Fontana shares are now listed on the Junior Market of the Jamaica Stock Exchange with bids now in to purchase 7.7 million shares up $2.50 prior to the opening of trading. There is just one offer at $4 to sell 4,500 shares.
The heavy demand in in keeping with heavy over subscription the IPO received. A number of investors in the stock are not pleased that the company varied the terms of the allocation of shares to persons in the general pool from the stated treatments included in the prospectus that stated that multiple applications would be merged and treated as one.
The share issue attracted 2,770 applicants for shares in the company. The order book on the buy side is shown in the accompanying chart with orders at 10 am.
The PE based on last year’s earnings is a low 8, suggesting that a price in the mid $4 region or higher is likely, once it can trade at those levels. Subsequent to the time the attached chart was created, the highest bid is now at $2.60 to buy 130,000 units with total bids in the syetem to purchase 17.7 million shares. One more offer at $3.77 to sell 30,610 units was posted after trading commenced. The maximum price the stock can trade at today is $2.44, 30 percent above the IPO price of $1.88.
Heavy demand for Fontana shares
Fontana lists today
Fontana Waterloo Road
Fontana shares will list on the Junior Market of the Jamaica Stock Exchange and will commence trading on Tuesday.
The shares that were well sort after will be in high demand with the price expected to jump sharply in a few days. A number of investors in the stock are not pleased that the company varied the terms of the allocation of shares to persons in the general pool from the stated treatments included in the prospectus that stated that multiple applications would be merged and treated as one.
Scotia Investments advised that they are currently in the process of disbursing refunds to applicants via transfers to each broker for their clients and expects to complete the majority of refunds during the week of January 7th.
The share issue attracted 2,770 applicants for shares in the company. Fontana brings to 38, companies listed on the Junior Market. In December, Eppley that was listed on the Junior Market moved over to the main market.
Fontana listing on Tuesday
Fresh from a successful initial public offering of 250 million shares, Fontana is not expected to start trading until early January on the Junior Market of the Jamaica Stock Exchange.
Scotia Investments, the brokers for the offer stated that the offer of Two Hundred and Forty Nine Million Eight Hundred and Seventy Four Thousand Nine Hundred and Sixty Five (249,874,965) ordinary shares opened and closed on Thursday, December 13 and attracted a total of 3,406 applications for a total of 982,194,569 shares.
Applications for the Public Pool received the first 25,000 units applied for, with amounts in excess of 25,000 units allocated approximately 8.82 percent.
The brokers indicated that multiple applications from a single person or entity were removed, except where they were entitled to apply for shares in a reserved and the public pool. Once that process was completed, 2,770 applications remained for 944,150,335 shares.
SIJL advised that the methodology and allotment of the shares as follows: Employee Gift, Company Reserved and Key Customers & Doctors pools applicants were fully allocated. Strategic Partners were received a minimum of 50% of the amounts applied for.
Fontana shares, will only be allowed to trade up to a maximum of $2.44 on the first day of trading or a maximum of 30 percent above the $1.88 the public bought the shares at. Thereafter, the maximum price will be dependent on the highest 
closing bid at the end of the previous day.
The Company recorded revenues of $3.4 billion in the financial year 2018, representing an increase of $272 million or 8.66 percent over the prior year and an increase of approximately 91 percent from $1.76 billion in 2014. Pretax profit for 2018 declined 6 percent from $322 million in 2017 to $303 million after rising from $237 million in 2016 that was up more than 100 percent over the 2015 profit of $115 million. The slowdown in 2018 is attributed to the state of emergency in Montego Bay and road construction in the Barbican area.
Fontana, is projected to earn around 35 cents for the current fiscal year and that should place the price at just over $5 during the course of the year.
Record new JSE listings for 2019
This year could be a busy one for Initial public offers (IPOS) and record new listings on The Jamaica Stock Exchange (JSE), giving investors many more choices for placing their money.
Nine IPOs came to the market in 2018 with three in December, giving investors more investment choices than in 2017. For 2019, ICreate will be the first IPO out of the block. The government owned Wigton Wind Farm’s IPO will be launched early 2019, probably by March, but it is not one for all investors, in spite of what some politicians would want to see happening. IC Insider.com gathers others to come include, a central Jamaica Manufacturing entity with strong export base, a large paint company and one in the BPO sector.
In addition, IC Insider.com gathers that there are at least another three IPOs, should definitely make it to the market this year.
The JSE is projecting for 21 new listing in the current year, Marlene Street Forrest, General Managing Director, informed IC Insider.com recently.
“The main market expects 10 of the total and the Junior Market 11. The list includes both ordinary and preference shares”, Street Forrest stated.
Fontana listing in January
Artist impression of Fontana Waterloo Road
Fontana shares are not likely to start trading until January. Feedback from the Jamaica Stock Exchange indicates that the listing committe that has to meet to approve the listing wont meet until next week.
IC Insider.com had previously reported that it would list today which was based on information gleaned from our sources. The shares allocated for the public pool that seems to be at variance with the terms of the propectus would need sorting out, before the shares are listed if in fact the allocation announced is different from the terms of the prospectus.
Fontana allocation varies from prospectus
The Fontana prospectus states that multiple applications by any person whether in individual or joint names will be treated as a single application, but the information included in the broker’s release regarding allocation seems at variance with this.
The brokers indicated that, “multiple applications from a single person or entity were removed except where they were entitled to apply for shares in a reserved and the public pool. Once that process was completed, 2,770 applications remained for 944,150,335 shares”.
It would appear that had the allocation been done in conformity with the terms of the prospectus, the number of shares applied for would still remain at 982,194,569. All multiple applications are to be merged to be one, as such investors
Fontana Waterloo Road
in the public pool should be allocated differently than what has been announced.
Contracts once consummated, are expected to be adhered to, accordingly, the terms set out in the Fontana prospectus, need to be satisfied as far as the allocation of the shares is concerned.
The broker needs to explain to the public if in fact the allocation for the public pool is in keeping with the terms set out on page 14 of the prospectus and if not why not and what will be done to comply with the terms that investors signed on for. It appears that the brokers are trying to unilaterally vary the contract that investors signed on to and they cannot do that.
ICreate to open January
The ICreate initial public offer of shares is expected to open on January 4 with the prospectus set to be released either later this week or next week.
Information gleaned by IC Insider.com is that 74 million ordinary shares will be offered for sale to the public at approximately $1 each and is slated to list on the Junior Market of the Jamaica Stock Exchange. Revenue is said to be running at just under $50 million per annum with prospects for strong growth going forward. Already the company is making a small profit IC Insider.com gathers. The business is the training of students in graphic designs and animation.
The majority shares are owned by EMedia Limited with Sagicor Investments holding a minority position in it.
Fontana IPO closed
The Fontana Initial Public Offer for 250 million shares to raised $468 million is oversubscribed and was closed shortly after 9 am today.
The issue which was scheduled to open on Thursday December 13 but and slated to close on 20 December 2018 but heavy demand for the issue forced an early closure. IC insider.com gathers that two brokerage houses delivered around 1,400 applications last night. Up to 1 PM on Thursday, staff at Scotia Investments were still sorting out applications that came in ahead of the closing time. With an historical PE ratio of just over 6 times earnings and around 5.4 times current years estimated earnings the price of the stock is expected to jump sharply after listing. With the plans the company has for expansion the company should enjoy strong growth in profit and stock price for a number of years.
Fontana corrects & explains Q1 figures
Fontana senior management team
Following IC Insider.com article, pointing to errors in the Fontana prospectus issued to the public on Thursday, December 6, the company subsequently corrected the errors and uploaded the corrected prospectus on the Jamaica Stock Exchange website.
“Please note that Fontana Limited attaches hereto its unaudited financial information for the period ended 30 September 2018. This information is updated from the financial information that is presented in the prospectus of the Company dated Thursday, 6 December 2018. The effect of the update is a revision to the Statement of Cash Flows where the profit before taxation and depreciation charges were inadvertently omitted. The Company also updated a typo to the Share Price of the Company from $2 to $1.88 on page 14 of the prospectus”, the company stated in a release on the JSE website.
The directors and management advised that the pricing error arose from a change in the original planned price of $2 that to $1.88 but the price, the price stated in the body of the document was overlooked. The error in the cash flow arose from the links to the cash flow from the work sheet did not copy over the figures for profit and depreciation when the final document was completed and no one picked up the omission prior to the publication of the error.
The directors at their investors briefing on Monday also addressed the matter of the sharp jump in inventories and the increase in the company’s first quarter profit over the prior year as well as the pace at which they will commence further expansion after the opening of the Waterloo Road branch in 2019. Inventories for the Christmas season were imported earlier than in 2017 the directors stated. Apparently, the movement in the exchange rate of the Jamaica dollar played a role as well as some concerns regarding the pricing of supplies out of China. The financial controller, Judale Smith indicated that the gross profit margins are usually 36 percent but it had fallen in the 2017 first quarter as they had to source some goods at higher prices that affected the margins, as such the 2018 figures better reflect what the out turn should be like.
I Create another IPO coming soon
iCreate, a fairly new company that is involved in the creative industry is at an advanced stage of planning to raise funds publicly by way of an IPO, ahead of a potential listing on the Junior Market of the Jamaica Stock Exchange.
According to the company’s website, they are a Creative Institute, developed with the aim of filling the gap in skills training and development of creatives in Jamaica and the wider Caribbean. As a part of the creative eco-system, students are provided with a wide range of career opportunities in the Creative Economy, while being a key partner of the Advertising Industry, Film Production Companies, Animation and Gaming Companies, and Creative Outsourcing initiatives.
iCreate partners with the University of the Commonwealth Caribbean (UCC) as its Creative Training arm for courses offered in Jamaica and the Caribbean. iCreate is also partnered with the Digital Marketing Institute, to become the only institution in the Caribbean licensed to deliver their Digital Marketing Diploma programme.
The majority shares are currently owned by eMedia Interactive Group with Sagicor Investment said to hold 19 percent of the shares. The total of just over 123.5 million shares issued are issued currently that will go to 196 million if the IPO is fully taken up. The issue should be coming to the market place soon, by the end of the year or early in 2019. Tyrone Wilson is the Managing Director of the Group.
Also expected to list in 2019 are Wigton Wind Farm which will provide an investment more for income than growth. Also exploring listing are a paint company and a manufacturing company from central Jamaica.