In 2013, First Citizens launched an Initial Public Offering (IPO) of 48 million shares that raised $1.1 billion at $22 per share. The issue was heavily oversubscribed with $3.3 billion chasing the shares offered. The stocks more than doubled sometime after being listed on Trinidad and Tobago Stock Exchange in that year.
As was the case with the 2013 IPO, the proceeds of the latest issue will go to the government of Trinidad and Tobago. The First Citizens Group is one of the leading financial services group in Trinidad and Tobago, offering a full range of retail, corporate and merchant banking services as well as asset management, trustee and brokerage services. The Group is headquartered in Trinidad and Tobago.
First Citizens reported profit after taxation of TT$185 million for the December 2016 quarter, compared to TT$180 million in 2015 and TT$637 million for fiscal 2016 with earnings per share of $2.52 for 2016. Profit for the December quarter before tax ended at $247.6 million, a growth 12.5 percent, compared to the corresponding period in 2015. The selling price comes out at 13 times earnings. The price is not as attractive as when it first went public with a PE 9 times earnings in 2013, worse earnings per share has not grown since then either. The stock last traded on the Trinidad & Tobago Stock exchange at $32 each on Friday.
The stock traded on the first day of listing, the 8th of February, at $2.61 but with just 100 units trading, with the next trade, taking place at $3.70 for 100 units. On Friday February the 10, 15,722,362 units traded with the price ending at $4.70 for a rise of 135 percent. Monday February 13, the stock closed trading at $.81 while trading 537,458 shares. On Tuesday the price slipped back to end at $4.51 as 757,244 shares changed hands. Wednesday saw trading in 696,685 shares be executed at $4.50, on Thursday 592,737 shares traded to close at $4.51 and 420,952 units traded on Friday to close at $4.80, to crown a successful two weeks for the stock that has gained 140 percent from the IPO price.
The stock which IC Insider.com project will earn around 35 cents per share in 2017, now trades at a PE of 14, with the junior market average now around 11.5, the upside from now will be challenging.
Main Event Entertainment Group had a successful initial public offer, closing on the same day it opened but with a massive over subscription.
What is clearly a successful offer may become a major public relation nightmare as investors may be furious with the paltry amounts they end up getting and hardly being able to benefit from what will be a huge upside move in the stock price shortly after listing.
According to the broker for the issue, Mayberry Investments, stated that Mayberry West Indies Reserved Shares and Key Partner Reserved Applications were allocated in full. The first 3,000 shares of Mayberry Client Reserved Shares were allocated in full, with the balance allocated approximately 4.6095917%. Company Reserved Applications will get the first 3,000 shares with amounts over this level, to be allocated approximately 48.7418953% and general public will get the first 3,000 shares applied for plus approximately 1.1906517% of the rest.
Gary Peart of Mayberry Investments indicated than more than 1,000 applications were received for the 62 million shares that were offered.
The Jamaica Stock Exchange latest potential listing on junior market, Main Event, pulled in just over 1,000 applications worth $670 million dollars, being 458 percent over subscribed.
The offering which closed on the same day it opened Tuesday January 24, is one with the largest number of applicant and is in line with Caribbean Producers and General Accident both with more than 1,100 applications.
According to Gary Peart, Chief Executive officer of Mayberry Investments, the broker for the deal there were several small applications. The level of over subscription is far worse than meets the eye with 22 million shares available to the wider public, to be split up amongst approximately 900 applicants. That works out at around 25,000 shares for each applicant.
The interest in the shares and the low level of shares that will be allocated to each applicant is going to have an electric impact on the post listing pricing by the market.
The outlook for the media and entertainment industry is positive. The industry can be consider cyclical, which will benefit from overall economic growth. As companies expand operations and try to improve their client relationships, an effective media and events partner is valuable in maintaining overall brand reputation, consumer awareness and loyalty.
The industry is poised for growth as new marketing and entertainment trends emerge focusing on “experiential marketing” rather than traditional methods. In addition Jamaica is well poised to become the commercial capital of the Caribbean and this would lead to more corporate events, conferences, concerts and more, which is a direct benefit to the media and entertainment industry.
Products|The Company provides a diverse range of marketing, events and entertainment related services including equipment rental, graphic design, online marketing, project marketing and sound and video production.
The group is well established as a leader in their industry, with only 3 major competitors and a larger number of smaller players. They list their competitive advantage as being a full service company providing turnkey solutions. MEEG is involved in a number of signature events which occur annually. This provides a good source or repeat business from existing clients and a basis for new business for some of these clients.
MEEG has built up a good reputation in the industry, and brings a wealth of knowledge to clients. They appear well rounded and versatile in their offerings. They also own a fairly large stock of equipment which positions them to react quickly to customer demands. The company operates in a number of Caribbean territories which could present further growth opportunities regionally.
Risks/Concerns|Some risks to MEEG include:
1. Equipment becoming rapidly outdated with the emergence of new technology.
2. It is expected that this could be a very capital intensive business. Their decision to own equipment rather than lease could also be one that hurts them in the long run.
3. A lot of their revenues appear to be derived from a few major clients. This could prove detrimental should they lose one or more of these customers or their profits could be eroded due to increased competition.
4. Intercompany contracts surrounding sourcing of equipment etcetera, is of concern but this may have been done for greater tax efficiency purposes.
Financial Highlights|The company appears to be running short on cash with the proceeds of IPO helping to alleviate the pressure. Net earnings should increase once finance costs are reduced.
At current valuation, the company is trading at just over 2 times book value (inclusive of the cash raised from the IPO)
At the offer price, the company is trading at 10 times last year’s earnings, based on the new number of shares assuming no new income from the capital to be raised. The estimated 2016 earnings is put at $0.23 and estimated 2017 earnings at $0.33 (earnings could be closer to $0.40 per share if debt is reduced and gross profits improved.)
Based on these projections, the stock price using a market PE of 15 could reach a price of about $5 in the next 12 months.
David Stephens is an individual investor in local and international stocks.
The Main Event Entertainment Group Initial Public offer of shares seem set to deliver a strong increase in share price once the stock list on the junior market probably in February. There are a number of positives to greet the issue.
The stock market is in a bull run currently. The stock is priced at just $2 which many small investors will be attracted to. The historical PE is just 7, compared to an average of 15 for junior market stocks, based on 2016 earnings. IC Insider.com is projecting earnings in the order of $100 million for 2017, assuming a 15 percent revenue gain, for earnings per share of 33 cents. Based on this, the stock should more than double in 2017.
The company grew revenues by 11 percent in 2016 over 2015 to an estimated $1.13 billion and by 55 percent over 2014 while that for 2013 was flat at $517 million. The company indicates that they had to recently turn away business due to capacity constraints which the fresh capital will fix.
Gross profit has been strong at 36 to 38 percent level in 2016, but it may be somewhat lower, as some items in administrative and general expenses may be directly related to events, rather than overheads.
Main Event,should benefit from the strong growth in the tourism sector and pickup in economic activity locally, that should see a greater number of Jamaicans patronising entertainment events, allowing for more events to be staged.
Importantly, the profile of the company will grow with the listing, as they benefit from daily exposure based on trading activity. The expanded directorship and regular examination of operations by the board and the infusion of capital will result in even better performance going forward and that should boost revenues and hold cost in check. This is a factor that should not be lost on investors.
Only 60 million shares are being sold, with few being available to the general public. The issue opens at 9 am, Tuesday 24 January and is likely to close at the same time. On the negative side, the company suffered a large fall in digital signage income with $75 million inflows in the 11 months to September 2016 from $139 million in the similar period in 2015. Receivables tend to be on the high side of nearly 2 months of sales, tying up nearly $100 million in excess of normal levels, while payables are running at 2.3 months at $181 million.
IC Insider.com is according an investment in the stock to be BUY RATED.
There is no listing even close to the next likely listing slated after Main Event comes to market, on the Jamaica Stock Exchange. It has no walls, no buildings, no one place of business, no borders, yet it could be a most profitable venture for investors.
Mayberry Investments, the broker bringing the Main Event IPO to market seems set to be the broker bringing this unique listing to the market by January as the Jamaica Stock Exchange opens up to some never before thought of companies that can be listed.
The junior market started off with a most unique company, Access Financial in 2010. That it was a financial entity was not unique, but lending to the lower end of the market was seen by many as a sure way to give away capital and making good Profit was unique at least to stock market investors. The IPO was greeted by howls of outcry of the rape that the promoters were inflicting on the investing public. History has proven the naysayers wrong and that first listing set the stage for one of the most successful ventures that the local stock exchange has pursued.
Jetcon, a used car dealer, caused the eyes of many to pop in bewilderment as they never conceived that such a venture could interest investors much less prosper. Main Event can be considered unique but the next listing lined up, is so different from the others, that it is bound to cause investors to wonder and ponder about it for a long time.
Since 2010, UCC has extended the opportunities for students in Jamaica and the Caribbean to experience a higher education through its online accredited degree programmes.
The prospectus is at an advanced stage with a few matters to be sorted out IC Insider source stated.
With revenues posited to be in the range of $1 billion to $1.5 billion for 2015, Main Event Entertainment should be coming to the public within two weeks subject to Financial Securities Commission effectively signing off on the prospectus.
The company is expected to raise between $100 million to $200 million at a price between $1.50 and $3.50, stockbroker for the deal, Gary Peart of Mayberry Investments told investors at a briefing today. IC Insider gathers that the amount to be raised, is likely to be $150 million, putting the PE ratio in the 10-12 range.
According to Peart, the valuation for the company is in the range of $500 million – $700 million. Between 20 to 40 percent of the shares will be offered in the IPO. Proceeds of the issue will be used to expand services particularly to Montego Bay where Solomon Sharp, Chief Executive says has a big market for his products and services. Funds will also be put into new equipment to meet increasing demand. According to Sharp, demand is such that they have had to turn away business. The additional equipment will allow for more business to be undertaken simultaneously.
Main Event Entertainment Group, a unique company that is in the business of management of event as well as producing their own production. The company provides event management, production, audio, video, lighting, staging, roofing, power supply, digital signage and management, concept development, creative development, infrastructural build-outs.
The principals include Solomon Sharpe, CEO and formerly of Desnoes and Geddes, Richard Bair, Chief Operating Officer, formerly employed at Porter Brothers and Donna Waithe, Director HR and Administration with 23 years of experience in the aviation sector at Air Jamaica. The company was established 2004 and employs between 51 and 200 full time and part time employees.
The Board of directors include Hugh Graham, Solomon Sharpe, Donna Waithe, Richard Bair, Tania Waldron-Gooden, Harriat Maragh, chairman and Dr. Ian Blair.
The company have as its clients many blue chip Jamaican companies, including Scotia Group, National Commercial Bank, Flow, Desnoes and Geddes to name a few.
It now appears that the junior market is again open for business, well sort of. Attracted by the tax free status, junior listings received, the planned phasing out of the tax free element, resulted in the last listing taking place in March this year, just days before the tax break for new listings was to have ended.
The new government elected in February, promised full restoration of the tax status. The senate recently passed legislation allowing for special tax regime for junior market listed companies to continue, opening up the market place for unleashing a new wave of listings.
Come Friday, Mayberry Investments officially launches their latest IPO with an Investor briefing for Main Event Entertainment Group, a unique company that is in the business of management. The business is that of event management, production, promotions, and digital signage. More specifically they provide event management, production, audio, video, lighting, staging, roofing, power supply, digital signage and management, concept development, creative development, infrastructural build-outs.
The principals include Solomon Sharpe CEO and formerly of Desnoes and Geddes, Richard Bair, Chief Operating Officer, formerly employed at Porter Brothers and Donna Waithe, Director HR and Administration with 23 years of experience in the aviation sector at Air Jamaica. The company was established 2004 and employs between 51 to 200 full time and part time employees.
The Jamaica Stock Exchange is expecting at least 14 new listings of ordinary share in 2017, Marlene Street-Forrest, General Manager of the Stock Exchange told IC Insider.com. Street-Forrest says “this is information provided by brokers as well as enquiries made to the exchange, by interested companies.”
Two bond issues are also expected to be listed as well. There is the possibility of another listing which could be a relisting of a company that was previously listed years ago.
Ten new listings are slated for the junior market with 4 coming for the main market. Listings could start from as early as January or February.
The industries the potential junior market listed companies are involved in include one from information technology, two from the financial sector including a micro finance entity, a restaurant operation,
The junior market listing activity was stalled while the business sector awaited the restoration of the tax incentive for the junior market. That legislation was passed by the senate on Friday Mrs Street-Forrest confirmed to IC Insider. The last listing of ordinary shares on the junior market was in March just ahead of the planned phasing out of tax free status for new listings on the exchange.
If the listings materialise, they would swell the junior market by a third and take the total listings on the exchange to more than 100, with the number of ordinary share listings to 80.