Stocks to watch: week of 1st July, 2013

Keep an eye on these stocks for movement | There aren’t many changes to this week’s posting compared to last weeks’. We added two new ones in the junior market as the Lasco companies gain interest from the approved stock split of 10 for 1 and one for the TTSE.

StocksToWatchJul1

JSE: Advancing & declining stocks in a battle

Monday, 1st July 2013 | While the junior market index continues to advance towards the all-time high of 811 points, the main market indices fell moderately as investors try to find acceptable prices to execute trades.

Based on the recent rise in the prices of many stocks, it’s hard to see how this stalemate will change in the short term without new information to entice investors to view stocks as attractive to acquire now, rather than later. Although the majority of the indices fell today, the advance decline ratio was just able to remain positive as 8 stocks gained to 7 that declined. Trading levels of 4.7 million shares was half of Friday’s, but even less was expended as only $38 million traded compared to $116.17 million invested on Friday. Three stocks closed with the last selling price reaching an all-time record. These are Blue Power at $11, Lasco Distributors at $16 and Lasco manufacturing at $16.

Carreras shares gained 27 cents to $52 as just 9,096 units valued at $482,000 traded, JMMB closed up 50 cents as Scotia Investment bought the bulk of the 1,093 million units that traded, with the stock closing at $8.50. Active offers for JMMB is now at $9.25 an indication that the supply at recent market prices is drying up, but investors may well sell below this price as there is a big gap between bids of $7.72 and offers prices.  Sagicor Life traded 248,000 units valued at $2 million as the price slipped back by 18 cents. Scotia Group traded 176,000 units, valued at $3.7 million and lost 31 cents in the process.

The supply of Cable & Wireless share on offer at 15 cents fell below the 30 million mark at the end of trading as the amount offered is now at 29.88 million units. RJR has a bid of $1.23 to buy 4.79 million shares as this stock has had a fair volume of trading recently.

Junior market | Eight junior market stocks traded as Lasco Financial, continuing to respond to the 10 to 1 stock split, closed at $12.70 down 30 cents on Friday’s last traded price with 101,185 shares trading between $12.60 and $13. Lasco Manufacturing also responding to the announced stock split, traded over 736,000 shares, closing at $16 up by 40 cents with $11.66 million invested, while Lasco Distributors closed at $16 after trading at a record high of $16.50 with only 206,408 units valued at $3.37 million trading. Caribbean Cream traded down 15 cents to close at $1.05 with 350,000 units changing hands. Blue Power closed at $11 up $1 on the last selling price with 38,000 units but the offer was for 303,000 units at $10.50 at the end of trading. AMG packaging traded 27,800 shares at $4.20.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer market sentiment indicator shows that bids for 3 stocks were higher with 1 stock having an offer lower than the last selling price.

JSEIndicesJul1

$2.85 for JSE shares, is it worth it?

The Jamaica Stock Exchange (JSE) prospectus to raise $107,865,000 is now released to the public for consideration with the issue scheduled to open at 9:00 am, Friday 5th July 2013.  The Invitation is scheduled to close at 4:00 pm, Friday 19th July, subject to the right of the Company to close the Invitation at any time after it opens.  The total amount of shares being made available will be 38.25 million units comprising 28 million being issued directly by the Jamaica Stock Exchange and 10.2 million by JMMB. JMMB is selling the shares they acquired when they took over the Capital Group, which put their holding at 18.18 percent, well above the threshold of 10 percent any one investor is allowed to hold as stipulated by the JSE articles.

The issue price | IC Insider computes that the stock carries a value around 10 times 2013 earnings, based on the assumption that trading activity continues for the rest of the year at the rate experienced in June. For the 12 months to December last year, profit of $93 million was reported but that figure included revenue from the sale of a board seat to Proven Wealth Management for $60 million, as well as large fee income from the purchase of Lascelles’ shares that were acquired by Campari last year and to a lesser degree the shares traded when Capital & Credit was acquired.

Existing capital | There are currently 112,200,000 (formerly 28 million) ordinary shares in issue and the new shares will bring the issued capital to 140 million units.  The shares have a book value of $5.52 but earnings per share based on 2012 profit will be just over $0.83 and that figure is inflated by the non-recurring income mentioned above.

jse_logo150x150Profit after tax amounted to $5.8 million compared to a loss of $6.1 million in 2012. For the quarter ending March, the JSE’s income rose 8 percent to reach $69.5m compared to $64.4m in 2012. Other Operating Income increased by $5.5m or 32% over the same period, primarily due to an increase of $5.3 million in revenue from the JSE regional conference. Investment income of $22 million jumped $14 million over 2012 due largely to the gains on US dollar investments as a result of devaluation of the Jamaican dollar.

Positives | The number of shares to be issued is relative small but shareholding is limited to 10 percent of issued shares. The preference shares which was a debt instrument was repaid and these funds replace the amounts paid out. The stock market is not at its most buoyant but with interest rates having declined below ten percent and government slashing the fiscal deficit, rates could go lower. This development ultimately makes stock market investments more attractive and drive up trading volumes and therefore fee income for the exchange. The stock exchange plans for more instruments to be traded on the exchange but there are no imminent new listings that are known. The stock exchange is showing signs of greater activity this year but it has not reached a level to ensure that the JSE makes an operating profit. The JSE will benefit from listing fee income if the value of shares rise, as the annual listing fees are tied to the value of each company’s shares that are outstanding at the start of each year.

Negatives | The number of shares to be issued will not ensure a good level of liquidity for the stock, which will keep bigger investors away. There are no rules preventing existing shareholders from selling their holdings in partially or in full thus increasing the volume that could become available to the wider public. Short term profit prospects are not exciting suggesting that the stock is not very attractively priced relative to the rest of the market. The company has an oversized board of 19, resulting in an unnecessary waste of funds and an unwieldy structure that makes it more difficult to properly run board meetings and by extension, the company.

Revenues | The Company derives its revenue from a range of sources including the JSE cess, calculated on the value of each market transaction, fees charged for listing companies at the initial stage, annually, as well as any supplementary listings, membership, transactions, the registrar and trustee fees paid to its subsidiary company JCSD, amongst others, income generated from the provision of conferences, seminars and the e-Campus. The JSE has recently entered into a Memorandum of Understanding with the Bank of Jamaica to work towards the development of a fixed income trading platform for Government of Jamaica securities and corporate bonds. It is also conducting research into the development of exchange-traded products and other exchange-related products.

In summary | Stock markets are cyclical in nature resulting in peaks and troughs in earnings flowing from bull and bear markets. At this juncture, the market is in the process of moving into a bull market. Investors who buy the shares now are essentially buying at the lower end of the market. The levels of trading currently are a fraction of what they have been in the past, so the potential is huge going forward. The change in interest rates and the focus of government on controlling the fiscal deficit will ultimately have a huge impact on the fortunes of the stock exchange. Investors should not be looking for any big pay day any time soon from this stock.

JSE: Junior market index over 800

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Friday, 28th June 2013 | The junior market index was the only one to advance today surpassing the 800 point level for the first time since November 11, 2011 and is now within a stone throw from the all-time high of 811 points. Although the majority of the indices fell today the advance decline ratio was once again positive with 7 stocks moving up in price whilst 3 declined. Trading levels picked up as 8.19 million shares changed hands with a value of $116.17 million.

There was heavy trading in Carreras shares which fell 77 cents to $52 as 1.146 million units valued at $60.7 million traded, Sagicor Life traded 1.456 million units valued at $12.45 million, Scotia Group traded 563,000 units valued at $11.9 million, and Seprod traded 285,000 units at $4.14 million. Cable & Wireless, which has more than 30 million shares on offer at 15 cents, traded 650,000 units 15 cents each. Jamaica Producers gained 45 cents to close at $18.50 with nearly 25,000 shares trading, Sagicor Investments gained 49 cents but hardly any shares traded.

Proven Preference shares traded 1.7 million units at a value of $8.7 million.

Junior market | Nine junior market stocks traded, as Lasco Financial closed at an all-time high of $13 gaining a $1 in the process, having traded 162,300 share between $11 and $13. Lasco Manufacturing traded over 300,000 shares closing at $15.60 while Lasco Distributors closed at $15.90 with only 73,600 units trading. Consolidated Bakeries moved back to $1.60 at the close while trading 847,000 shares. AMG packaging which had put on 20 cents yesterday while trading a very small amount, closed at $4.20 today with 55,613 shares changing hands and lost 50 cents.

The junior market is in the golden cross which indicates that further big increases are ahead.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer market sentiment indicator shows that bids for 1 stock was higher with 2 stocks that had offers lower than their last selling price.

JSEIndicesJun28

JSE: Advancing stocks ahead but indices down

Thursday, 27th June 2013 | Trading picked up today as the amount spent on stocks increased to more than $42.8 million as 4.66 million shares changed hands with 27 stocks trading resulting in 11 being up while 6 declined in price. Two new all-time closing highs were reached on the day, a third stock closed at its 52 weeks high and Lasco Financial Services closed at $12 for an all-time closing high. All indices that had stocks that traded declined marginally at the close.

Junior market | Much interest continued in the three Lasco companies as all three traded more than 500,000 units each. Lasco Distributors traded 1,090,159 units at a value of $16.978 million and Lasco Financial Services traded 518,000 at a cost of $5.73 million as the stock closed up 20 cents at $12. Lasco Manufacturing, closed off 20 cents at $15.60 with 531,000 units trading. General Accident traded 467,000 units at $2.04 accounting for $952,000, Access traded 8,988 units at new high of $8.25 while Blue Power had trading in 500,000 units, costing $5 million as the stock retreated 50 cents on the day to close at $10.

Trading took place in the stocks of 9 junior companies. All three Lasco companies approved a 10 for 1 stock split at an extra ordinary general meeting on Wednesday. The record date for the Lasco splits is July 9, 2013 and the ex-date is July 5, 2013.

Main Market | Prices generally recovered from declines earlier in the week even as the indices slipped marginally. While Berger slipped 15 cents to close at $2.30 with 19,000 shares crossing the exchange, Carreras regained $1 off of the amount which was lost yesterday recovering from the initial reaction to the proposed ban on the smoking of cigarettes in public, the stock closed at $53.50, on very small volume. Pan Jamaican gained $2.08 while trading under 3,000 units to close at $52.60, the same level as the bid. Scotia Investments put on $1 to close at $27.50 but only 1,000 units traded. The bid on the stock on Trinidad exchange is at the equivalent of J$28 and it could trade higher as there is little supply in the market currently.

IC bid-offer Indicator| At the end of trading, the Investor’s Choice bid-offer market sentiment indicator shows that bids for 3 stocks were higher with 3 stocks that had offers lower than their last selling price.

JSEIndicesJun27

JSE: Advancing stocks clobbers declining ones

Wednesday, 26 June 2013 | While in yesterday’s stock market trading, declining stocks were more than advancing ones with 11 stocks declining and 8 gaining in price, today’s trading not only reversed the negative trend but clobbered declining stocks 16 to 6 with three stocks closing at new 52 weeks high.

The junior market index inched up marginally, to close at 796.02 up 7.19 points. The all Jamaica index declined by 229.71 points to close at 88,512.59 and the main market slipped 127.93 points to 87,135.91 at the close. The fall in Carreras stock which fell $3.50 to $52.50 and Jamaica Producers which shed $2.65 to close at $18.05 would have been the two main contributors to the decline. Carreras was reacting to the news on a ban on cigarette smoking in public, effective July.

The number of shares traded increased over that of yesterday’s volume of 5.8 million units with a value of $58.9 million. In today’s trading 7.6 million shares traded, but for a lessor amount of $36.7 million as Cable & Wireless which pulled in only $524, 000 accounted for more than 3.78 million of the volume that went through the market.

Junior market | Eight stocks traded in the junior market with 7 increasing in price. Dolphin Cove closed up 20 cents at a 52 weeks high of $8.65 with 6,200 shares. Lasco Manufacturing traded 135,128 shares between $15.50 and $16 but closed at $15.80 up 25 cents. Lasco Distributors traded 823,740 shares while gaining 22 cents to close at $15.77. Lasco Financial Services closed at an all-time closing high after the stock traded at $11.80 up 25 cents while trading 152,327 units. The stock traded as high as $12.50 during the day.

Main Market | Although the overall market enjoyed nearly $36.7 million of trading, $17 million came from the junior market with the two large Lasco companies continuing to be dominant in the market. Carreras was the big loser today and for the week to date, as investors shed 31,000 shares at prices that were all lower than yesterday’s close. Jamaica Producers shed $2.65 but with only 3,200 shares trading. Companies that had noticeable price action included Carreras which lost $1.40 to close at $56.50, Desnoes & Geddes gained back the 20 cents it lost yesterday to close at $5 with small volume trading. Grace also traded a small volume but the stock closed at $60, up 40 cents. Sagicor Life dropped 40 cents, closing at $8.40 with 11,157 units trading. Scotia Group traded 373,951 shares with the stock closing at $21.20 the same as yesterday.

IC bid-offer Indicator | At the end of trading, the IC bid-offer sentiment indicator shows that bids for 3 stocks were higher, with 2 stocks that had an offer that was lower than their last selling price — not a very bullish sign at this time.

JSEIndicesJun26

JSE: 2 new highs as prices retreat

Tuesday, 25th June 2013 | Stock prices continued to retreat today with 11 stocks declining and 8 gaining, the third day in a row that this has been so. The junior market index fell marginally but the major indices fell with the all Jamaica declining by 889.68 points to close at 88,742.30 and the main market slipping 505.36 points to 87,263.84 at the close.

Trading picked up with more than twice the number of shares traded today than yesterday as 5.8 million units changed hands with a value of $58.9 million, compared to 2,507,546 on Monday at a value of $23.7 million.

Juniors up | Eleven stocks traded in the junior market as the index closed at 788.83 down 3.5 points with 4 increasing in price and 3 falling. Blue Power closed at an all-time closing high of $10.50 up 50 cents on the day as just under 22,000 shares traded. Consolidated Bakeries closed up 25 cents at $1.60 having recovered most of the amount lost after the company reported poor 2012 final results. Jamaican Teas lost 38 cents to close at $4.01 with 10,938 shares changing hands. Paramount traded a mere 1,000 shares and fell 25 cents to close at $3.30. Lasco Manufacturing traded 1.23 million shares between $15.55 and $16 but closed at $15.55. Lasco Distributors traded 1.04 million shares between $15.50 and $15.55, gaining 1 cent to close at $15.51, an all-time closing high after the stock traded at $16.50. Caribbean Producers traded 422,635 shares and General Accident traded 210,139 units to close at $2.

Main Market | Although the overall market enjoyed nearly $59 million of trading only $21 million came from the main market as the two large Lasco companies accounted for $35 million of the amount traded. The market sentiment suggest that profit taking is occurring for a number of stocks hence the price pull back. Carreras again lost ground shedding 50 cents to close at $56 as 65,925 units valued at $3.7 million traded.

Companies that had noticeable price action included Carreras which lost $1.40 to close at $56.50, Desnoes & Geddes losing 20 cents to close at $4.80 after trading 144,000 units as high as $5. Grace traded 23,932 shares as the stock closed at $59.60, down 50 cents. JMMB which traded 71.1 million shares (Monday 7,874 shares) as the price moved back to $8, up 50 cents on the day. The bid for 1 million units at $7.60 is still posted providing some down side support for the stock. National Commercial bank lost 49 cents while trading just under 11,000 shares to close at $20.06. Pan Jamaican Investment lost $0.48 to close at $50.52 with moderate volume, and Scotia Group trading down 80 cents at $21.20 while trading 60,868 shares.

IC bid-offer Indicator | At the end of trading, the IC bid-offer market sentiment indicator shows that bids for 6 stocks were higher, with 3 stocks that had an offer lower than their last selling price. The main market should continue in a flux for a few more trading days as investors get accustomed to the tighter liquidity in the financial market.

JSEIndicesJun25

JSE speaks of 2012 achievements

Marlene Street Forrest in her overview of the Jamaica Stock Exchange group company’s performance for 2012 and operational plans for 2013 and beyond, stated that although there were economic challenges, the JSE saw an increase in operating income of 93%.

The Company’s operating income moved from $281M in 2011 to $542M in 2012, which contributed to the JSE Group’s net profit increasing from $34M in 2011 to $129M in 2012 an increase of 279% in net profit. Street Forrest told the audience that although most of the Exchange’s revenue came from trading fees she also attributed the increased in profitability to a diversification of the revenue streams for both the company and its subsidiary, which enabled the Exchange to survive in a difficult economic environment.

She indicated that the Exchange achieved a number of other positives during 2012:  Increase in the number of companies on the Junior stock market, sale of member dealer license, progress made towards listing of JSE’s ordinary Shares,  business process improvement, document management and  business continuity plan.

The following goals were set for 2013/2014 period:

  1. Listing of the JSE’s ordinary shares
  2. Concentration of effort at marketing the JSE
  3. Developing markets, new products and services for our customers such as:
      • Trading Government and corporate securities
      • Fixed Income Instruments
      • Depository receipts

At the special board meeting held immediately after the annual general meeting, Messer Donovan Perkins and Allan Lewis were returned as Chairman and Deputy Chairman respectively and Steven Whittingham was elected to the JSE Board subject to the FSC’s approval.

JSE: Heavy trading in Lasco stocks

Friday, 21st June 2013 | The local market traded 6.185 million shares at a value of $67 million, with the bulk of the trading taking place for the second day running in the junior market as two Lasco companies accounted for nearly $50 million of stocks traded.

Mayberry was again the dominant broker buying virtually all the Lasco Manufacturing traded as they bought 1.3 million units from clients for their own account. They were also the big trader in Lasco Distributors in which they picked up 1.74 million shares for their own account, which they bought from their clients. They were the only trader for General Accident Insurance that traded 759,000 shares.

Advances turn | The advance decline ratio was slightly negative once more with 8 stocks advancing in price versus 9 that declined.

Main Market | Trading in the main market was subdued today as more focus seemed to have been on the junior market stocks. The main indices fell moderately except for the junior market.

Carreras traded 45,840 units and gained 90 cents to close at $57.90, Hardware & Lumber 49 cents to close at $3.86 as just 200 of its shares trading. Grace traded 10,160 shares as the stock closed at $60.25 and was up 20 cents. JMMB lost 50 cents to close at $7.50 as just 94,792 shares traded. Proven Investments traded 526,215 shares at a value of US$58,000.

Juniors up | Six stocks traded in the junior market as the index put on 18.52 points to close at 788.3 with 4 increasing in price and 2 falling. Lasco Distributors closed up 60 cents at $15.90. Lasco Manufacturing lost 30 cents to close at $15.50.

IC bid-offer Indicator | At the end of trading, the IC bid-offer sentiment indicator shows that bids for 8 stocks were higher, with 4 stocks that had an offer that was lower than their last selling price. Of note is Access Financial, that has not traded for some time, now has a bid of $8.20 with the last selling price of $8.10. Cargo Handlers bid was at $11, the last sale took place at $10.55, Lasco Financial bid is at $10.70 with the last sale taking place at $10.10.

JSEIndicesJun21

JSE: It was Lasco’s day

Thursday, 20th June 2013 | Right on the heels of the Lasco group participating in the Mayberry Investor forum on Wednesday. trading picked up in all three stocks with Mayberry doing the bulk of the trading, many of them crosses. Early in the trading session attempts were made to trade as high as $18  for both Manufacturing and Distributors but were cancelled later as the price exceeded the limitation set by the exchange in a day. So dominant was the Lasco trading that of 132 transactions, the three companies accounted for 48 while JMMB accounted for 17.

Junior’s down | Nine stocks traded in the junior market, with 5 increasing in price and 3 falling. Lasco Manufacturing gained $1.80 to close at $15.80 as 1,891,055 of its shares traded at a value of $29.8 million. Lasco Distributors closed up $2.30 at $15.30 as 905,219 of the company’s shares traded, valued at $13.63 million. Lasco Finance traded as high as $11.25 but closed at $10.10 as 248,561 units traded, valued at $2.65 million. Blue Power moved up $1 to close at $10 as 215,987 of the stock traded, valued at $2.24 million.

Caribbean Producers lost 5 cents while trading 1.077 million units to close at $1.95. The bulk of the buying took place at $1.50 with Mayberry being the main buyer. Some investors are viewing reports in the press that a listed company is faced with import duty violation as being negative for the company and profits, thus the sell-off which started yesterday.

Advances positive | Trading elsewhere was moderate with just a total 5.42 million shares trading at a value of $56.6 million. The advance decline ratio moved back into the positive once more but not as strong as on Wednesday, with 7 stocks advancing in price versus 5 that declined.

The all Jamaica index climbed by 522.95 points (Wednesday 343.29) to close at 90,562.68, the market main index closed at 88,297.86 up 297.05 (Wednesday 194.99) points and the junior market gained 22.95 points in closing at 769.78 driven by the price movement of the Lasco shares.

Main Market | Hardware & Lumber put on 50 cents to close at $4.35 on low volume. Grace traded 8,120 shares as the stock closed at $60.05 and as the stock gained $1.05 today toad to the $1.50 gained on Wednesday. Kingston Wharves gained 25 cents to close at $8 as just 5,500 shares traded.

IC bid-offer Indicator| At the end of trading, the Investor’s Choice market indicator shows that bids for 6 stocks were higher with the junior market accounting for 4, as 3 stocks (two from the junior market) had offers that were lower than their last selling price.

JSEIndicesJun20