JSE could face law suit over Knutsford

IC Insider understands that Proven Wealth received a letter from the Jamaica Stock Exchange (JSE) indicating that Knutsford Express failed to be approved for listing under the junior market rule 501 governing listings.

Christopher Williams, CEO of Proven Wealth, stated that the brokerage firm received the letter from the JSE to which their lawyers have responded. According to Williams, “the lawyers pointed out in their response that the company qualified under section 502 of the listing” amongst other issues.  This is in keeping with IC Insider’s report of Tuesday December 31, the day the listing was turned down. The stock exchange is being given the opportunity to respond before more drastic action, if needed, is taken, Williams stated.

The development is black eye on the Jamaica Stock Exchange, the sponsoring broker and an embarrassment to all concerned with the capital market. The stock exchange and the Financial Services Commission would have reviewed the prospectus and ought to have been aware of any deficiencies that could have derailed the listing before giving the approval. Nevertheless the JSE gave their approval subject to the listing committee meeting. The process is backhanded, which is a view that Williams is in agreement with. The approval of the powerful listing committee should have been done ahead of the IPO and not after, with the JSE executive to ensure that administratively all the post-IPO conditions were met.

KnutsfordBus150pxThe Rules | The preamble to the rules states: For the purposes of initial admission, an eligible company shall issue its participating voting shares by way of an initial public offering in accordance with the requirements set out in Rule 502.

Section 502 states: An eligible company shall, for the purposes of its initial admission, issue participating voting shares by way of an initial public offering subject to a prospectus seeking a minimum subscription of new shares (or allotment of existing shares) of not less than J$50 million and not more than J$500 million only.

Rule 501 Minimum Requirements differs from 502 with the former saying: No request for the initial admission of any eligible company will be considered by the JSE unless the eligible company has demonstrated to the satisfaction of the JSE that, following its initial public offer:

  1. It has not less than 25 participating voting shareholders who hold, in aggregate, not less than 20% of the fully paid, subscribed participating voting share capital; and
  2. The fully paid, subscribed participating voting share capital is not less than J$50 million and not more than J$500 million, and such capital is fully paid.

Discretion of the JSE | (a) Initial admission of any eligible company to the Junior Market shall be in the absolute discretion of the JSE. (b) For the purposes of (a) above, the JSE may waive or supplement the provisions of certain of these Junior Market Rules as it sees fit.

In summary, the JSE had the power to use the discretionary clause with conditions for the company to increase the issued capital.

Related posts | JSE rejects Knutsford Express | Knutsford Express share allotment | Knutsford IPO gets in before door closes

Image courtesy of StuartMiles/FreeDigitalPhotos.net

Buy Rated: H&L up 74%

Friday, 3rd January 2013 | The Buy Rated list counts another major winner! This time Jamaica’s Hardware & Lumber closing at $8 up from $5.10 last week for a 74 percent gain since selection.

The stock is a recovery opportunity with the price falling sharply to a low of $3 in 2012, flowing from losses incurred after hitting hard times post-2008 and 2009 and poor profits in 2011 and 2012. With the potential for them to earn $2 per share for 2013, Hardware & Lumber stands a good chance of reaching $20 this year.

BuyRatedJan3rdJunior Market stock, Access Financial Services, which was moved to a Market Watch, gained this week and ended up at $12.20 up from $12 last week. Caribbean Producers continues to produce gains climbing to $2.70 this week, up from $2.65 to register gains of 33 percent since elevated to the list.

Pan jam moved up to $54 at the end of the week and now shows positive gains, Jamaica’s Scotia Group moved to $20 this week from $19.06. Caribbean Cement also gained this week to end at $3.50 and so did Jamaica Broilers that closed at $4.61 up from $4.51.

On the Trinidad Market, First Citizens was put back on the Buy Rated list, the price closed this week at $40.63 and should be heading into the $50 region before too long.

Related posts | H&L – big profits boost | Access moved to Market Watch

Image courtesy of Tungphoto/FreeDigitalPhotos.net

JSE: Stocks mostly up for 2nd day

Friday, 3rd January 2013 | Advancing stocks out distanced declining ones 8 to 3 making it the second straight trading day of the year that this ratio has been positive on the JSE, which is a continuation of the trend from mid-December. Trading resulted in 1,681,231 shares changing hands valued at $23,421,414, a better performance than yesterday with Hardware & Lumber hitting a new 52 weeks high of $8 as the price gained $1.90 on 5,000 units.

Market activity resulted in the JSE Market Index declining by 471.33 points to close at 80,531.48 and the JSE All Composite declining by 714.90 points to close at 81,695.23 as a result of pull back in the prices of National Commercial Bank, Grace Kennedy and Sagicor Group shares. The JSE Junior Market Index advanced by 8.12 points to close at 768.49.

Main Market| The main movers in trading in the main market are Caribbean Cement with 112,485 units to close unchanged at $3.50; Carreras gained $2 to close at $38 while trading 44,750 shares; Jamaica Broilers with traded 100,000 shares as the price moved up 8 cents to $4.61; National Commercial Bank had just 6,000 units changing hands as the price closed down 35 cents at $16.15; Sagicor Group shed $2.32 in trading 4,145 shares as the price dropped to $8.28; Sagicor Investments  gained 47 cents to end at $17 with $6,700 units, and Scotia Group exchanged 906,022 units as the price moved up during trading to $21.96 but closed unchanged at $20.

Jamaica Money Market Brokers 7.50% preference shares traded 205,438 unchanged at $2.

JSEIndicesJan3Junior Market| It was a subdued day for trading of junior market companies with Caribbean Cream trading 10,000 units to close firm at $1; Caribbean Producers swapped 70,852 shares at $2.70 with no change in the price; General Accident Insurance had a volume of 20,000 shares as the price rose 18 cents to $1.80; Lasco Manufacturing traded 131,751 shares and the price closed up 3 cents at $1.28 and Medical Disposables & Supplies swapped 30,000 shares to close firm at $2.15.

IC bid-offer Indicator | At the end of trading the Investor’s Choice bid-offer indicator had 6 stocks with bids that were higher than the last selling prices versus only 2 stocks with the offer lower than the last sale price.

JSE: Light trading greets the new year

Thursday, 2nd January 2014 | Trading on the first day of 2014 on the Jamaica Stock Exchange was very moderate but prices closed mostly higher with stocks of 17 companies be active of which 7 advanced and 3 declined as 494,825 units valued at $3,580,089 changed hands.

The price changes were reflected in the main indices of the market with the JSE Market Index advancing by 369.26 points to close at 81,002.81, the JSE All Jamaican Composite index gained 560.09 points to close at 82,410.13 and the JSE Junior Market Index increased by 2.51 points to close at 760.37.

Main Market | Carreras traded 59,217 units at $36 for a decline of 75 cents; Kingston Wharves traded 37,894 units to close firm at $6.06; Mayberry Investments had 44,335 shares changing hands at $2; National Commercial Bank dropped $1.50 to close at $16.50 with 5,251 units traded; Scotia Group exchanged 10,850 units and closed firm at $20; Seprod put on $2.50 to end at $13 while trading just 1,400 units.

Jamaica Money Market Brokers 7.50% preference share traded 250,000 units, firm at $2.00.

JSEIndicesJan2Junior Market | Access Financial Services reached a new all time high in trading 1,500 units to close at $12.20 up 20 cents; Caribbean Producers traded 50,940 units to close unchanged at $2.70; Lasco Manufacturing traded 16,390 units at $1.25 with a gain of 5 cents.

IC bid-offer Indicator | At the end of trading the Investor’s Choice bid-offer indicator had 8 stocks with bids higher than the last selling prices versus only 3 stocks with offers lower than the last sale price.

Knutsford Express share allotment

Knutsford Express Services’ IPO of 20,000,000 ordinary shares at the price of J$5,11 per share was oversubscribed on Friday December 27,2013 with only 66 applications received.

All Reserved Share applicants will receive 100% of the amount of the Shares for which they applied. Applicants for the general pool with 5,000 or less units will receive the full amount. The remaining applications will be allocated at approximately 97.477 percent of the application amount. Refund cheques will be available for collection from Proven Wealth Ltd on Monday January 6, 2014.

The Jamaica Stock Exchange voted today, Tuesday December 31, to block the listing of the company’s shares that should have started trading this morning. IC Insider understands that the company had moved a belated resolution to allot shares to some directors thus increasing the amount of shares in issue, as well as the value of those shares, in an attempt to get listed before the year closed. That resolution, however, would have been improper as it conflicted with the terms of the prospectus, which incorporated all material contracts the company had at the time Investors would have applied for shares in the public offer, and the change would in all probity, require the approval of the new investors to approve same.

Related posts | Knutsford IPO gets in before door closes | JSE rejects Knutsford Express 

JSE: Market closes year positively

Tuesday, 31st December 2013 | Knutsford Express, the latest IPO to hit the market, was scheduled to be listed on JSE market today bit it never made it after frantic attempts were made so to do after the Listing Committee turned down the application to list.

IC Insider understands that the company had moved a belated resolution to allot shares to some directors thus increasing the amount of shares in issue, as well as the value of those shares, in an attempt to meet the $50 million minimum capital figure to get listed before the year closes. The funny thing is that based on the junior market rules, the company does meet the conditions set out for listing.

jse_logo150x150The last day of trading for the market for 2013 saw 10,865,481 shares changing hands with a value of $71,844,965 as 9 stocks recorded price gains to 8 that declined. Jamaica Money Market Brokers dominated trading with 8,045,488 units as the price closed at $7.50 with a total value of $60,341,160.

The junior market index, which had a gain of 17 percent for the year, ended at 757.86 but declined by 10.20 on the last trading day of the year. The all Jamaica index ended the year at 81.850.04, gaining 2,061.32 on the final day of the year and the main market index finished the year at 80,633.55, up by 1,185.67.

Main Market | The main stocks to trade were Barita Investments that closed at $2.50 with 8,497 shares changing hands; Caribbean Cement with 10,000 shares closing firm at $3.50; Carreras with 18,240 shares closing at $36.75 up  by 75 cents; Gleaner Company 63,000 shares to close at $1.10; Hardware & Lumber 1,000 to close at a 52 weeks high of $6.10 as the price rose $1; National Commercial Bank 52,545 units closing up by $1 to end at $18; Sagicor Group 58,852 closing up by $2.20 at $10.60; Sagicor Real Estate X Fund 14,241 shares to close at $6.05, down 44 cents; Scotia Group 23,480 units closing up 73 cents at $20; Scotia Investments 9,904 closing at $25.50, declining by 38 cents; Proven Investments 229,200 units unchanged at 13 US cents.

In the preference sector Jamaica Money Market Brokers 7.50% traded 75,000 units firm at $2.

JSEIndicesDec31Junior Market | The junior market ended 2013 with several of the listings with strong gains during the year. Caribbean Cream, which was listed during the year, closed the year at the IPO price of $1 as 126,300 units traded on the final trading day of the year. Caribbean Producers Jamaica exchanged 335,448 units as the price moved up 5 cents to a new 52 weeks high of $2.70, Consolidated Bakeries closed down 4 cents to end at $1.16 with 15,000 units; Lasco Financial Services 36,900 traded at $1.20 with a fall of 11 cents; Lasco Manufacturing saw 24,762 units changing hands to close at $1.20, off by 10 cents; Medical Disposables & Supplies had 1,613,853 units switching ownership as the price eased 5 cents $2.20 and Paramount Trading traded 78,663 units as the price gained 5 cents to close at $3.55.

IC bid-offer Indicator | At the end of trading the Investor’s Choice bid-offer indicator had 11 stocks with bids that were higher than the last selling prices versus only 1 stock with the offer that was lower.

Related posts | Knutsford IPO gets in before door closes | JSE rejects Knutsford Express | Knutsford Express share allotment

JSE rejects Knutsford Express

Investors in the latest IPO to hit the market Knutsford Express may have to wait awhile to see their shares listed on the junior market as the Jamaica Stock Exchange (JSE) this morning rejected the application to list only a few days after the sponsoring broker Proven Investments advised the stock exchange that the IPO was officially closed at 4:00 pm Friday, December 27, 2013 and that the offer has been fully subscribed. The company was trying to beat the December deadline in order to enjoy the ten years tax holiday.

The stock exchange deliberated for a long time on Monday but came to no decision as the company did not meet the minimum requirement of issued share capital of $50 million. The stock was included in the list of companies for trading at the end of Monday with the symbol KEX, but when trading started today, it was no longer in the list of tradable companies.

This is the first time in the stock exchange history that a company has gone to the public and raised the required sum as set out in the prospectus that the stock exchange has refused to approve the application. The development is black eye on the Jamaica Stock Exchange and the sponsoring broker. The stock exchange and the Financial Services Commission would have reviewed the prospectus and ought to have been aware of any deficiencies that could have derailed the listing before giving the approval.

KnutsFordExpressIt appears that the stock exchange could have sanction the go ahead for listing as Section 502 of the rules governing listing of junior market companies states:

An eligible company shall, for the purposes of its initial admission, issue participating voting shares by way of an initial public offering subject to a prospectus seeking a minimum subscription of new shares (or allotment of existing shares) of not less than J$50 million and not more than J$500 million only.

It appears that the company complies with this provision. The problem is that the issued value of the shares on its books after such issue would only amount to $25 million even as the equity of the company would be more than $100m.

Related Posts | Knutsford IPO gets in before door closes

Photo courtesy of Knutsford Express social media 

JSE: NCB trades 27m units for $475m

Monday, 30th December 2013 | The penultimate day of JSE trading for the year saw 29,063,554 shares changing hands with a value of $486,844,554 as 7 stocks recorded price gains to 5 that declined. National Commercial Bank dominated trading with 27,122,196 units as the price closed at $17 with a total value of $474,632,832.

The junior market index declined by 7.03 to close at 768.06. The all Jamaica index ended at 79,788.72, gaining 431.32 and the main market index finished at 79,447.88, up 248.10.

Main Market | In the main market, trading took place in Cable & Wireless with 210,000 shares to close firm at 16 cents; Caribbean Cement 133,880 shares with the price closing up 20 cents at $3.50; Carreras 12,865 units to close firm at $36; Grace Kennedy 5,645 units closing down $3.75 at $55; Jamaica Money Market Brokers 497,752 shares at $7.50; Sagicor Group 20,428 units to close at $8.40 up 30 cents; Scotia Group 86,673 units at $19.27 for a gain of 21 cents; Proven Investments 288,050 shares at 13 US cents,

In the preference sector Jamaica Money Market Brokers 7.50% traded 74,000 units at $2 and the 8.75% exchanged 32,370 shares at $3.

JSEIndicesDec30Junior Market | Derrimon Trading exchanged 27,400 units at $2.45; General Accident Insurance traded 74,000 units at $1.62; Lasco Manufacturing 208,060 units at $1.30 and Medical Disposables & Supplies 237,069 shares at $2.25 up 7 cents, a new high.

IC bid-offer Indicator | At the end of trading the Investor’s Choice bid-offer indicator had 8 stocks with bids higher than the last selling prices versus only 1 stock with an offer that was lower.

Image courtesy of watcharakun/FreeDigitalPhotos.net

Knutsford IPO gets in before door closes

Investors will have just one day to subscribe to shares in Knutsford Express, the latest IPO to hit the market, that is scheduled to open on December 27 as the company gets in just before the door closes on the 10 year tax break for junior market companies. The issue is scheduled to close on the same day.

The Company invites Applications on behalf of itself and the founding shareholders for 20,000,000 Ordinary Shares in the Invitation of which 4,867,338 shares are newly issued shares for subscription that will raise net of $20 million for the company and 15,132,662 shares are existing shares of the current shareholders. At the end of the IPO, the total number of shares issued will be 100 million, an increase from the 95,132,662 now in issue.

The Company intends to use the proceeds for working capital support, acquisition of one new coach and upgrade of existing coaches and payment of the expenses of the Invitation, estimated not exceed $4 million. Applications from the general public must be for a minimum of 100 Ordinary Shares and be made in multiples of 100. A processing fee of $110 per Application is payable to the Registrar of the Company (JCSD) and is payable by each applicant. Proven Wealth are the brokers for the issue.

KnutsFordExpressFree Advertising | This company should be known by most as it earns free publicity just by its vehicles plying the routes proudly displaying its name and logo for all to see. Many have seen it between Kingston and Monetgo Bay and recently from Kingston to Negril. Knutsford Express seems set to be the next company to list on the stock exchange as it seeks to raise only a small sum for itself and some for its owners. The company, which has reported a profit from 2009, has filled a big gap left by Air Jamaica Express ending service between to two major cities. Customers seem to be impressed with the quality service and timeliness and the growth speaks volumes.

Revenue has increased by 27 percent in 2010 to $99.4 million from $78 million and in 2011 the growth inched to 28 percent to $127.5 million and jumped by 33 percent in 2012 to $170.4 million. In 2013 it moved to $203.2 million and increase of 19 percent, the slowest year so far.  Profit rose from $7.9 million in 2009 to reach $51 million in 2013 with growth of varying percentages for each of the years.  The last being 2013, with an increase of $30 million or 135 percent.

Revenues | Revenue of $ 71 million, a $17 million or 31% percent increase was generated for the first quarter of the 2014 financial year compared to the similar period in 2013 and flowed primarily from an increase in business from existing routes. Management projects further growth in revenue from the South Coast expansion in the third and fourth quarters. However, the expansion has led to an approximate $18 million increase in administrative and general expenses.

The Company recorded other income of $4.7 million derived from settlement of an insurance claim and as at August. Profit before tax stood at $21 million, a twenty-five percent (25%) improvement compared to the first quarter of 2013. Without the insurance inflows earnings would have been flat with 2012 of $16.7 million. The first quarter numbers suggest profit from ongoing operations of approximately 70 cents per share, that may be a tad high with seasonal factors affecting revenues and cost.

Asset base grew by fifty-two percent predominately due to growth of the fleet or “investment properties” which increased by twenty-one million to $75 million. In addition, accounts receivables grew to $18 million stemming from a deposit made on a coach. Approximately $8.8 million is due from Total Waters Limited, a related party, and settlement of this amount is expected in the third quarter of 2013/14. “There was also an inflow of $40 million from a facility used to expand our fleet for which a restriction was placed on a term deposit.” the company stated. Shareholders’ equity expanded to approximately$105 million. Loans payable of $49 million and cash funds of $15 million were on the books at the end of August. Current liabilities stood at $13 million and is mostly tax payable, while current assets stood at $61.5 million.

KnutsfordBus150pxWho are they | Knutsford Express Services is a transportation company dedicated to offering customers an intercity luxury coach experience in Jamaica. The service began on June 1, 2006 with twenty-eight (28) departures weekly between Montego Bay and Kingston and now have one hundred and five (105) departures weekly and expanded this reach to Falmouth, Negril, Savanna-La-Mar, and Mandeville. The Company is required to hold Express Carriage Licenses for each bus in its fleet. Carriage licences are issued by the Transport Authority and are renewable on March 1st each year.

Principals & Directors | Oliver Townsend is the Managing Director and Chairman of the Company. Mr. Townsend has served in the Tourism & Service Sector for over 24 years in various management capacities including those that involved marketing locally & overseas. His career began in Caribic Vacations, a family-owned Destination Management Company, where he served as Director of Transport and C.E.O.

Gordon Townsend is a Director and Company Secretary of the Company. Prior to joining the company he has served for over 40 years in the Tourism Industry where he has held numerous positions. His career in tourism began as a hotelier where he served as Managing Director of Montego Bay Club Resort for 11 years. In 1982, he shifted his focus to his own newly formed company, Caribic Vacations, a Destination Management Company which provided hosting, transportation and other holiday services to the Tourism Industry where he remains as Chairman.

Anthony Copeland is a Director of the Company with special focus and responsibility on Operations, Maintenance and Standards. Copeland began his career in the Private Sector at Manhattan House in the area of Marketing before leaving to serve his country, which led to 18 years in the Jamaican Defense Force in the Engineering Regiment. With this expertise gained in Transport and Logistics his career led him in 1996 to become the Technical Advisor in Metropolitan Management Transport Holdings.

Peter Pearson is a graduate of Cornwall College and a graduate of the University of West Indies from which he holds a BSc. Peter is a Fellow of the Institute of Chartered Accountants and a Fellow of the Chartered Association of Certified Accountants. He retired as a partner of PricewaterhouseCoopers in 2013.

Mr. Wayne Wray is the Mentor to the Board for the purposes of the Junior Market Rules and has several years’ experience within the financial sector.

Stock Value | The stock is priced around 7 times 2014 earnings before taxation, which is not highly attractive but appealing with the rate of growth they have been enjoying, although that could slow down as the market matures.

Price to book is 5 to 1, which is somewhat on the expensive side compared with other junior market companies but the growth makes up for it. It appears that investors should hold some of these but don’t expect a ton loan of gains in the short term.

JSE: Rally has legs

Monday, 23rd December 2013 | The Jamaican stock market had two stocks recording all-time highs and one trading at its 52-day high reached earlier in the year. The prices of 10 stocks advanced and 5 declined.

Access Financial Services recorded a new all-time high and so did the Sagicor Real Estate Fund as trading took place in 4,467,343 units with a value of $18,405,855 as the main indices all rose.

Indices | Trading activity resulted in the JSE Market Index advancing by 188.00 to close at 78,855.65, the all Jamaican Composite moved up by 326.83 to close at 78,902.49 and the JSE Junior Market Index closed at 774.03 for an increase of 2.76.

Stocks trading included Berger Paints with a nice volume of 1,242,398 units to close at $1.75; Cable & Wireless 209,006 units to close at 16 cents; Caribbean Cement 257,372 share to close up 14 cents at $2.99; Carreras 35,758 shares at $36 for a gain of 75 cents; Gleaner with 30,000 units, gained 10 cents to close at $1.20; Grace Kennedy 40,000 shares at $59, gaining $3 in the process; Jamaica Money Market Brokers 148,163 shares to end at $7.60, a fall of 7 cents; Jamaica Producers Group 9,687 units with the price closing unchanged at $18.25; National Commercial Bank 38,700 units to close up 50 cents at $17.50; Sagicor Group, traded under its new name for the first time as the holding company for the banking and insurance companies, had a volume of 184,073 shares as the price ended at $8.05; Sagicor Real Estate X Fund recorded another record with 4,500 units as the price jumped 70 cents to $7; Scotia Group 125,757 shares to settle unchanged at $19; Scotia Investments gained $1.82 to close at $27 in trading 1,000 units.

Proven Investments 8% preference share traded 212,000 units at $5.11.

JSEIndicesDec23Junior Market | Access Financial Services reached another high of $11.48 by gaining 10 cents with 26,100 units changing hands. Caribbean Flavours traded 28,420 units to close at $2.50, after declining by 14 cents; Derrimon Trading exchanged 1,509,426 shares and closed firm at $2.50; Dolphin Cove traded 17,000 units to close up 11 cents at $8.50; Lasco Distributors traded 195,000 units to close at $1.40; Lasco Financial Services put on 23 cents while trading 69,400 units to close at $1.30 and Lasco Manufacturing traded 71,488 units to close down 5 cents at $1.40.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer indicator had 10 stocks with bids higher than their last selling prices versus only 3 stocks with offers that were lower. The strength of this indicator points to more gains ahead. For how far into the future the gains will take place, we’re unable to predict.