First Rock heads to market for US$18m

First Rock Capital Holdings, the real estate owners and developers in January next year open their public share offering to the Jamaica capital market to raise up to US$18,487,465 in added capital.
The Company issued 166 million class A shares before commencing commercial operations in the first quarter of 2019, following the successful closure of its private placement in March 2019 that raised US$15.5 million.
The Initial Public Offer by First Rock is up to 106,083,332 Shares in two classes with Class A comprising 51,053,333 US$ Class A Ordinary Shares at 12 US cents each and 10.8 US cents for Reserved shares. Additionally, 55,029,999 Class B Ordinary shares are Jamaica dollar-denominated and priced similar to the class A share. The company reserves the right to upsize the offer by an additional 53,041,666 shares in the event of oversubscription.
The general public will be offered Shares of 16,250,000 Class A Ordinary shares, with 14,553,333 units reserved for Key Strategic Partners and 20,250,000 reserved for First Rock Affiliates. Of the 55,029,999 units of the Class B Ordinary shares, 37,916,666 are available for the general public, with 3,613,333 shares are reserved for subscription to Key Strategic Partners and 13,500,000 shares are reserved for subscription by First Rock Affiliates. Application to list on the JSE is dependent upon the Company’s raising at least $200 million or the US dollar equivalent.
The company owns properties in Jamaica, Cayman Islands, Costa Rica and in the USA.
Opening Date January 13, next year and scheduled to close on January 31.
First Rock reported a loss from operations of US$203,648 before a US$374,301 forex gain to September resulted in a pretax profit of US$170,653.
The forecasted is for the profit of US$2,647,696 in 2020, US$4,653,992 in 2021 and US$6,614,802 in 2022 with income coming from rental and from 2021 includes revenues from the sale of units. The projections have annual inflows from foreign exchange gains and fair value increase in investment properties.  While the fair value gains may well occur as forecasted, there is no certainty that there will be annual forex gains.
The company’s directors are, Dr. David Lowe, Douglas Halsall, York Page Seaton, Kisha Anderson, Norman Reid 8 Davis Avenue, Alton Morgan and Lisandra Rickards. Sagicor Investments are brokers to the issue.

MailPac set to jump

MailPac shares were listed on Wednesday and closed at $1.32 for a rise of 32 percent, with less than 49,373 units traded.
The most recent information has the highest buying price at $1.72 for 305,000 shares, followed by 73,247 shares at $1.70 a lot of 26,388 units at $1.51 and 300,001 units at $1.50. At $1.49, there is buying for 60,357 units and at $140 to buy 4.37 million.
Selling starts at $1.35 with 24,092 shares, followed by 21,227 units at $1.44 and 21,227 at $1.45, with a total of 82 offers posted so far.
Trading in the early trading session on Thursday resulted in just 56,620 units changing hands at $2.10 at a PE ratio of 15. The maximum price that it can trade at for the day is $2.18. With the price movement to date, the stock has moved out of the IC TOP 10 list.

2020 another big year for JSE

It has been boom times at the Jamaica Stock Exchange these days with rising prices and increasing listings. That is in stark contrast only a few years ago when the Jamaica Stock Exchange suffered a contraction in listings when some companies that were acquired or merged.
The market lost companies such as Cable and Wireless, Lascelles de Mercado, Courts, Capital and Credit Merchant Bank, Scotia Investments, Desnoes and Geddes, First Life and Pan Caribbean Bank. In addition to these local companies, a few Trinidad and Barbados companies delisted. The advent of the Junior Market saved the day for the exchange in bringing new listings but, more importantly, telegraphed that listing on the market could raise good money for the companies and was not harmful to management as many thought to be the case in the past. In short, there has been a considerable revolution in the concept of going to market, especially with the younger cadre’ of management now running businesses.
The change in the thinking of the business sector is leading to two significant years for listings with the JSE expecting 18 new listings of ordinary shares in 2020. Managing Director of the JSE, Marlene Street-Forrest confirmed the projections with the IC “The 2020 listings are compiled from feedback the exchange obtained from brokers. The list is split equally between Main Market and Junior Market stocks,” Street Forrest confirmed to this publication.
At the start of this year, the JSE projected to have 20 new listings, so far they have listed 12, but Street-Forrest expects new listings to hit 19 or 20 by the end of the year including a listing of a Canadian company that will come to the market by way of an introduction. By contrast, the exchange is said to have had just eight (8) new listings in 2018. The new listings for 2019 include MailPac Group that the exchange said is set to list on Wednesday. Lumber Depot could start trading before the end of the week word reaching IC suggests. In addition to the above two, Sagicor Select Fund is expected to list before the end of the year. For 2019 to date, there are eight (8) new Main Market and four (4) new Junior Market listings, including one preference share and Margaritaville share that was listed in the regular market, in addition to being previously quoted in the US dollar market. The recent IPOS will lift the total to 15 for the year. Some of the 2020 listings should include First Rock Capital Holdings with its prospectus said to be at the Financial Services Commission, TransJamaica Highway, Jamaica Mortgage Bank and Jamaica Public Service Company.
While the new listings will provide more choices for investors, it is also expected to add to the Stock Exchange revenues and profit in 2020 and beyond.

Junior Market trading drops

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Consolidated Bakeries (Purity) traded at a 52 weeks’ low on Wednesday.

Trading activity on the Junior Market on Wednesday declined sharply to just 1,131,976 units valued at $4,612,663, compared to 12,854,412 units amounting to $57,700,892 on Tuesday as 31 securities changed hands, down from 29 on Tuesday.
At the close, the market index rose 5.29 points to close at 3,313.68. At the close on Tuesday, the JSE had the market closing at 3,349.46 points, but it was revised down to 3,308.68. Trading resulted in just 6 securities rising and 12 declining while the prices of 13 remained unchanged and the market’s PE stood at 14.2.
Trading ended with an average of 36,515 units at $148,796 for each security traded, in contrast to 443,256 units for an average of $1,989,686 on Tuesday. The average volume and value for the month to date amounts to 182,254 shares at $627,201 and previously 135,292 shares at $667,284, for each security traded. In contrast, October closed with an average of 186,927 units valued at $788,734 for each security traded.
IC bid-offer Indicator| At the end of trading, the Investor’s Choice bid-offer indicator with 9 stocks ending with bids higher than their last selling prices and 3 with lower offers.
At the close of the market, AMG Packaging dipped 17 cents in trading of 55,892 units at $1.90, Blue Power lost 2 cents in exchanging of 1,800 stock units at $6.98, Consolidated Bakeries declined by 10 cents in trading of 51,953 units to close at a 52 weeks’ low of $1.50. Derrimon Trading ended with 126,975 shares crossing the exchange, after rising 3 cents to end at $2.60, Elite Diagnostic close with a loss of 26 cents at $4.99, in swapping 56,515 stock units, Everything Fresh climbed 6 cents and exchanged 36,968 shares at $1.08. Express Catering closed with a loss of 30 cents at $6, after swapping of 12,500 shares, Fontana ended with a loss of 1 cent at $6.99 with 111,225 stock units changing hands, Fosrich climbed 1 cent and exchanged 34,329 shares at $4.76, General Accident dropped $1.59 in trading 6,500 shares to close at $6.41. iCreate climbed 1 cent and exchanged 110,353 shares at 61 cents, Jamaican Teas exchanged 26,121 units and declined 35 cents to settle at $5.95, Jetcon Corporation closed trading of 6,200 units and gained 15 cents to end at $1.95, KLE Group ended with a loss of 1 cent at $1.75 with 4,000 stock units changing hands. Lasco Distributors traded 15,626 stock units and declined by 30 cents to settle at $3.60, Lasco Financial ended market activity exchanging 64,860 shares to close at $4 after falling 18 cents, Lasco Manufacturing lost 3 cents in trading of 25,880 units at $5.22 and Main Event climbed 15 cents and exchanged 42,877 shares at $6.05.

Prices of securities trading for the day are those at which the last trade took place.

MailPac Group IPO gains IC buy rating

Mail Pac Group and shareholders are selling 500 million shares at $1 each to raise $500 million with the offer opening on November 22. Applications from the general public must be for a minimum of 10,000 shares.  
The general public will be allowed to purchase just 6 percent or 150 million of the total issued share capital of 2.5 billion units that will be issued, following the close of the issue.
MailPac Group was formed late in 2019 and acquired Mailpac Services Limited and Mailpac Local Limited from Norbrook Equity Partners, majority shareholders, to amalgamate both logistics platforms into one operating business.
Profit is expected to reach $282 million in the 12 months to December this year based on results of the business operations for 2019 and will result in 14 cents earnings per share and a PE ratio of just seven times 2019 earnings and compares favourable with the average for the Junior Market of over 12 .5.
The company projects a profit of $317 million in 2020, but IC is forecasting $356 and 14 cents per share. The stock receives the coveted IC Buy Rated grading, with the price doubling by 2020.
The company enjoyed growth in revenues of 12.2 percent in 2017 and 25.7 percent in 2018 and 28.8 percent for the first half of 2019.
Before the acquisition mentioned above, the businesses in 2018 grew revenues to $969 million and $851 for the first three-quarters of 2019. Net income for the same periods was $213 million and $203 million, respectively. Mailpac Local Limited operated for seven months in 2018.
The Company intends to apply to the JSE for listing on the Junior Market subject raising at least $495 million. Proceeds are for general corporate purposes, including working capital and capital expenditure re and to settle existing debt obligations the selling shareholder assumed on behalf of the Company.
According to the company, Mailpac Services offers over 20 years of expertise in e-commerce fulfillment. With a rapidly growing client base of over 50,000 consumers in Jamaica, the business, a technological fulfillment platform for anyone shopping online. MGL’s core offering provides clients with physical addresses in Miami, Florida, where they can receive all goods purchased from international providers. Deliveries to the 55,000 square foot Florida warehouse are flown to Jamaica by a third-party cargo plane. MGL clears all items and delivers them to the customers at their homes or businesses or customers may collect packages at any of the company’s eleven stores islandwide.
The directors of the company are Khary Robinson, Executive Chairman, Mark Gonzales Executive Director & CEO, Garth Pearce Director, William Craig Independent, Non-Executive Director Tracy-Ann Spence Independent, Non-Executive Director. In the interest of good corporate governance, the board would do well to appoint an independent non-executive director as the chairman.

MPC Clean Energy rights open Wednesday

Wigton closed at anew high of $1MPC Caribbean Clean Energy (MPCL) stock traded at a record $275 on the Jamaica Stock Exchange last week, as investors positioned to buy into 22,848,320 class B shares offered to shareholders by way of rights.
The Offer entitles shareholders to buy two new shares for each one they own and will open November 13 and will close December 16.
The shares are currently listed on stock exchanges in Jamaica and Trinidad and were priced at J$130 or US$1 when it came to the market in late 2018. The new shares are renounceable and priced at J$140 to Jamaican shareholders and US$1 per share for shareholders in Trinidad and Tobago on record on November 8. The Company seeks to raise the equivalent of US$22,848,320 to facilitate expansion into new renewable energy projects.
The company went to the market in November 2018 to sell up to 50 million shares, the take-up fell well short with the capital with just 11.25 million units with Jamaican taking up over 77 percent of the issue and Caribbean Clean Energy Feeder Ltd taking up 18.4 percent.
MPCL has 34.4 percent interest in the Paradise Park project that comprises a 50 MWP solar plant in Westmoreland, Jamaica, with a total investment of US$64 million.
The second asset, Tilawind is a 21 MW onshore wind farm based in Costa Rica in which MPC effectively holds 50 percent with the other half owned by ANSA McAL, a Trinidad and Tobago group. The total investment in that operation is approximately US$50 million. The wind park has been in operation since March 2015.
According to the company, a further 14 projects have been prioritized and form the indicative deal pipeline for the Investment Company. These require a total investment estimated at US$499 million to deliver up to 314 MW of new renewable energy capacity. The listed company invests in MPC Caribbean Clean Energy LLC, the company that invests in the operating projects directly.
The company posted earnings for the nine months to September that reverses the positives number in the June Quarter. The results released are confusing, lacks transparency and will not help the company in raising the desired capital.
The company does not invest directly in the operating entities but directing into a management company that invests directly. Effectively, the company accounts for its investments as shares of profits in associates and books their share of profit in accordance with international accounting standards. MPC has investments indirectly in two power-generating operations. The results for the September quarter reflects the share of results from activities of the wind farm in Costa Rican and that of Paradise Park.
According to the company, the Tilawind “wind farm generation is mainly dictated by the trade winds, presenting a clear high wind season, with a high tariff from January to May, and a low wind season, with a low tariff from June to December.” The impact of on profit in the second half of the year is telling, with around 20 percent of the year’s energy production. The situation is made worse by the wind farm machinery undergoing repairs in the period and resulting in losses. Paradise Park generation in the quarter that started in June was affected by lower than expected sunlight levels resulting from poor weather conditions generated by hurricane Durian in late August-early September.
The net effect is that the company profit share dropped to $56,788, down from $145 million generated in the June quarter. The management report states that production at the Costa Rican operation generated 9.4 percent more energy than in the prior year. The company reported total profit share of $205,858 and a loss of $45,749 for the nine months period, the results from operations look vastly worse. The company reported a loss of $109,523 for the September quarter but advertising cost of $87,020 was the major cause of the big loss along with the fall in revenues mentioned above.
The projections in the prospectus were for revenues of US$1.39 million and profit of $1.25 million for 2019 and projected revenues of US$2.94 million in 2020 with a profit of US$2.76 million. They seem set to meet the revenues forecast but will be off from the profit as a result of not investing in the Costa Rican operation from the start of 2019 to have benefitted from the higher revenue period from January to March.

JMMB Group seeks buyers for J$12.4b

JMMB Group is offering 266,737,797 ordinary shares to the public with the option to upsize it to 325 million units and raise up to J$12.4 billion that would lift the existing capital from 1,630,552,532 units to 1.96 billion.
The shares are priced at J$38 for existing shareholders, team members and key investors and J$38.75 for non-reserved share applicants resident in and making applications in Jamaica. Subject to receipt of regulatory approvals for the Invitation in Trinidad and Tobago, TT$1.90 per new ordinary share for existing shareholders and team members and key investors for applicants resident in and making applications in Trinidad and Tobago and TT$1.94 per new ordinary share for non-reserved share applicants.
The offer opens in Jamaica on October 22 at 9 am and in Trinidad and Tobago on October 25 at 9 am and scheduled to close on November 7. The Company reserves the right to close the offer prior to the closing date, provided that, early closure of the application list in Jamaica shall not occur prior to the end of a period of seven days following the Opening Date.
JMMB Group enjoyed moderate growth in earnings over in the past three years with earnings per stock unit for the 2019 fiscal year being $2.34 just slightly higher than the $2.18 in the previous year and $2.03 in 2017 after it jumped from $1.39 in 2016. Total comprehensive income better reflects the quality of management of the operation, by this measure with the exception of 2017 when total comprehensive income hit $4.76 billion profit have not reached that level since, with 2019 hitting $3.4 billion. Dividend payout ratio declined from 26.24 percent in 2016 to 20.65 percent in 2019 although the total amounts paid out have grown.
The group started in Jamaica in 1992 as a broker in money market instruments and expanded into other areas in the financial market since. It now has operations in the Dominican Republic and Trinidad and Tobago and plans to use some of the proceeds to acquire indirectly 22 percent of Sagicor Financial Corporation, a Caribbean based Life insurance group.
Earnings per share amounted to 68 cents for the quarter ended in June this year, up from 57 in the June 2018 first quarter. Net profit recorded year over year growth of 17 percent moving from $957 million to J$1.12 billion for the first quarter this financial year.
Net operating revenue stood at J$5.84 billion as at the end of the period representing growth of 25 percent or J$1.18 billion over the prior comparable period. This growth resulted from increases in net gains on securities trading, FX trading gains, fees and commission income and net interest income. Net interest income grew 6 percent over the prior comparable period ending the June 2019 quarter at J$2.2 billion. Operating expenses for the reporting period totaled J$3.84 billion, 15 percent higher than the prior period.
JMMB Group has a number of positives, the main one being the diversification of countries it operates in. Growth in the Jamaican economy and the substantially larger population of the Dominican Republic relative to Jamaica and Trinidad provides a strong platform for above-average growth of the group. There are political and economic risks associated with the diverse locations but the group capital base is growing and that will allow it to expand the business into areas that can deliver an above-average return.
The price the stock is offered at is fair with modest potential for growth short term with a PE around 14 times this year’s earnings versus a market average of 16, but the stock peaked at J$55 earlier this year.

QWI Investments list on Monday

The latest initial public offering of shares QWI Investments was approved for listing on the main market the Jamaica Stock Exchange on Friday and will be listed on Monday.
The offer of shares was initially for 600 million units but was upsized to 900 million after the issue was oversubscribed. The issue saw more than 4,000 applicants applying for more than 1.6 million shares and pulled in just over $2 billion with more investors who never caught the IPO wanting shares.
As a result of the oversubscription, applicants from the General Public received the first 100,000 units plus 31.2188 percent of the excess applied for. NCB Capital Markets and Directors of QWI Investments get the full allotments. All other applicants got a portion of what they applied for with a minimum of 76,000 units for applicants in the Jamaican Teas and KIW International pool.

QWI Investments IPO oversubscribed

NCB Capital Markets advised that the invitation for subscription of 600 million shares with an option to upsize to 900 million units by QWI Investments closed on Wednesday morning.
The share offer was by way of a prospectus dated September 9, 2019, in respect of ordinary shares at the price of $1.35 to the general public, with shares reserved at discounted prices of $1.20 and $1.25 for some investors. The issue attracted more than 4,134 applicants but more than 4,550 applications for an estimated $1.5 billion at an interim count stage with a number of persons who wanted to buy in not being able to do so. With the level of oversubscription, the company exercised the option to upsize the issue to 900 million to raise just under $1.3 billion.
QWI Investments is an investment company that will be added to the JSE Financial Index JSE sources say.
IC is reliably informed, that there are two pending IPOS coming to the market soon. JMMB Group and the Lumber Shop both sought and got approval from shareholders to arise added capital and these could be the next two to come but Tropical Battery should not be far off. There could be two others before the year closes.

QWI IPO opens next week Monday

QWI Investments, a recent start-up investment company’s initial public offer of shares opens on Monday, September 16, with the sale of 600 million units.
The company has the option subject to the Financial Services Commission, to upsize the amount to 900 million shares if demands warrant it. Shares are being offered to the general public, at $1.35 each.
The amount expected to be raised is $787 million from the 600 million shares but could rise to just under $1.2 billion if the company upsize the issue to the maximum permissible.
The investment objectives of the Company is to invest primarily in securities of companies listed on the Jamaica Stock Exchange and on other recognised overseas stock exchanges with a medium to long term investment horizon to provide attractive risk-adjusted returns, with diversification across industries and regions. The portfolio will be actively managed on an ongoing basis guided by the investments team.
The company, currently a subsidiary of Jamaican Teas, really started operations towards the end of March when it acquired the quoted shares, from KIW international and Jamaican Teas amounting to $465 million. Since then it has grown the net assets by 52 percent to $705 million after accounting for operating expenses, well ahead of growth in the JSE composite Index over the same period. The performance equates to earnings per share in the period of 51 cents. At the end of July unaudited placed the net asset value at $1.52 per share.
Of the 600 million shares on offer, 270 million units are set aside for the general public. 115 million shares each are earmarked for NCB Insurance Company and NCB Capital Markets. Shareholders of Jamaican Teas and KIW International on record on 16 September 2019 can buy up 45 million shares at $1.25 each per share. Directors of the group and customers have 55 million units set aside at varying prices.
QWI had quoted shares amounting to $899 million at the end of July and current liabilities of $188 million. The closing date for the issue is set for 30 September but could be extended if market conditions demand it.
The QWI board is chaired John Jackson, John Mahfood, Cameron Burnet, all Chartered Accountants, Carl Carby, Management Accountant, David Stephens, Investor and business owner and Malcolm McDonald, Attorney at Law.
The shares are to be listed on the main market of the Jamaica Stock Exchange. NCB Capital Markets are the brokers to the issue and will be using their electronic portal to process all applications, which should allow for speedy processing of applications.
Persons involved in preparing this story, are connected to QWI investments.