FESCO may have computed the projection of income and profit to 2025 incorrectly by overstating some expenses but they are on the right track and must be commended for including the forecast in their prospectus, a very useful addition.
This publication has been rightly calling for all prospectuses to include forecasts of income and profits for three years at a minimum, but prior to the FESCO issue only new companies have been doing so. The lack of forecast is a disservice to the investing public.
The Alliance Financial Services prospectus released to the public in December does not contain any forecast of revenues and profit so was the case for Tropical Battery in late 2020 as such, FESCO decision to include a forecast maybe just a voluntary exercise rather than a standard for the industry that investors can look forward to.
Management who are responsible for the contents of prospectuses has much more information about a company’s future than the investing public. Since markets depend on good and timely information to thrive, the lack of forecast in all prospectuses is a disservice to the capital market and investors. To ask new starts up companies to provide a forecast of the future and not more mature companies who are in a better position to do so defiles logic.
Stockbrokers taking companies public should help to raise the standard by putting forecast in all prospectuses for the benefit of the market development and the Jamaica Stock Exchange should insist on it and so raise the standard of information going to the public.
Earnings projections wanted for all IPOs
February 21, 2021 by
