected to flow from historical data. The new location on Old Hope Road, will add to cost and that is unknown as well as the likely increase in revenues that can be expected. The prospectus gives some indication of manning an equipment levels, that provides a good guide as to what can be expected for cost with 7 persons being engaged compared to 27 at the original location.
IC Insider.com delved further into the numbers and now forecast profit of 22 cents per share for the current year to June and 35 cents for 2019. The assumptions assumes growth of 33 percent in revenues for the rest of the fiscal year with the new location contributing to it, while cost is projected to jump by 30 percent and would result in profits of $78 million and $120 million in 2019 from a 23 percent increase in revenues. But revenues could grow faster with the benefits of listing.
Data shows that Junior Market companies get sizable bounce in revenues after listings, that flow from the injection of capital, new directors and most importantly, greater publicity from listing and trading. For example

Stationary and Office Supplies had a 13% point bounce in revenues after IPO

Stationery and Office Supplies saw a bounce of about 13 percentage point jump in revenues over and above the growth rate of 24 percent in the quarter prior to the IPO. In 2016, Jetcon Corporation got a major bounce in sales after listing as well. Recently listed FosRich also reported increased business as a result of their listing. IC Insider.com expects to see quite some increase in revenues for Elite due to the increased exposure from the listing.
Elite shares now rank as the sixth highest ranked Junior Market stocks for gains in 2018.
The Elite shares remain  BUY RATED notwithstanding the foul up of the interim figures. The concern is with the directorship as it would be expected that the company would have had budget with the figures compared with the actual. In such cases the directors should have picked up that the depreciation was omitted from the report, well before it was incorporated in the prospectus. The discrepancy between the cash flow, the income statement and the addition of fixed assets would have been more challenging, but with a board of 9 comprising a number of experience business and financial personnel one would not expect the type of error but it will be a moment of embarrassment for them and it one they will never forget, hopefully Elite will be the better for it.

$11M missing from elite figures

$11 million are missing from the first quarter figures included in Elite Diagnostic prospectus to raise $141 million in an IPO.
While the 2017 audited accounts show depreciation and amortization of $28 million and administrative expenses of $81 million,the interim figures show no amount for depreciation, with administrative cost of $24 million which is just over 25 percent of the full years cost to June. Direct cost is $87 million for the fiscal year or just under $22 million per quarter, in line with $21.7 million in the September quarter. The conclusion is that the cost of depreciation is not included and would result in profits falling from $23 million reported to $14 million and would reduce the expected full year earnings below the annualized figure of $92 million down to a much lower amount, assuming that the new location at Old Hope Road just break even.

Elite Diagnostics is the first 2018 IPO out of 9, that is expected this year.

The intrigue does not end there. The movements in fixed assets show a missing $11 million, with fixed assets at June being $187 million and the cash flow statement showing additions of $71 million, that should result in a total of $257 million which would be reduced by approximately $9 million for depreciation for the quarter, bringing the net figure to $249 million but the interim figures have fixed assets at $238 million. For short, a material amount of $11 million is missing and it is unclear what items are under or over stated.
On the face of it, the reported profit for both years appear overstated, on that basis, IC Insider.com reduced earnings per share for the full year to 20 cents, with the stock being priced at 10 times earnings, but that still leaves the stock a buy.

Elite Diagnostics IPO a buy

Elite Diagnostics is the first 2018 IPO out of 9, that is expected this year.

The initial public offer for Elite Diagnostics will open on January 22 at $2 per share and is scheduled to close on January 29, the prospectus which is now out states.
A total of 70.68 million shares are offered to raise $141 million. The shares to be listed on the Junior Market of the Jamaica Stock Exchange, if the issue is successful and will bring the total company listings on the Junior Market to 35 and the total listings to 39 and the total listings on the entire exchange to 96. Elite will be the second medical related company expected to list on the market and the second within two months.
Based on interim first quarter results to September last year the stock is attractively price and seems set to be heavily oversubscribed to be followed by a big bounce after listing. Elite has done well in just 5 years and seems set to expand at a nice pace going forward.
The company operates from Holburn Road in Kingston and now have a new office on 164½ Old Hope Road. The 4 year old company provides imaging and Diagnostic Medical Facility offers services such as MRI, CT Scan, X-Ray, Ultrasound & Fluoroscopy.
Of the shares available for subscription in the IPO, 18 million units are reserved for subscription at $2 each. The company has 282 million issued shares. The proceeds of the IPO will put the company in a position to repay a substantial part of the debt due lenders amounting to $202 million.
A number of Imaging diagnostic service providers operate in Kingston and Saint Andrew. These providers compete with the company for the provision of services in the Kingston and Saint Andrew market.
For the September quarter 2017, the company had net profits of $23 million on revenues of $69.8 million compared to revenues of $56.9 million in 2016 and profits of $14.4 million. Annualised, net profits would be $92 million or an increase of 108 percent over the previous financial year, if the current trend continues and would result in earnings per share of 30 cents for a PE ratio of 6.7 times earnings.
In the first year of operations in 2014 a loss of J$48.7 million was realized on revenues of $58.3 million. For 2015, revenues increased 127 percent and profit of $498,079 was realised. For the financial year ended June last year, revenues increased to J$263 million and net profits moved to J$44.2 million from $29 million in 2016. Gross Profit margin is very high at 67 percent for the 2017 fiscal year with administrative expenses at 31 percent of revenues, excluding depreciation.
In 2017, a new office was set up at 164½ Old Hope Road, opening in November 2017 and is expected to generate additional income for the benefit of the company commencing the current financial year, the company says.
Directors are, Steven Gooden, B.Sc., M.Sc., CFA, Chairman, Warren Chung, B.Sc. Executive Director, Dr. Neil Fong, B.Sc., M.B.B.S Executive Director, Andre Ho Lung, FCCA, M.Sc. Non-executive Directors are Kevin Donaldson, B.Sc., M.B.A, Paula Kerr-Jarrett, B.A., LL.M., Quentin Hugh Sam, B.Sc., Peter D. Chin, B.Sc., M.B.A., William Mahfood, B.Sc.
The company believes that its principal competitive advantage lies in using state of the art diagnostic equipment. “It 64-Slice or Multi-Slice CT Scanner is one example. It produces clearer images compared to older models by allowing technicians and radiologist to acquire thinner slices and 3D images at lower doses of radiation leading to a more detailed view of the patients’ anatomy. This leads to faster and more accurate diagnosis. 10.20 The Company has recently acquired a 3 Tesla (3T) MRI scanner – to the company’s knowledge only one of two in the Caribbean, the other being located in the Cayman Islands. The strength of the magnetic field generated by a 3T MRI scanner is twice that of the current industry standard 1.5T MRI scanners. The image quality of an MRI scanner is generally dependent on the strength of the magnetic field it is able to generate, the higher the magnetic field the better the image clarity. This increased image clarity aids Radiologists in their interpretations of diagnostic images. In certain circumstances the more powerful scanner is also capable of reducing scan times thereby reducing patient turnaround time.”
NCB Capital Markets and Sagicor Investments are brokers for the issue.