61% over the top

One Great Studio Initial Public Offer of shares earlier this month was 61 percent oversubscribed in successfully raising just over $338 million. The stock commenced trading on Tuesday last week on the Jamaica Stock Exchange Junior Market and became the 49 listed Junior Market company but that won’t last that way for long as General Accident is expected to migrate to the Main Market on September 29.
The IPO attracted over 3,600 new subscribers and brings the total number of ordinary shares listed on the exchange to 101, pushing the number of securities listed to 149, a release from the Jamaica Stock Exchange stated.
The total capital raised by Junior Market companies totals $21.23 billion, with the above listing lifting the market capitalization of the Market from $187.34 billion as of September 18 to $189 billion.
“We are proud that you will be listing on a market that when benchmarked to pre-Covid activities is doing well,’ said Ms Andrea Kelly, General Manager of the Jamaica Central Securities Depository and JCSD Trustee Services, in her welcoming remarks at the Listing Ceremony. Ms Kelly stated that during the period 2017 to 2019, a total of 79,480 new accounts were created and 110,353, from 2020 to August 2023. “What this means is that we are steadily, despite the current market conditions, building a pool of investors from which companies can tap for equity and debt capital through the Main, Junior and Bond Markets”, stated Ms. Kelly.

Djuvane Browne, Managing Director

Addressing the audience at the Company’s listing ceremony, IGS, Djuvane Browne, Co-Founder and Chief Executive Officer, said, “This is an extremely humbling experience and I think the market has communicated clearly through this offer that they are still interested in investing in great companies. We’d like to thank everyone who participated in this offer “The listing of One Great Studio on the Jamaica Stock Exchange holds profound significance for both Jamaica and the wider region. It exemplifies the potential of young and aspiring entrepreneurs who, armed with their ideas and dedication, can transform those concepts into tangible plans and a client-centric focus.”
One Great Studio that was offered to the public at $1 ended trading on the first day of listing at $1.14 up 14 percent and went on during the week to trade as high as $1.36 on Thursday.

One great Studio IPO allocations

Allocation of ordinary shares in the public offer of 338,627,439 shares in One Great Studio Company Limited that was oversubscribed, has been determined.
According to Barita Investments, brokers for the issue, all applicants in the One Great Studio Team Members and Key Strategic Partners will get full the amounts applied for and General Public the first 20,000 shares applied for and approximately 34.09 percent of the balance.
Applications that were only accepted in part will be refunded the balance of their subscription monies as per the Prospectus, the release stated. The release states that they will now proceed to apply for a listing of its Ordinary Shares on the Junior Market of the Jamaica Stock Exchange, that will bring the total listings on the market to 49.
The level of oversubscription was not stated, but the level of allocation suggests that it was not one of the hot issues as a result, there is unlikely to be any sort term bounce of note, in the early days after the shares are listed.

One Great Studio comes to market

One Great Studio Company seems set to be the 49th listed Junior Market company and the second to list in 2023, a year of limited interest in listings.
The Company was incorporated in Jamaica in July 2012 and provides web design, search engine optimization, web development and software development services.
Just over 338.62 million Ordinary Shares are being sold to the public at $1 each, with half of the amount reserved for Key partners. Applications must be for a minimum of 10,000 Shares. Some $338.6 million is slated to be raised from the issue. Some of the proceeds will be used to reduce long-term loans.
A total of 1,354,503,636 shares are currently issued and will climb to 1,693,131,075 units if the issue is entirely taken up.
The Invitation will open on August 28, with the Closing Date set for September 18, but it should close very close to the opening date. Barita Investments are the broker for the issue.
Increase in revenues since 2021 shows strong growth, with the quarter to March this year generating sales of $115 million,  up from $44 million in the first quarter of 2022, an increase of 160 percent and amounts to 48 percent of the full year revenues of $239 million to December last year. Revenues in 2021 amounted to $128 million.

Djuvane Browne, Chief Executive Officer.

Pretax profit amounts to $29 million for the March 2023 quarter versus $35 million for the twelve months to December 2022, compared to pretax profit of $29 in 2021. Projections by the Company show revenues rising to $538 million for 2023 and pretax profit of $137 million, if achieved, it will result in the PE ratio of the IPO being 10 times current year’s earnings, with the stock likely to double after listing.
Consistent with our projected increases in revenues, we are projecting that with the incorporation of the business infrastructure and other operations, to see growth in Profit before Tax moving from $35.47 million in 2022 to $136.92 million in 2023.
The group delivered a gross profit margin of 52 percent for the March quarter, with 2022 delivering 53 percent and 59 percent for 2021.
Total current assets in March 2023 amount to $178 million, with cash and Investments of $131 million. Total current liabilities ended at $57 million, Long-term loans amount to $290 million, with shareholders’ equity of $181 million.
The directors are John Bailey, Djuvane Browne, Chief Executive Officer, Gina DeLisser, and Jacqueline Sharp, former CEO of Scotia Group, who are all listed as business persons. At the same time, Simone Bowie Jones and Marc Ramsay are Attorney-at-Law.

Why accountants cant compute earnings per share?

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The latest company to get the computation of earnings per share wrong is the last to list on the Jamaica Stock Exchange, but it is not the only one that has accountants and auditors that cannot compute earnings per share properly. The other most recent listing got it terribly wrong, not only did this happen for the interim accounts, most likely produced internally but the audited report had the wrong computation as well.

Dr. Karlene McDonnough – Chairman of Image Consultants Ltd.

The correct computation of earnings per share is so critical, with investors using it to value shares of companies. A wrong calculation can result in distorted valuation by investors placed on a stock and it only needs to be in the marketplace for a few days for enormous potential damage to be done.
The Jamaica Stock Exchange in publishing reports with woefully inaccurate earnings per share figures should place a bold note with the release of the results that there is an error in the EPS so that all investors can be aware of it upfront. This approach is recommended rather than waiting for the company to re-compute it as the release of profits is also of much import to the market. this will require a different approach by the JSE than the current practice.
Image Plus Consultants which was listed just over a week ago reported a strong increase in revenues and profits but spoilt it by reporting excessively overstated earnings per share as they used the incorrect number of shares in the computation. Rather than 29 cents per share for the quarter and $1.84, it reported the computation is 2.3 cents and 15 cents for the nine months. One on One Education did the same thing for both their audited accounts and the first quarter results, both of which were corrected this past week after it was in the public domain for several days before the revision. This publication has been critical of the boards of both companies. The latest error shows the lack of experience on behalf of the board members as well as their accountant and the stock exchange must share the blame as well.

Ricardo Allen CEO of One to One

It is one thing for a company to get the computation wrong, it is an entirely different issue for auditors to do the same. The problem is that on too many occasions this error is cropping up and the situation seems to get worse as the Junior Market listings grow.
Stock splits or stock bonuses do not result in averaging shares issued. All that is needed in such cases is to use the new number of shares in computing EPS and all past periods are to be adjusted likewise. Only when new shares are issued for a consideration of value that the time weighted average number of shares would be used.
We have written on more than one occasion that investors in Jamaica are not properly protected, the above errors are just some of the matters that need to be addressed, but like the Stocks and Securities issue and others similar, those in authority fail to move with alacrity in correcting the fault.

Heavy IPO first day trading bad for stock

Investors seem to accept that shares of Junior Market companies offered to the public will be oversubscribed and would go on to hit the circuit breaker of the first day of trading and take a few trading days before liquidity starts to emerge and deliver significant gains. The latest listing on the market that was oversubscribed was not greeted with the euphoria usually associated with IPOs and struggled on debut, with heavy trading in the stock.  
Since 2019, the Junior Market added 13 new listings, with Image Plus Consultants being the last with its listing on Friday.  Trading was unusually heavy on the first day with an exchange of 12.4 million units, accounting for 61.3 percent of the day’s trade with the price moving 10 percent to $2.20 from a listed price of $2. Image Plus although significant for a first trade is not the largest volume for an opening day.
The biggest volume on debut belongs to Future Energy that rose 32.5 percent after trading 19.68 million shares and never got a second leg in April when it listed and remained around the closing price for all of month.  JFP rose 31 percent on the first day with 10.19 shares trading. Tropical Battery rose 29 percent on the first day with 5.76 million shares traded, with all of the others trading less than 356,000 units, with the lowest being a mere 100 shares for Limners and Bards, with a first day price gain of 30 percent.
The worst performing stock since 2019 is iCreate with a rise of 8 percent on the first day. All other stocks gained between 30 percent and 32.5 percent on the first trading day.

Image Plus crashed on launch

Image Plus Consultants share crashed on launch after listing on Friday morning on the Junior Market of the Jamaica Stock after the price reached a high of $2.25 with 104.4 million units trading in the early morning session.

Dr. Karlene McDonnough – Chairman of Image Plus Consultants Ltd.

The price fell back to just over the IPO issue price of $2 after 90 minutes and traded up to $2.20 after more than two hours of trading. Within a few minutes after midday, investors exchange slightly more than 9.8 million shares, with the last traded price of $2.09.
The listing brings the total number of companies on the Junior Market to a record 48. The shares will be amongst the few IPOs since the covid9 pandemic that failed to rocket higher on the first day of trading.
The company offered 247,889,936 new shares to the public at $2 each, to raise $495,779,872 before expenses, with the offer that opened on December 28 and closed on December 30, last year and was oversubscribed.
Applications from Key Stakeholders, Broker Reserved and Employees got full of the amount applied for, with the General Public getting the first 10,000 New Shares applied for and 35.68 percent of the balance.

Image Plus Consultants IPO looks attractive but…

Yet another company is heading to the Junior Market of the Jamaica Stock Exchange on the heels of the recent successful Regency Petroleum public issue that culminated in a listing on Thursday. The prospectus of Image Plus Consultants limited offers up to 247.89 million new ordinary shares at the price of $2 each, projected to raise $495,779,872 before expenses and to list on the Junior Market.
The issue will amount to 20 percent of the increased share capital of 1.2394 billion shares, up from 991.56 million currently issued. The offer values the company at $2.5 billion and that should rise to around $5 billion sometime after listing.
The issue opens on December 28 and is slated to close on January 11, but should close on the same date of opening or soon thereafter. Based on recent IPOS, if $5 billion goes into the Public allocation, investors can expect to get around eight percent of the offered amount.
Image Plus Consultants Services owns and operates the 25 years old Apex Radiology a Medical Imaging Company that was established in 1996.  Services provided include multiple modalities such as X-Ray, Ultrasound, CT Scan, Fluoroscopy and Nuclear Medicine at three locations in Kingston and one in Ocho Rios. The prospectus states that “With a view to growing at a faster pace, the Board took the decision to employ professional management experience and recruited a Chief Executive Officer in late January 2020. That step has resulted in very evident benefits demonstrated by the significant increases in patient cases, revenue and net profit margin over the last thirty months.”
Shareholders’ equity of $267 million in February 2022 was up 55 percent over the previous year and moved to $362 million in August. Profits before tax of $113 million increased 318 percent over the fiscal year to February 2021, representing the return of equity of 43 percent that flowed from revenues of $778 million which was up 10 percent over the prior year.
Total assets stood at $619 million at the end of August this year. Current assets ended the half year at $325 million and include receivables of $248 million that climbed from just $99 million at the end of August last year and from $139 million at the end of February this year. Current liabilities amount to $$124 million, while borrowed funds ended at $132 million.

Dr. Karlene McDonnough – Chairman of Image Plus Consultants Ltd.

Results to August show revenues and profits growing with revenues up 53 percent to $555 million from $363 million in 2021 with profit before tax of $153 million up 237 percent above the 2021 outcome of $45 million. Prior to the current year directors’ fees were paid at a higher rate than normal but are expected to reflect market rates going forward as a result the $66.5 million expensed in 2022 will drop sharply in the fiscal year 2023 and should result in a fall in administrative expenses.
“The Company intends to use funds raised to strategically and sustainably grow the business by acquiring property to be identified in Kingston which is suitable to relocate our largest operations, thereby ensuring control of our revenue and allowing for even further expansion of our offerings. Procuring suitable new bio-medical equipment to offer additional diagnostic modalities at our Ocho Rios location. Expand our offering of interventional procedures, maximizing this fast growing area of diagnostic imaging” the prospectus states.

The PE ratio will be just 7 times current year’s earnings and puts the stock in a strong position to move towards $6 during 2023. A comparison with Elite Diagnostic makes for interesting reading. While the reported profit is better for Image Plus, most other measures are in favour of Elite. The best comparison is EBITDA which shows Image with $152 million versus Elite with $190 million for the 2022 fiscal year. The interim figures annualized show Image with $359 million versus Elite with $220 million for the 2023 fiscal year. At $2 per share for the Image IPO, the stock is priced at 5.6 times EBITDA and Elite trades around 5.3 times. With three locations Elite net fixed assets amount to $885 million versus Image with $279 million and resulting in Depreciation charge being more than three times that of Image with four locations and higher finance costs as well.
If listed, the company would be the second such entity of the exchange following Elite Diagnostic. A successful IPO will raise the Junior Market listings to 48 and the total to list on that market to 52, including three that migrated to the Main Market and one that failed.
The board of directors is dominated by doctors in the medical profession and could do with some other directors with wide-ranging business experience. The directors are Karlene McDonnough, Lilieth Bridgewater, Gordon Bradshaw, Steve Lewis, Marian Vaughn and Leon Vaughn all medical-related doctors, Carolyn DaCosta, Jacqueline Leckie and Kisha Anderson.

Image Plus Consultants the next IPO

Yet another company is heading to list on the Jamaica Stock Exchange and is coming on the heels of Regency Petroleum that was listed on Thursday. Image Plus Consultants Limited announced its intention to go public and that seems imminent with the Junior Market seems the most likely target.
Image Plus Consultants Services owns and operates the 25 years old Apex Radiology a Medical Imaging Company that was established in 1996.  Services provided include multiple modalities such as X-Ray, Ultrasound, CT Scan, Fluoroscopy and Nuclear Medicine at three locations in Kingston and one in Ocho Rios.
According to an advertisement in the newspapers, shareholder’s equity stood at $267 million in February 2022 and was up 55 percent over the previous year, with profits before tax of $113 million that increasing by 318 percent over 2021, representing the return of equity of 43 percent that flowed from revenue of $778 million which was up 10 percent over the prior year. Total assets amounted to $447 million at the end of February this year.
Based on the profit, the company’s market value is just over $2 billion after the shares are listed.
If listed the company would be the second such entity of the exchange following Elite Diagnostic. A successful IPO will raise the Junior Market listings to 48.

About 5.3% of Regency IPO shares for the Public

Initial public share issues continue to disappoint many investors, with investors in the Regency Petroleum issue allocated the first 10,000 shares applied for plus approximately 5.3% thereafter, a release from the lead broker, GK Capital Management, stated. 
Strategic Partners, Employees and applicants converting loans got a full allocation of amounts applied for, the report also indicated.
Applications in the general pool with the same JCSD number were consolidated and treated as one.
The prospectus indicates that listing of the shares is expected to take place within 21 days of the closing of the issue, with ten days elapsing since the issue closed on November 25, the listing should take place before the end of next week.
A total of 287,157,354 Ordinary Shares were for sale at $1 each, with only 115,196,354 shares that were available to the public.

Regency IPO opens on Thursday for a $1

Regency Petroleum Co. Limited a company based in Westmoreland is offering up to 287,157,354 Ordinary Shares for sale at $1 each. The offer opens on Thursday, November 24 and should bring the total Junior Market listings to 48 and the number of companies to 47. Only 115,196,354 shares will be available to the public.
The company reported revenues of $332 million in the half year results to June this year, up from $248 million in 2021, with profit after tax of $51 million compared with $35 million in 2021, putting the earnings per share for this year at 98 cents, with the PE at 10 times this year’s pretax earnings versus the Junior Market average of just over 12, but below the peak of recent new issues of approximately 20. ICInsider.com expects the offer to close quickly after opening and the price to soar into the $2 range after listing.
Revenues for the 2021 fiscal year were $607 million a big jump from $194 million in 2020 and just $45 million in 2019, with a profit of $59 million in 2021, after taxation of $18 million, up from $14 million with taxation of $3 million in 2020.
The company’s operations span Jamaica as a petroleum marketing company licensed to distribute bulk petroleum products. The company was founded by Andrew Williams, Chief Executive Officer. Revenues are currently generated from sales of LPG Cooking Gas, Automotive Petroleum and Transportation of gasoline.
Revenues are set to climb in 2023 with the ongoing construction of two service stations which should be open to the public by the end of the March quarter of next year, the company stated in its prospectus. A service station to be opened in Negril, which Regency will lease, is located upon entering the town from the east, will increase the visibility of the brand and generate additional revenues and profit. In addition, the company is likely to see increased business due to the exposure from the IPO and trading in the shares after listing on the exchange.
The company states that it has purchased delivery vehicles to reduce costs and improve efficiency and create greater economic value in the future. Currently, only 90 Octane Fuel and Diesel are sold at the service station, the opening of the new service stations will see the introduction of ULSD and 87 Octane Fuel at the pumps. The new products should attract added demand and provide a more inclusive retail market product line.
Expansion plans call for the purchase of additional cylinders to supply increased demand for its cooking gas to reduce cost of sales and improve efficiency, the Company will also acquire a fuel tank trailer, the prospectus states.
Of the total issue 171,961,000 shares are reserved as follows – 55.5 million for Employees & Key Strategic Partners, 100 million for GK Investments to convert loan balance and 16.46 million for Associates Loan Conversion.
The company is relatively small, with Shareholders’ Equity of $111 million at the end of June this year, accordingly, there is much room for growth going forward.
The directors of the company are Dr André Foote, Andrew Williams, Andrew Cocking, Radcliff Knibbs and Edgar Bennett.