Investors need the Lab’s April results

There is a good reason why stock markets require listed companies to report on their performance quarterly.
Quarterly results provide investors with critical information on a timely basis about the fortunes of a company’s operation and allow investors to make better investment decisions.
When a company goes public with financial information that is nearly six months old when a lot may have happened since the last report that is unacceptable. Information, profits and interest rates are three important things that drive stock prices. It is so critical for pertinent information to be make available to the public for rational decision making.
This publication finds it unacceptable that Limners and Bards are going to the market in July to raise capital with the last results included in the prospectus being January this year, nearly 6 months ago. What is worse, there are no projected earnings in the prospectus to guide investors with fresh capital being injected with the IPO proceeds.
The historical records hardly help in making a rational decision on what the 2019 earnings could be. The first quarter figures for 2019 shows that the profit made in the 2018 period was just about half of the full year’s figure but investors have to guess how the 2019 profit out-turn will be. Information gleaned by this publication, is that April’s second quarter numbers are known and are said to be around the same level as that of the first quarter. The big question is why is this information or some indication of post January results not mention in the prospectus for all to see?
The world’s best performing stock market cannot keeping living with the world’s worse investment practices.

The Lab IPO opens July 17

The Limners and Bards (The Lab) will be offering 189,138,050 ordinary shares at the subscription price of $1 each to the public and preferred applicants with only 50 million units of the amount earmarked for the general public.
The stock comes to the market with a PE of 10 times 2018 earnings on a pretax basis and about 8.3 times 2019 estimated earnings, if it is assumed that the increased profit in the first quarter of 2019, continues for the rest of the year. These PE are below the average of the market and is suggesting a bounce when listed.
Profit of $76.5 million was made in the year to October 2018 from revenues of $483 million reflecting a major improvement over a small loss in 2017 of $2 million from revenues of $291 million.
Unfortunately, the company has only reported interim figures, to January. With more than 6 months having elapsed since, there are no guidance on what has happened since and can be expected going forward. There are no forecasted earnings, even with fresh capital injection expected. Investors should not have to do wild guesses as to what the future may hold when management is in a far better position to guide them.
For the first quarter this year, revenues climbed 52 percent to $189 million from $124 million in 2018 while profit before tax grew just 16 percent to $42 million for earnings per share of 5.5 cents. Without any historical quarterly information or guidance of likely earnings, it is impossible to say what the out turn will be for the rest of the year. The 2018 fiscal year numbers, suggest that there are seasonality in its operations as the profit for the full 2018 year is just a little over twice the amount earned in the 2018 first quarter, even as revenues for the full year were 4 times that earned in the 2018 first quarter.
The offer opens July 17 and is scheduled close on July 31. Funds raised will be used for expansion and to finance a targeted acquisition. IC will post a fuller report at a later date.

Gradual growth for Sagicor Select

There is a great deal of interest in the Sagicor Select Funds that is offering 2.5 billion shares for subscription by the general public at $1 per share and a slight discount for some selected applicants.
The company has the right to upsize the offer by an additional 1.5 billion shares. The offer opened July 3 with a closing date of July 17.
Financial Select Fund aims to give results before expenses, corresponding generally to the price and yield performance of the JSE Financial Index that seeks to mirror the financial sector companies on the Jamaica Stock Exchange. The list includes some that are not wholly financial, with NCB Financial dominating with 38 percent of the index at the beginning of March.
In order to track the performance of the Index, the Select Fund uses a replication strategy, with the Fund investing substantially all of the securities represented in the Index in approximately the same proportions as the Index. The Financial Select Fund will rebalance monthly, if necessary, to maintain the appropriate balance to track the index. On average, the Financial Select Fund will invest at least 95 percent of its total assets in the securities comprising the Index. The Index is developed and maintained by the Jamaica Stock Exchange and calculated based on market capitalization of the various companies making up the index.
The company estimates that “financial stocks will increase in price by an annual rate of 8 percent over the five-year period, with the net asset value of the total assets expected to rise to $7.2 billion in 2024. The performance of the securities held is expected to be favourably impacted by the growth in the financial sector and the consequent higher earnings for the companies whose stocks form part of the JSE Financial Index, on average,” the company stated in the prospectus.
Frankly, if that were the returns, investors would be better off investing in a number of the preference shares listed on the market that provide a rate of return that is equal or better without the same risk. Since the Financial Index started at the beginning of March this year, it has gained 22 percent as NCB Financial in the main, the largest portion of the Index and the fund, moved from $145 to last trade at $188, to be up 30 percent since the end of February.
Fortunately, with interest rates being low and continuing to fall, profits of companies will most likely rise, including financial sector ones and therefore drive the value of stock in the fund at a much higher rate than the unrealistic forecasted levels.
The positive with the fund is that if one is of the view that the sector will continue to grow at an attractive pace then it could be a good vehicle to hold without having to buy a basket of the stocks and having to manage them appropriately. The down side is that because it is not a managed fund, the value will rise and fall with the stocks in the portfolio. Additionally, the fund violates one of the carinal principle tenets of investing, that of having a balanced portfolio, so that no one investment is so large as to drag down the portfolio significantly. Investors do not need to go beyond the 1990s to see how devastating concentration of investment can be.
IC considers the environment to be very conducive, to the fund do well going forward with a likely growth rate closer to 20 percent per annum for a few years than 8 percent, but investors should not factor in a premium to the net asset value of the fund anytime soon if at all.
Some investors just don’t want to be bothered with managing a portfolio but want direct exposure to the market and that is where a select fund is seen as useful. Each investor has to determine what it is that they want from an investment. Investors are unlikely to see the level of gains generated from the Wigton public offer from this issue in a matter of weeks, for example.

5 hot summer IPOs

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Initial public offers have been extremely popular amongst investors who have made good money from the vast majority of them. Come this summer investors will get five more opportunities to invest in IPOS.
The last issue, Wigton Windfarm made several thousands investors happy, with the price rising as high as 90 percent over the IPO price of 50 cents. Even now that it is trading lower than the peak, investors are still more than 40 percent up on the initial price. Investors in the year’s first IPO, iCreate are not that lucky as the $1.01 they paid for the stock fell as low as 70 cents since and remains well below the IPO price.
Coming this summer are, The Lab that styles itself as a fully integrated 100 percent Jamaican born and bred advertising agency with global reach and an island swagger.

Kimala Bennett, Managing Director of The Lab.

Kimala Bennett is the company’s Managing Director. NCB Capital Markets are the brokers for The Lab, that could be looking at regional expansion. Clients include National Commercial Bank, JPS. Wendy’s Dominos, Supreme Ventures, Wray and Nephew, Grace Kennedy, Caribbean Broilers, Digicel. Persons in the know say this is one of those IPOs to plan for, as it is unique and profitable. NCB Capital Markets is also taking Eppley Property Fund, a company that owns property across the Caribbean, to market this summer as well as QWI Investments, a new company that invests in listed shares.
NCB Capital Markets is also brokers to Tropical Battery Company. The company expects to come to market in July, to raise around $200 million in an IPO our sources state. The company was founded in 1950 and later purchased by John Melville and remains in the  family, since. The company’s core business is the sale of automotive batteries, complemented by the distribution of several local and world renowned automotive consumer brands. Tropical Battery’s headquarters is located in Kingston, with distribution centres in Kingston and Montego Bay.
Another that will be coming to market is Sagicor Select Funds Limited an Exchange Traded Fund that is going to market in June to raise $5 billion. The fund according to Sagicor Investment CEO, Kevin Donaldson, will track the JSE Financial Index and will be rebalanced if needed, monthly. Donaldson indicates that the fund currently has assets of $1.2 billion already. Sagicor Investments could have 2 to 3 additional listings before the year ends.
When completed, the new listings on the Jamaica Stock Exchange will raise the listed ordinary shares to more than 80 and total listings to more than 100 securities.

Wigton pulls 11,772 new investors

Popular new stock issues have a way of electrifying stock markets and empower new stock market investors to increase their wealth.
It happen when National Commercial Bank went public in 1987 and again with the Wigton IPO.
“While the overall number of applications was 31,200, we are pleased to report that 11,772 or 38 percent are new investors to the market. This represents an increase in the number of account holders in the JCSD of 7.6 percent,” Marlene Street Forrest managing Director of the Jamaica Stock Exchange stated in addressing the observers at the listing ceremony of Wigton Windfarm listing on Wednesday.
Street Forrest went on to say, over 64 percent of those who invested were under 50 years of age with approximately 50 percent under 40 years old.” According to Street Forrest, females comprised 56 percent of the applicants for shares compared to 44 percent males. “The average spend for new investors was approximately $124,000 with the offer oversubscribed by 158.8 percent.”

Wigton stock could double soon.

Wigton is the largest IPO the list on the JSE since the listing of NCB, Telecommunication of Jamaica in the latter part of 1980s. In recent times, it is ahead of Wisynco Group with 7,769 applicants. “We have made tremendous strides as Wigton with total applications of 31,200 and four times the size of that offer has taken 21 days from the close of the offer to listing today” Street Fporrest stated that,
Andrew Holness, Prime Minister of Jamaica, stated that he wanted not only for Jamaicans to own assets but to share in the profitability of the company and this was achieved with the Wigton issue. He noted also that shares the company own in Jamaica Public Service and Jamaica Mortgage Bank will be divested in the short to medium term.
The stock closed with the price rising by a maximum of 30 percent at 65 cents trading 8,351,000 but ended with the bid at 66 cents which will allow it to trade as high as 85 cents on Friday.

Wigton shares list today

Wigton stock could double soon.

Shares in the highly sought after Wigton Windfarm will start trading today on the Jamaica Stock Exchange when the market opens at 9:30 this morning.
The shares that saw more than 31,000 investors the 11 million units that were on offer was heavily oversubscribed and persons within the financial market expects that it will trade at a premium to the 50 cents offer price. The shares will be restricted to a maximum price rise of 15 cents today or 30 percent of the IPO price, which is the maximum the stock exchange circuit breaker rule permits. If the bid closes at 84 cents at the close of trading then it can trade as high as $1.09 on Friday when the market reopens after the Labour day holiday.
The stock should be very liquid and that may constrain the price movements as speculators take profit early. The PE ratio of the stock is 8.5 times earnings but with many main market stocks priced in the 15 times region Wigton could get to that valuation and sell just under $1.
Mayberry Investments the main broker for the issue stated that the public sector pool was oversubscribed accordingly and all Public Sector workers who applied for less than 15 million shares were fully allocated while investors from the general public, were fully allocated up to 8.5 million shares.

Wigton shares now fully allocated

Wigton IPO prospectus is out.

Successful investors in the public share offer of Wigton Windfarm will see the shares trading on the Jamaica Stock Exchange at the commencement of trading next week Wednesday.
Mayberry Investments (MIL) the main broker for the issue announced the allocation of shares. In a release on the allocation, MIL stated that the public sector pool was oversubscribed accordingly, all Public Sector workers who applied for less than 15 million shares were fully allocated. The remaining Reserved shares are allocated sequentially, in tranches of 10,000 units until the Reserved Pool was exhausted. Members of the general public who applied for less than 8.5 million shares, received full allocation, the remaining shares were allocated sequentially in tranches of 10,000 units.
Refunds to applicants who are clients of Mayberry, will be credited to their accounts, by end of today, 15 May, refunds for non-Mayberry clients will be made available to the selling agent or location where the application was first received by 16 May.
All Applicants will receive a formal letter from the Jamaica Central Securities Deposit advising them of their respective allotment of Shares in the Company in due course.

Wigton Windfarm lists next Wednesday

Wigton IPO prospectus is out.

The wait by investors in the latest initial public offer of Wigton Windfarm to Jamaicans to list will soon be over with the shares set to list on the main market of the Jamaican Stock Exchange next week Wednesday.
The JSE in a response to IC question today said that they are planning for the listing for next week. Other information has confirmed that the listing ceremony will start at 8:30 on Wednesday.
The government of Jamaica that previously owned all the company through Petroleum Corporation of Jamaica upheld the decision to sell all of the shares. Investors gobbled up all the 11 billion shares at 50 cents each and still wanted more as some 32,000 applications went after the issue making it one of the initial public offers to attract more than 30,000 applicants.
Information gleaned is that the allocation of shares will leave many of the bids with large amount of shares will not see much more than 4 million units being allocated to them.

Wigton attracts over 30,000 applicants

Wigton IPO prospectus is out.

Wigton Windfarm’s recent IPO is said to successfully attracted more than 30,000 applications, for the 11 billion shares that were offered at 50 cents each, IC has been advised.
IC gathers that the number could reach as much as 32,000 applications and is more than 100 percent oversubscribed. The number of applicants, suggest that the level of oversubscriptions is most likely lead to the issue being twice oversubscribed. Based on the formula announced for allocation that will see smaller applications getting full allocation, the top bidders are likely to be disappointed with what they end up getting that could see their take coming for 10 percent or less, depending on the amount applied for.
According to a release from Mayberry Investments lead brokers, “all Applicants (large or small) up to the first 10,000 shares will be met. Applicants in excess of 10,000 will then be met in similar fashion in increments of 10,000 until all applications are met or all shares are allocated”.
The number of applications seem to be close to the issue of National Commercial Bank in 1987 that attracted over 30,000 applications, with the issue being oversubscribed by 175 percent.
The oversubscription should result in a healthy liquid market, when the stock starts trading in a few weeks time.

The Lab, coming to a broker near you

NCB Capital Markets is readying a number of new public share issues to come to market by the summer this year.
Numbered amongst them are, The Lab that styles itself as a fully integrated 100 percent Jamaican born and bred advertising agency with global reach and an island swagger. “We are a strategic, creative, passionate solutions oriented and no nonsense group with a heavy emphasis on getting stuff done.” Kimala Bennett is the company’s Managing Director. Clients include National Commercial Bank, JPS, Wendy’s, Dominos, Supreme Ventures, Wray and Nephew, Grace Kennedy, Caribbean Broiler and Digicel. Persons in the know say this is one of those IPOs to plan for, it unique and profitable. QWI Investments is another that NCB Capital Markets is readying to take to the Jamaica Stock Exchange main market by early summer.

Kimala Bennett, Managing Director of The Lab.

Another that will be coming to market is Sagicor Select Funds Limited an Exchange Traded Fund. According to a note in the Sagicor Group audited financial statements, “It is the intention of the company to apply to the Board of the Jamaica Stock Exchange for admission of the shares to trading on the main market if subscriptions of at least $5 billion are raised.”
The above will come on top of the current public offer of Wigton Windfarm that opens next week to raise $5.5 billion, earmarked to be paid over to the government after expenses associated with the offer.