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.
New IPO coming in days
The Jamaica Stock Exchange should be welcoming another new main market listing, before too long as the latest new entrant to come with an initial public offer, is expected to present their case to the investment public in the coming week.
The issue hopes to raise just over $1 billion that would see shareholders’ equity moving from $700 million to nearly $2 billion if the maximum target is reached. The pricing of the issue is expected to be less than $1.40 per share.
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 Insider.com 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 Indier.com 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
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.
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.
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 JSE in a response to IC Insider.com 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.