JSE: Slow trading continues

December 12, 2013 by

Thursday, 12th December 2013 | The Jamaica stock market recorded another day of very low trading as the indices moved down and 5 stocks advanced in price to 7 that fell. There was trading of only 890,346 shares with a value of $18,037,940.

Indices | The two main market indices fell by the end of trading with the JSE Market Index closing at 78,096.31 down by 569.13; the All Jamaican Composite closed at 77,582.40, having a fall of 989.41 and the Junior Market Index closed at 762.58, up by 8.99.

Stocks trading comprise Cable & Wireless 169,348 units at 16 down a cent; Carreras 10,940 shares at $36.10, up 30 cents; Grace Kennedy 196,211 units at $56 down by $1.03; Jamaica Broilers 12,800 shares closing up at $4.30, an increase of 7 cents; Mayberry Investments 77,431 shares to close up 4 cents at $$2; National Commercial Bank 125,200 shares to close at $16.01; Sagicor Real Estate X Fund 10,000 units closing unchanged at $6; Scotia Group 11,154 units as the price closed down $1 at $19; Scotia Investments 113,838 units as the price retreated by 5 cents to $26.95 and Seprod lost 30 cents to close at $10.70 while 4,250 shares traded.

JSEIndicesDec12Jamaica Money Market Brokers 7.50% preference share traded 100,000 units at $2.

Junior Market | Only stocks of three companies traded in the junior market with extremely low volume. Lasco Financial traded 31,934 units at $1.30, Caribbean Producers closed up 30 cents to $2.50 with only 3,970 shares.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer indicator shows bids for 9 stocks higher and 2 stocks with offers lower than their last selling prices.

Filed Under: JSE Main Market, Stock Market Tagged With: , ,

JSE: Market down but heading up

December 11, 2013 by

Wednesday, 11th December 2013 | The main indices fell slightly on the Jamaica Stock Exchange as the number of declining stocks were equal to advancing ones. However, the Investor’s Choice market indicator has been flashing positive signals from last week and continues to do so at the close of trade with 10 stocks closing with bids above the last selling price and only one with an offer lower than the last sale.

Trading was slow with shares of just 20 securities changing hands with 5 stocks advancing to 5 that declined as 3,003,406 units changed hands valued at $14,188,321.

Indices| The three main indices all went down at the end of trading with the JSE Market Index closing at 78,665.44 down by 49.16, the All Jamaican Composite closed at 78,571.81, having a fall of 85.46 and the Junior Market Index closed 753.59 down 1.57.

Main Market | The main traded stocks include Cable & Wireless with 755,707 shares as the price closed at 17 cents; Caribbean Cement 1,224,439 units to close unchanged at $2.30; Grace Kennedy 54,500 shares with the price dropping by $1.97 to end at $57.03; Jamaica Stock Exchange closed at an all-time low of $1.80 down 20 cents with 4,950 shares; National Commercial Bank had 115,700 units, closing at $16 down by $1; Pan Jamaican Investment with only 26,287 shares to close unchanged at $48; Sagicor Life 8,121 units at $8.45, up 45 cents and Scotia Group with 145,176 shares to end at $20, down 50 cents.

JSEIndicesDec11Jamaica Money Market Brokers Ltd 8.75% traded 140,443 shares firm at $2.90 and Proven Investments 8% saw 146,250 units changing hands at $5.10.

Junior Market | Trading in the junior market stocks was low, only 5 companies participated with Blue Power contributing 4,000 shares as the price closed unchanged at $9.38; Cargo Handlers had 4,855 shares to close unchanged at $13.50 cents; Lasco Distributors saw 133,394 units changing hands as the price closed at $1.50 but there was an offer of $1.45 at the end of trading for 14,000 units. Lasco Financial traded 79,914 units to close firm at $1.30 and Lasco Manufacturing exchanged 137,300 units to close at $1.30, down 10 cents.

Filed Under: JSE Main Market, Stock Market Tagged With: , ,

Medical Disposables, OK not great

December 9, 2013 by

Companies are beating a hasty push to get listed ahead of the change in tax regime for junior market companies. The latest to do so is Medical Disposables & Supply Limited that hits the road with the opening of its IPO on December 13.

The Company invites Applications for up to 63,157,895 Shares in the Invitation. All Shares, including the Reserved Shares, are priced at $1.83 per Share. The Invitation will open at 9:00 a.m. on the Opening Date, Friday 13 December 2013 and will close at 4:00 p.m. on the Closing Date, Friday 20 December 2013. There are 18,096,060 Reserved Shares in the Invitation that are initially reserved for Priority Application from Staff and Key Partners 5,464,481 and Mayberry Clients 12,631,579.

Minimum fundraising | The minimum amount which, in the opinion of the Directors, must be received by the Company is $96.5 million. The offer looks interesting as there should be some initial price gains after listing even though not much is known of the company by the wider public.

Medical DisposablesCross150x150Profits | The unaudited results for the first 7 months of the Company’s current financial year to October 2013, show an 18 percent increase in revenues over the same period in the prior year, increasing to $508 million. The Profit before tax outturn was $42 million, a 127 percent increase over the same period in 2012. This puts pretax earnings around 35 cents per share with 200 million shares outstanding and a PE of 5.3 times current year’s earnings. Adjusting for tax for the period before going public, the PE ratio is around 7 times but by the following year with all the profit being tax free the PE would drop to around 5 assuming earnings are basically flat that could result in a price appreciation in 2014 around 40-50 percent.

The new shares are likely to create some dilution in per share earnings initially, as the rate of return on equity is likely to be around 37 percent for the year ending March 2014. Paying off loans, which is one of the objectives for the funds being raised, will yield a lower return on the fresh capital.

Profit before tax declined by $11.8 million in financial year 2010. The Directors consider that the Company began to realise the benefits of an expansion that was executed, as well as its new pharmaceutical distribution relationships, in financial years 2011 and 2012 when Profit before tax increased by $23.5 million moving from $7.4 million to $31 million and $19 million to $50 million in 2012.

Revenues | Revenues moved from $289 million in 2010 to $506 million in 2011, a 75 percent increase and to $724 million in financial year 2012 and increase over 2011 of 43 percent. The rate of growth in sales has slowed and profit growth is also likely to slow down. The company needs strong and sustainable growth levels to justify investors picking these shares ahead of others that are better valued currently. From all indications based on the comparative valuation of other listed stocks, investors are likely to have to wait on the market rally to deliver above average growth in the stock price in the medium term.

Finances | High receivables of $186 million, just under 3 months of sales and inventories are spots of bother resulting in high borrowings of $153 million as of March, versus shareholders’ equity of $152 million.

Medical Disposables280x150FREEThe company | The Company is a distributor of pharmaceutical products and disposable medical supplies. When it began trading, the it specialised in medical and hospital supplies and disposable items, such as surgical masks, gloves, tubes, gauze, and adhesive and other bandages. Over the years it expanded into the distribution of pharmaceuticals and health and personal care items and other consumer goods. The Company is a co-distributor of the GlaxoSmithKline Jamaica, Dr. Reddy’s, and Bunny’s pharmaceutical and healthcare product lines. It also distributes general consumer items inclusive of complementary beauty, personal care and household products. In that regard, the Company is a sub distributor for Cari-Med Limited, Kirk Distributors Limited, Consumer Brands Limited, and Smith Russell and Company Limited, among others.

The Company is centrally located in a commercial complex in the mid-town industrial area of Kingston. It currently services over 1,100 customers across the island, including pharmacies, hospitals, medical practitioners, health centres, radiology units, nursing homes, medical laboratories, clinics, health food stores, bakeries, hotels, commercial institutions, schools, spas, sports teams and walk-in customers.

Directors | The Company was founded by the Boothe family 15 years ago in Kingston. Myrtis Boothe, Managing Director, provides the Company with its strategic direction and has than 20 years of sales and distribution experience in the pharmaceutical industry.

The directorship includes, Winston Boothe (Chairman), Myrtis Boothe (Chief Executive Officer), Kurt Boothe (General Manager), Nikeisha Boothe (Marketing), Dr. The Hon. Vincent M. Lawrence O.J., Dr. Dahlia McDaniel and Sandra Glasgow.

Use of proceeds | The proceeds of the offer is slated for expansion of the company’s existing product ranges, expansion into new product ranges and underserved niche markets, retirement of bank debt and directors’ loans and balances and pay for the expenses of the IPO, estimated not to exceed $9 million.

Short term gains are possible, but longer term growth and increased profits will come from the quality of management’s execution of the strategies and the maintenance of good relations with suppliers and customers. The suppliers, whom they represent, is critical as a loss of any major ones could negatively affect profitability in the short to medium term.

Image courtesy of DreamDesigns/FreeDigitalPhotos.net

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: ,

Derrimon not over by much

December 4, 2013 by

Derrimon Trading Company, the Junior Market’s latest IPO was oversubscribed having closed on the morning the issue opened. Data released by the broker to the issue Mayberry Investments indicate that there was just a relatively small over subscription. The broker confirmed today that the company has completed all applications in respect of the Initial Public Offering.

The bases of allotment | Board Reserved Applications, Employee Reserved Applications, Mayberry Clients Reserved Application and Key Partners Reserved Applications were fully allocated and the Public pool receives the first 50,000 shares in full and amounts and approximately 77.622% were allocated for excess amounts applied for over 50,000 units.

The amount of shares that were available to the general public was only 8,568,486. The amount suggests that the level of oversubscription did not exceed 1.7 million units.

Related Posts | Derrimon Trading, high risk low returns

Filed Under: Company News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: ,

Exponential 235m IPO share offer

December 1, 2013 by

Stock markets were created for the very thing that Exponential Holdings is trying to do, raise funds for a start-up operation.

The company plans to raise $479 million in an offer that opened on November 25 and is scheduled to close on December 9 of this year.  Justin Nam, the CEO, says the minimum subscription needed for the listing is 150 million shares of which the founding members will contribute 82.5 million of it.

The company started planning the IPO from 2012 and was delayed until now. Exponential has no track record and the only other start-up to come to the market, C2W Music, has been a disappointment with virtually no income since it was listed in 2012. The recent memory of the music company’s failure to perform could divert some interest from this issue. Exponential is an investment company with focus on identifying what they see as good opportunities in the global market to make money. Unlike the C2W, Exponential can make money from start with funds placed in income earning assets and low overhead cost.

Subscriptions should be for multiples of 100 Shares subject to a minimum of 2,500 Shares. 75 million Shares are reserved for the members of the Founding Team and Team Affiliates at J$2.00 each. If the Reserved Shares are not fully subscribed, they will be available for subscription by the general public.

Application has been submitted to the Board of the Jamaica Stock Exchange for the whole of the issued ordinary share capital of Exponential to be listed on the Junior Market.

ExpoBusinessmanSitingThe Company incurred certain expenses in respect of office rental, Lead Broker’s mobilization fees, office overheads and consultancy fees paid to Jaїr Minott and André Hartley and are not expected to exceed J$10 million. These expenses were paid, on behalf of the Company, by members of the Founding Team and will be discharged by issuing no more than 5,000,000 ordinary shares to them at the subscription price of J$2.00 per Share.

In addition, the Company has been incurring legal, accounting and financial advisory fees in connection with the IPO transaction contemplated by the Prospectus. It is anticipated that such costs shall not exceed J$20 million. If the IPO is successful, those expenses will be paid out of the IPO Proceeds.

The Company proposes to invest and hold up to 75% of the net IPO funds raised in equities and the remainder in fixed income securities and cash.

Operating expenses | The Company will bear normal office overheads and will pay a management fee in the form of salaries limited to two per cent (2%) per annum of the Average Net Asset Value of the Company’s investment portfolio to the Employee Group led by Justin Nam, who will manage the Company’s investment portfolio and provide all requisite administrative and management services except for accounting and internal audit services. The Founding Team, which comprises the current Directors, will be paid an annual performance fee of twenty per cent (20%) of the amount by which the Return on Opening Equity (expressed as a percentage) exceeds the Hurdle Rate (being the return of the S&P GLOBAL 1200 for the financial year.)

Exponential expects to earn income from dividends and interest paid on the shares and debt securities comprised in its investment portfolio and from trading securities comprised in the portfolio. Absent of untoward events such as market turmoil, the Company expects to deliver net profit in the region of J$62 million to its shareholders for the first full year of operations based on net interest income and other operating revenue of some J$94 million. The majority of this revenue is expected to be derived from realised capital gains on the Company’s equity portfolio, profits from private equity investments and interest income from the Company’s fixed income portfolio.

The prospectus states that each potential investment identified by the management of the Company will be subject to rigorous and careful analysis and will have to be approved by the Company’s Investment Committee before it is added to the Company’s portfolio.

A great deal of success for this company will be dependent on the individuals managing the funds and making the decisions surrounding investing and disposal of investments. The selection and appropriate timing of investing are critical components of success. Nam has a number of years experience both at Dehring Bunting & Golding and at Proven Investments.

Filed Under: Company News, Initial Public Offers, JSE Main Market, Stock Market Tagged With:

Eppley preference shares over

November 30, 2013 by

30th November, 2013 | Eppley Limited announced that a total of 303 applications were received for the recent public offer of 50 million preference shares valued at approximately J$361.95 million.

As the Invitation was oversubscribed, the Company intends to exercise its right to issue further preference shares by allotting 60,325,600 to all applicants who will receive 100% of the amount of the Shares they applied for.

28th November, 2013 | Eppley’s Invitation for Subscription to 50 million Cumulative Redeemable 9.5% Preference Shares at J$6.00 each has been oversubscribed the company reported today.

The offer opened on Wednesday, 13th November 2013 and was closed on the closing date, Wednesday, 27 November 2013.

The Company had reserved the right to make available further Preference Shares prior to the Closing Date but IC Insider understands that this option was not exercised.

Related posts | Profit up 92% for Eppley

Filed Under: Company News, General Business News, JSE Main Market, Stock Market Tagged With: , ,

Derrimon Trading, high risk low returns

November 26, 2013 by

Derrimon Trading Company is a name not known to the vast majority of Jamaicans but that may change if the company succeeds in raising just over $150 million from a public issue of shares in December.

A cursory look at the company’s finances quickly indicates why it needs the infusion of funds; margins are low at around 10 percent and working capital is weak with the current assets ratio at 1.2:1, which is considered very weak and well below a 2:1 ratio. Unfortunately, the new capital while it will improve the ratio, will not be enough to lift it to where it should be.

Cost continues to grow sharply with Admin up 30 percent to August this year and selling and distribution up 25 percent. These compare with revenue growth of just 13 percent. Quite a bit of profit is coming from other income including investment and rental amounting to $21.8 million in 2013 and $24 million in 2012 to August and $36 million for the 2012 calendar year to December. Before interest cost, the main operations reported a $9 million profit. Admittedly, this is after making provisions for inventory loss of $18 million and doubtful debt provision of $9 million.

DerrimonSamparsBasketIn 2012, the supermarkets had gross profit around 20 percent but the distribution margin was only 7 percent and wholesale 11 percent. Revenues with low margins make up 92 percent of sales in 2012. The average number of persons employed full-time by the Company during the year was 135 (2011 – 96), while part time employees averaged 17 (2011 – 14). Cost relating to staff rose from $96.76 million in 2011 to $146.5 million an increase of 51 percent with the staff numbers going up by 38 percent.

Profits | Financial statements to August show profit of $51 million pretax and $35.7 million post tax or 18 cents per share, annualized around 25 cents. Gross profit margin is just over 10 percent for 2013 up from 8 percent in 2013 for similar period and 9.5 percent for all of 2012.

The company reports profit for 2008 to 2013 rising from $8.4 million pretax profit in 2008 to $8.1 million in 2009; $17.5 million in 2010; $36 million in 2011 and $25.3 million in 2012. While there was big foreign exchange gain in 2011 there was a big loss in 2012. Revenues have moved rapidly upwards from $807 million in 2008; it reached $1.48 billion in 2009; $2.46 billion in 2010; $3.35 billion in 2011 and $4.76 billion in 2012. The rapid rate of growth seems to have slowed in 2013 with sales of $3.756 billion to August, versus $3.32 billion for the same period in 2012, a 13 percent increase compared with 43 percent in 2012 and 36 percent in 2011.

Tax free | As a junior market prospect, profit will be tax free for 5 years if listed. Hence, the valuation should be based on pretax profits. For 2013 excluding tax, earnings would be in the order of 32 cents per share assuming no major negative development occurs in the last 4 months of the year to reduce the level of profitability. Using Lasco Distributors with a PE ratio around 7 as a guide, we would price the stock around $2 each, just about the issue price to the public. Paramount Trading may even be a better guide with a PE of 5 times earnings, which would place Derrimon stock price value at $1.80. These numbers suggest that investors should not be running for this one looking for any potential gains in the short term. At best, it will be in the future.

The 73,336,067 ordinary shares that are available will not see much going into the public’s hands with an allocation of just 8,568,486 shares. Board Reserved Shares amount to 25,693,590, which has been effectively taken up by the conversion of loans made to the Company amounting to $52.67 million. Others include Employee Reserved Shares: 4,878,049; Key Partners Reserved Shares: 12,195,122 and Mayberry Clients Reserved Shares: 22,000,820. The Invitation will open at 9:00am on Monday, 2nd December and is slated to close at 4:00pm on Monday 9th December 2013. Applications from the general public must request a minimum of 2,000 shares and be made in multiples of 1,000.

DerrimonLogocrop150x150About the company | Derrimon Trading was founded in 1998 by Derrick and Monique Cotterell. The business began to grow in earnest in 2002, when the Company was appointed as a regional co-distributor of Nestlé Jamaica for Kingston & St Andrew, St Catherine and St Thomas. In 2009, the Company acquired the business of Sampars Cash and Carry, one of the largest wholesale businesses in Kingston in order to increase the portfolio of products and to extend its market reach. More recently, the Company has introduced a line of exclusive branded products under the ‘Delect’ name. The new range includes rice, canned mackerel, tomato ketchup, vegetable oil, cornmeal and other products.

Since 2009, the Company’s operations have been based at its principal premises at 235 Marcus Garvey Drive. This location provides the Company with 100,000 square feet of warehouse facilities including cold storage over some 3.5 acres of property, which is strategically located close to both Kingston Wharves and key distribution routes to the Company’s various markets. In support of its operations, the Company engages a contracted fleet of over 60 delivery trucks to deliver the Company’s products to customers.

Use of proceeds | The company says it intends to use the proceeds of the Invitation for the following purposes:

  • Expansion of Sampars business, with further wholesale and retail outlets;
  • Enhancement of the Company’s wholesale/retail business software platform;
  • Provision of working capital support to the Company’s distribution business;
  • Retirement of a portion of the Company’s debt, including certain Directors’ loan;
  • Pay the expenses of the Invitation out of the proceeds, estimated not exceed $9.5 million.

Directors | Executive Directors: Derek Cotterell (Chairman), I. Kelly (Finance), W. Thomas (General Manager). Non-Executive Directors: Monique Cotterell, Earl. A. Richards, Alexander Williams.

A number of the directors has had several years’ experience with Grace Kennedy in the distribution business.

IC Insider outlook | At the current state of the local stock market, this one seems to be better watched from the side lines than on the field of play.

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: ,

Jamaican Teas lists corporate bond

November 25, 2013 by

Monday, 25th November 2013 | Tanisha Samuels, Assistant to CEO John Mahfood, inserts the Jamaican Teas fixed & variable rate banner in the slot on the Jamaica Stock Exchange board prior to the start of trading today. To her left is the John Mahfood, the company’s CEO.
In today’s trading 1,000 units traded at $99.50 per 100 units.

Related posts | Jamaican Teas raises over $100m

Filed Under: Company News, General Business News, JSE Main Market, Stock Market Tagged With: ,

New additions to Buy Rated stocks

November 25, 2013 by

Monday, 25th November 2013 | There are two additions to the Buy Rated and Market Watch list for the coming week. Added to the Buy Rated stock list is Jamaican Teas due to a 30 percent gain in profits for the year ended in September flowing from a 46 percent jump in export sales, sales of apartments in its first real estate development and expectation of further growth in 2014.

Carreras is added to the Market Watch list based on IC Insider’s assessment for earnings around $5 per share for the current fiscal year and dividend yield above 10 percent. Trading in the mid $30’s, this stock has a very good chance to head back into the mid $40 range.

BUyRatedGRowthNov25Performance tracking | During the past week, a few of the Jamaican stocks made some recovery with JMMB breaking even in Jamaica but has retreated in Trinidad. Access Financial is up 15 percent so far but Lasco Financial and Manufacturing are still off by good margins. The selections in the main market remain mostly under water, but the ideal time to buy may be slipping away as prices seem to be at their bottom. More importantly, there are indicators that a year-end market rally will happen again in December.

While Jamaica has disappointed, the same can’t be said about Trinidad. There are only two losers so far; Guardian Holdings and Scotia Investments. During the past week Neal & Massy, that had declined below the price at the time of selection, has bounced back from its low to be just slightly ahead at the close on Friday.

What seems clear, is that the focus ought to be on longer term performance rather than just short term gains. The Trinidad market performance of slow price movements illustrates this very well. There are also signs in the Jamaican market suggesting the same, the major difference being the Jamaican market is more aggressive with price movements.

Related posts | Exports push Jamaican Teas’ profit | Carreras down but not out |  Jamaican Teas raises over $100m

BUYRatedWatch_Nov25

 

Filed Under: Company News, JSE Main Market, Stock Market, TTSE Market Tagged With: , ,

JSE: Sagicor X Fund up 10% on IPO price

November 22, 2013 by

Friday, 22nd November 2013 | The Jamaica Stock Market recorded more gains on Friday and recorded two new highs and one new low with Sagicor Real Estate X Fund increasing 10 percent since last week’s listing to close at $5.50. Paramount Trading was the other to hit a new high.

A total of 26 securities traded on Friday amounting to 5,463,219 units valued at $10,046,554 as the prices of 11 stocks increased and 8 declined still positive but a little less so than on Thursday.

The JSE market index gained 297.10 to end at 77,384.08; the all Jamaica index closed at 76,339.89 for a gain of 516.50 and the junior market index closed up to 725.48 with a gain of 6.70 thus continuing the gains from Thursday.

Main Market trades | Cable & Wireless traded 1,808,024 shares to close at firm at 15 cents; Caribbean Cement 27,800 units as it gained 10 cents to close at $2.30; Carreras exchanged 9,518 units as the price moved up 30 cents to close at $36; First Caribbean International Bank delivered 16,553 units to new investors at $90.01, up a cent but the offer closed at $90; Jamaica Broilers Group 671,556 units traded to close at $4.20, down 4 cents; Jamaica Money Market Brokers traded 21,910 units to close down 10 cents at $8; Radio Jamaica 65,392 units at $1.30, down 4 cents; Sagicor Life exchanged 25,850 units at $7.80; Sagicor Real Estate X Fund added 10,989 units while closing at a new high of $5.50, up 30 cents; Scotia Group traded 107,442 shares to close at $17.06 down 44 cents; Seprod surprisingly, gained 50 cents while trading 3,374 units at $12.50.

Jamaica Money Market Brokers 8.75% exchanged 74,677 units at $2.90.

JSEIndicesNov22Junior Market | Start up C2W Music that has earned little income since listing in 2012 hit a new all-time low in trading on the stock market on Friday, as 2 million units changed hands, at 74 cents with the price falling by 19 cents. Caribbean Producers traded 92,000 units to close up 15 cents at $2.10; Consolidated Bakeries traded 215,000 shares to close at $1.35 for a loss of 4 cents; General Accident Insurance exchanged 63,915 units to close at $1.60; Lasco Distributors traded 18,300 units as the price moved up 5 cents to close at $1.50; Lasco Financial Services exchanged 20,200 shares to close at $1.03 up 3 cents; Lasco Manufacturing had 201,700 units changing hands at $1.25, down 15 cents; Paramount traded 900 units at a new high of $3.65, up 5 cents.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer indicator is pointing to a fluid situation between advancing and declining stocks early into next week as there were bids for 6 stocks higher and 6 stocks with offers lower than their last selling price.

Filed Under: JSE Main Market, Stock Market Tagged With: , ,