The Main Market of the JSE fell 8 percent and the Junior Market is down 0.7 percent to the year to September, helped by higher interest rates since 2022, but that is the least of the problems besetting the market. A close look at the underperforming companies shows that companies with growing profits have done far better than those with a recent history of disappointing results.
The Main Market had just eight companies recording gains for the first nine months of 2023 compared to 17 of the Junior Market, including One Great Studio, the latest listing.
Two of the best performing stocks for the year are listings on the Main Market with Ciboney ending with a rise of 150 percent, following the purchase of the majority shares from Finsac. Transjamaican Highway is next, up a solid 98 percent, following an outstanding jump in profits for the six months to June over the similar period last year, with earnings of 14 Jamaican cents per share versus just 3 cents for the same period last year, with the company poised to enjoy earnings of just over 30 Jamaican cents per share for the current year. The stock’s performance was also helped by the declaration of a substantial increase in dividend of 18.66 cents up from 8.55 cents last year.
The next best performer in the Main Market was a 30 percent rise in Massy Holdings followed by Stanley Motta, the commercial rental property company, with just 12 percent, Jamaica Broilers chipped in with 10 percent and Productivity Business Solutions with 9 percent.
Most of the Main Market’s worst performing stocks had disappointing results compared to the previous year. Palace Amusement Company was the only listing of the worst performing stocks that recorded improved profit compared to 2022. Mayberry Investments suffered a sharp reversal in profit during 2023 compared to the previous year, Berger Paints profit fell sharply with the company reporting a loss during the period, Radio Jamaica reported a loss during the last two quarters compared with the previous year. Barita Investments profits are down sharply with the third quarter to June down from $1.5 billion in 2022 to just $504 million in the current year.
Jamaica Stock Exchange led the declining stocks with a 43 percent drop, First Rock Capital was next with a fall of 38 percent followed by Palace and Pulse down 35 percent each. Barita Investments dropped 32 percent and Radio Jamaica ended with a fall of 31 percent, Salada Foods ended up with the lowest decline of the TOP10 worst performing stocks with a loss of 20 percent.
Junior Market’s performance was vastly better than the Main Market. ISP Finance led the Junior Market with a gain of 94 percent, following the announcement that two new directors with experience in the financial service sector were appointed to the board. There was also speculation that the majority shares could probably change hands sooner rather than later. There is also the expectation of the company increasing funds loaned which is expected to have a big impact on profits. Lasco Distributors was next with a solid increase of 70 percent as profits for the fiscal year to March jumped and was followed by improved results for the June Quarter. Main Event continued to recover from the damage to revenues and profits during the COVID, bouncing back with a gain of 58 percent as profit climbed. Caribbean Assurance Brokers chipped in with a 56 percent increase followed by Regency Petroleum up 46 percent. General Accident migrated from the Junior Market to the Main Market but gained 36 percent by the end of Friday.
Most of the top ten companies have seen improved profit performance with most recording b increase in profits for the half year over 2022.
Indies Pharma profit declined moderately for the nine months to June but was up 16 percent in the latest quarter, that performance does not warrant a 34 percent cut in the stock price. Fesco’s price declined sharply for the period even as the net profits for the June quarter were marginally higher than that of the similar in 2022 as revenues were marginally higher. The stock price pulled back from heady levels in 2022 to adjust to the earnings in the last fiscal year of just under 23 cents per share with indications that it may not significantly improve in the current fiscal year to warrant the high premium it had in 2022. Fosrich, on the other hand, had a sharp decline in profits but it too enjoyed a big premium in the stock price in 2022 and investors readjusted their expectations by marking the stock price down, although both stocks got a two day bounce that improved their performance year to date. Lasco Financial had a third less profit in the 2023 fiscal year than the prior year and reported vastly poorer results in the third quarter to June that seemed to encourage more selling of the stock. Revenues and profit bounced in the third quarter for Limners and Bards but are still down year to date compared with last year. Edufocal profit bounced in 2023 and may not necessarily justify the 38 percent fall in the stock price, while iCreate had a totally disastrous set of results in the 2022 fiscal year as well as in the first half of 2023, with the company’s performance continuing to raise questions about the future. Elite and CC 2000 suffered a reversal in fortune that is reflected in the decline in stock prices of both companies.
Of note is a 40 percent rebound in profits at Scotia Group for the July quarter and 74 percent for the nine months, but the stock still suffered a moderate decline in value even as the price earnings ratio is just over six times current year’s earnings and Stationery and Office Supplies that is having a good year with profits up 56 percent in the June quarter and 36 percent over that of first six months of 2022 from ongoing operations and warranted a better price performance, but the nine for one stock split created supply pressures that pushed the price down from nearly $4 two $1.91 currently.