Trans Jamaican Highway trades at $1.02

Shares of Trans Jamaican Highway trades at $1.02 after listing this morning. The stock that was sold to the public at $1.41 in February traded 17,804,223 up to $1.39 at 11.18 AM and has fallen 28 percent from the Initial Public Offer in the Jamaican dollar market but far less based on US dollar trading.
Bids in the market to buy are sparse with twenty bids to buy between $1.02 and a low of 50 cents, while sellers are dominant with 600 on the offer to sell from $1.03 upwards.
The public offer attracted 36,062 applicants and was oversubscribed and with a total intake of $25.12 billion.
The public offer attracted 36,062 applicants and was oversubscribed and with an intake of $25.12 billion.
The Concession Company and the Public Sector Employees reserve shares pool were undersubscribed. The excess was transferred to the Registered Pension Funds and E-Tag Reserve Pools. Applicants in the Registered Pension Funds Reserve and E-Tag Reserve Pool were fully allotted based on transfers to the Registered Pension Funds and E-Tag Reserve Pools. Underwriters Reserve Pool was allocated shares on a pro-rata basis as the pool was oversubscribed, with the excess moved to the General Public Pool.
Allocation to the General Public as a result of oversubscription was allocated up to 10,000 shares with applications in excess of 10,000 shares allocated increments of a further 10,000 shares until all shares were allocated.
Trans Jamaica came to the market at a PE ratio of 24 times 2020 earnings. Since the opening of the IPO much has happened in the capital market with prices falling sharply with the spread of the Coronavirus. Importantly, since March traveling around Jamaica has declined and that is expected to affect the revenues for the highway as long as business activity remains low.

TransJamaican IPO pulled in $25.5B

Ministry of Finance, Dr. Nigel Clarke in his budget presentation in the Jamaica Parliament stated that the TransJamaican Highway IPO pulled in $25.5 billion from 36,428 applicants.
National Road Operating and Constructing Company (NROCC) that owned all the 12.5 billion ordinary shares that are issued, 8 billion ordinary shares at $1.41 each and they upsize the offer by an additional 2 billion shares.initial
the issue attracted more applications than the 31,000 brought in by Wigton Windfarm. The shares went to the market at a PE ratio of 24 times earnings and will hit the market at a time when the market values have declined sharply since the debut of the IPO in February.

Caribbean Assurance oversubscribed

Caribbean Assurance Brokers Initial Public Offer of shares to the public closed shortly after opening on Tuesday, February 18, with the issue oversubscribed, Mayberry Investments, brokers for the issue announced.
Caribbean Assurance Brokers offered 52.5 million ordinary shares at the price of $1.91 per share to the general public and selected group of subscribers.  Mayberry will advise Applicants of the preliminary basis of allotment of the shares by Friday, February 21, under the Junior Market Rules of the Jamaica Stock Exchange (“JSE”). The Company has made an application to list the shares on the Junior Market of the JSE.
The stock is attractively priced and is likely to surge sharply after the issue opens for trading.

Trans Jamaican Highway IPO highly overvalued

Add your HTML code here...

After suffering a US$11.5 million loss in 2014, with more losses in 2015 and 2016, Trans Jamaican Highway (TJH) turned a profit in 2017 of US$1.75 million, with an increase to US$6.5 million in 2018. The company seemed on track for another profitable year, in 2019, before cost associated with restructuring debt financing, pushed profit off the road. projects 2020 earnings to be around US$5 million or 6 Jamaican cents per share, from total revenues of US$57 million with a gross profit of $21 million. Finance cost is projected at $15 million, inclusive of preference share dividend with a high, 8 percent coupon rate.  The PE ratio is a rich 25 times 2020 earnings, but that should fall to 19 in 2021. The IPO price works out at 1.3 times book value. Shareholders’ equity amounts to $95 million, with borrowings at $245 million inclusive of nearly US$20 million in preference shares, putting the debt to equity ratio at a high 2.6.
National Road Operating and Constructing Company (NROCC), the selling party, currently owns all the existing 12.5 billion ordinary shares, is inviting investors to purchase up to 8 billion ordinary shares of TJH, at $1.41 each. The company reserves the right to upsize the offer by an additional 2 billion shares in the event of oversubscription on the terms and conditions set out in this Prospectus.  NROCC estimates that after the issue, new shareholders will own between 64 percent and 80 percent of the issued ordinary share, s offer is upsized or not.
Just under 80 percent of 8 billion shares offered for sale, is underwritten by NCB Capital Markets, Underwriting of a portion of the offer will ensure the listing of the shares will on the Main Market of the Jamaica Stock Exchange.
A total of 5.36 billion shares are reserved for a select group of applicants and just under 2.64 billion are available for the general public.
Highway 2000 East-West was the first toll road built and operated in Jamaica and connects May Pen and Portmore to Kingston and is operated under a concession agreement.
The concession is for a period of 35 years, with 17 years remaining, with an option to renew for a further 35 years, subject to payment of a renewal concession fee to be determined. The company has the right of first refusal to secure a similar concession to maintain, operate or own, when complete, the leg of Highway 2000 that will extend from May Pen to Williamsfield that will extend the length of the Toll Road by approximately 50 percent.
The Portmore leg of the highway accounts for 56 percent of traffic and 51 percent of revenue in 2019 and Vineyards accounts for 19 percent of traffic and 36 percent of revenue, with Vineyards having higher tolls than any other toll plaza due to more class 2 and 3 vehicles using it.
Traffic on the highway is exceeding the forecasts since 2015 onwards, the prospectus states and is expected to grow at a steady pace, with 4.5 percent in 2020. In 2021, the growth rate rises to 5.6 percent and 6.3 percent in 2022. For the nine-months to September last year, the Company had revenue from ordinary operations of US$39.26 million, reflecting an increase of US$240,000, on the US$39 million generated for the same period in 2018. This miniscule rise was primarily due to an increase in the annual toll rates starting in July 2019 following the toll rate increases allowed under the Concession Agreement. Revenue was also affected by decreased traffic since March 2019, primarily at the Portmore leg, due to the near completion of construction works of the Nelson Mandela Highway. The reduced traffic at Portmore has, however, been offset by increased traffic at the Spanish Town toll plaza as more users divert to the Nelson Mandela Highway.
There are other opportunities for the company to take advantage of expansion locally and overseas. As such, the growth prospects could be very positive going forward.
The stock seems suited for investors with a long-term time horizon. The stock at the offering price is well ahead of the average of 16 for the market based on 2020 earnings. Investors in the IPO are taking on a considerable risk of a pullback in the value of the stock when things settle sometime after listing.

Caribbean Assurance IPO details out

Caribbean Assurance Brokers are offering just 52.5 million ordinary shares for sale at the subscription price of $1.91 with a minuscule amount allocated for the general public.
The offer includes 44.36 million units for Reserved Share Applicants, including 5.25 million for Mayberry Investments’ clients with just 8.14 million units available to the general public.
Earnings for the past three years to 2018 have been almost flat, but results to September 2019 show a steep rise putting pretax profit to $71 million compared with $43 million for the full year in 2018. Based on the 2019 results, annualized earnings on 263 million shares that will be in issue after the IPO will translate to earnings of 36 cents per share, with a PE around, five which is well below the Junior Market level.
The company intends to use the net proceeds of the IPO to (i) pay IPO & Listing Expenses, (ii) expand its brokerage operations to other Caribbean territories, (iii) extend the Company’s solar photovoltaic system and for working capital purposes.
The issue opens on February 18 and scheduled to close on March 3, subject to early closure. Investors fortunate to get a good volume will enjoy a nice payday, with the limited supply, the general public will have to be satisfied with the usual dribblings.
The company acts as brokers for International, general and individual Life Insurance and employee benefits.
The directors of the company are Raymond H. Walker, Chairman Chief Executive Officer. Non-executive directors are, Rion B. Hall, Norman Minott, Jennifer Rajpat, Barrington Whyte, Tania Waldron-Gooden, Carlton Barclay and Janice P. Holness.

IPOS and more IPOS

First Rock IPO closed on the originally scheduled day last week. There was no announcement made about the level of subscription, but IC gathers the issue was oversubscribed.
Sharp on the heels of First Rock is Trans Jamaica Highway that is coming to gobble up as much as $14 billion. IC’s preliminary review of Trans Jamaica Highway prospectus is that it lacks critical information for investors to make a proper assessment of the issue easily. So much is happening with the company finances, that investors should be provided with a profit forecast for 2020 and 2021 at least. Building a robust capital market requires more information not less. It is full time that investors get all relevant information so they can make informed investment decisions. The average Jamaican cannot make a proper assessment of this unusual company. It is unacceptable that some companies have to provide forecasted earnings regardless of how meaningless they may be and others with relevant information that can guide investors, keep it to themselves.
IC’s preliminary assessment is that the PE ratio for Trans Jamaica based on estimated 2020 earnings is around 25. It not attractively priced as Wigton Windfarm. A more detail assessment of the offer will be coming soon.
IC gathers from usually reliable sources that Caribbean Assurance Brokers’ prospectus will be out on Thursday as they seek to raise just $100 million from the market.

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

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.