RJR/Gleaner charting new course

RJR/Gleaner launched TVJ International with 24 hours service in the Cayman Islands in August and two other Caribbean Countries are in line with other countries also showing interest in the service.
The launch of a new TV service is just one of a number of changes to the group’s services that the directors updated more than 160 shareholders attending the annual general meeting held at the Jamaica Pegasus Hotel in Kingston today. The vast majority of RJR shareholders in attendance continue to be representative of the older loyal RJR AM listeners.
Some of the several changes that the group is undertaking including merging of certain operations will lead to greater efficiency, reduced rental and personnel cost. Work is being carried out to expand RJR 94 in areas that currently have room for improved coverage that is expected will lead to greater listenership and ultimately increased revenues. A number of transmission sites were merged with existing ones in the past financial year, reducing rental expenses, electricity, repairs and maintenance.
A raft of changes within the group that are underway if successful, will result in major changes to the group and generate increased revenues and profit as well as a number of new revenue-generating services. The effect, the future will look markedly different than the past, with digital technology playing an increasing role in providing services and driving revenues not only locally but globally.
Shareholders were told that the main reasons for the loss of $22 million made for the year to March 2019 were due to losses in staging the FIFA World Cup in 2018 amounting to approximately $40 million and adjustments occasioned by adopting new accounting standards that accounted for $60 million in added cost. The group nevertheless recorded growth in revenues across all segments of the business, with TV revenues climbing 16 percent, audio mainly radio up 4 percent and print 4 percent.

RJR shareholders at the 2019 AGM at the Jamaica Pegasus

All companies within the group will be on one accounting platform that will allow for the completion of financial statements within five days of the month-end. The move will also result in reduced costs in maintaining accounting records.
The group saw a major turnaround in fortunes in the first quarter to June for the 2020 fiscal year, with profit of $24 million up from a loss of $70 million in 2018 although revenues from sales rose modestly to $1.36 billion from $1.35 billion but gross profit jumped to $700 million from $597 million. The improved position in the quarter over 2018 is due primarily, to losses incurred in staging the World Cup matches in 2018 that has no recurred in 2019 and good growth in regular revenues in the 2019 quarter. IC Insider.com forecast is for earnings of 25 cents per share for the current fiscal year and 35 cents for the 2021 fiscal year. RJR’s stock price started the year at 85 cents has gained 129 percent so far and closed trading at $1.95 the Jamaica Stock Exchange on Wednesday with a PE of 8 times current year’s earnings.

JMMB pretax profit up 16%

JMMB Group profits up 16% before tax to June.

JMMB Group posted a 16 percent increase in pretax profit, for the June 2017 quarter over 2016, but increased taxation left shareholders with a much smaller 4 percent increase to $617 million, as taxes climbed from $264 million to $381 million.
Net revenues jumped 19.4 percent to $4.1 billion from $3.44 billion in 2016, operating expenses rose even faster at 20.5 percent to $3.1 billion. Net interest income improved noticeably, moving from $1.55 to $1.9 billion as interest income grew to $1.96 billion, from $3.62 billion and cost fell modestly to $2.04 billion. Gains from securities trading rose to $1.54 billion from $1.1 billion but with revaluation of the Jamaican dollar, the group earned $238 million in the quarter, down from $443 million as the group also benefited from one off gains in 2016.
The Jamaican operations contributed 23 percent to growth in operating revenues, putting it at 75 percent of overall group revenues while Trinidad with its economic challenges, remained flat with just a one percent increase and Dominican Republic generated an increase of 18 percent.
Growth in managing pension funds, unit trust and money market funds, with assets under management moving from $89.5 billion in June 2016 to $114.75 billion helped in moving fee income up from $298 million to $364 million over the same period.
The group gained commercial banking license approval in Jamaica, in the September quarter, started to convert some branches to accommodate the new thrust and were also preparing for the roll out of their pension fund management in the Dominican Republic.
Total assets grew from $252 billion to $268 billion between March this year and June, shareholders’ equity moved from $25.9 billion to $26.8 billion including $2 billion in investment revaluation reserves at June this year, lending was almost static at $48 billion versus $47 at March. Investment in resale agreements stood at $173.8 billion versus March’s $172.5 billion. Customers’ deposits rose to $50.87 billion from $49 billion in March, while securities sold under repurchase agreements stood at $169.5 billion, up from $156.6 billion as of March, representing a fairly significant increase of $14 billion in just one quarter.
On Monday, JMMB Group closed at $21.50 on the Jamaica Stock Exchange and TT$1.20 (J$22.80) in Trinidad on Monday. IC Insider.com projects earnings of $3 for 2017 up from $2.03 as of March this year, putting the PE at 7 times the March 2018 earnings. The stock continues to be IC Insider.com BUY RATED.

Big Berger gain lets in Scotia

Scotia enters IC Insider.com’s TOP 10

A big 36 percent jump in the price of Berger Paints kicked it out of the main market TOP listing, allowing Scotia Group into the top list for the very first time. Berger returned to its 52 weeks high of $15 at the end of the week but had 103,511 units on offer at $15 with buying of 1,735 units at $13.01.
The top main market stocks now sell at a 50 percent discount to the average main market stocks and is lower than the discount of stocks in the junior market.
Pulse Investments gained 21 percent during the past week, to end at $8.50 and was the second largest mover in the top listing for main market stocks. Pulse has offers for 118,391 units at $8.50 and buying at $8 for 1,500 shares. Carreras earnings have been up graded with the increase in the price of cigarettes this month, following increased taxes on the product. Interest in the stock is not great currently, with 21,125 on offer at $69.50 and buying of 2,000 shares at $69.20. Radio Jamaica closed the week with 990,792 units on offer at $1.90 and buying for 5,300 units at $1.80. Barita Investments has limited buying interest at the current price with just 447 units on the bid at $6.85 and 171,830 units on the offer at $6.90. With the increased level of construction activity currently taking place in Jamaica and plans for increase construction to meet growing demand for commercial and residential units in the sector, Caribbean Cement’s weak demand continues in the mid-thirty dollar range, with the stock closing with only 2,000 units on the bid to buy at $31.50 while offers are at $32.45 to sell 24,440 units. JMMB Group weakened in the week and now sits at $17.50 but buying is on the weak side, with 5,000 units on the bid at $16.60 and only 378 units offered at $17.50.

Top 10 junior market stocks are trading at a 40 percent discount to the average of the junior market, at the close of the week, this is after Lasco Distributors fell out of the top listing and is replaced
by Lasco Financial Services that suffered a reduction in price during the week to $3.70.
During the past week ISP Finance hit a new high of $12.25 up from $11.75 at the close of the previous week, the stock still sits high on the list at number 3. Access Financial and Jetcon had a bit of price movement during the week, with both closing lower than the week before.
Price movements remained volatile during the past week, as buy and sell orders remained thin for several stocks. With little new news to come until a flood of first quarter results start to flow volatility is likely to continue for a few weeks and this could provide patient investors with some good entry points, if bids and offers are strategically placed. The sharp one week move in Berger signals that supply may not last too long before demand kicks in.

Flat results, increased profit at tTech

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tTech closed at $4.50 on Thursday.

tTech closed at $4.50 on Thursday.

tTech enjoyed a big 42 percent growth in revenues for the June quarter to $58.4 million from $41 million at June 2015, well ahead of the 14 percent growth in the March quarter. For the six months, revenues are 30 percent to $105.6 million from $81 million in 2015.
Profit after tax, is up to $16 million from $12.4 million for the six months and $9.2 million versus $7.6 million in 2015, but for tax expense saved in 2016, profit for the year to date would be flat. Profit for 2015 was subject to $1.4 million in taxes and for the six months, $3 million. A sharp rise in operating expenses due to a 50 percent rise in staffing, pushed the spend by 54 percent to $50 million for the quarter and 36.4 percent to $91 million for the half year.
Earnings per share ended at 9 cents for the quarter and 15 cents for the half year and should end up around the 35 to 40 cents range for the full year based on the results to date. The strong revenue gain is a signal for growth going forward for the company.
Management stated that “the increase in revenue was due to growth in all areas of our services including the Consulting Division. Increase in expenses was driven primarily by increases in our workforce to increase capacity to meet the growth in demand. At June 30, 2016 the company had 31 full-time employees compared to 21 at the same date in 2015.”
From Left: Mr. Hugh Allen, Resolution Manager and Executive Director; Mrs. Natalya Petrekin, Service Desk

From Left: Mr. Hugh Allen, Resolution Manager and Executive Director; Mrs. Natalya Petrekin, Service Desk

Demand for the company’s services remains strong. Going forward improving our efficiencies by automating more processes will be an area of focus. Work has already started in this area and more
opportunities for automation will be explored to facilitate increased efficiencies and improved service delivery.”
The company ended with cash and investments amounting to $115 million at June, up from $67 million at the end of December last year with net current assets ending at $130 million with payables at $34 million, while shareholders’ equity is at $146 million.
The stock traded as high as $5 on the JSE junior market today but fell back before the close to $4.50 for a PE of just over 11 times projected 2016 earnings. For investors will the strong growth continue and deliver increasing profit for them to buy and hold at these prices for long term gains.

Access post good Q1 results

Access Financial Services' profit jumps 29% in Q1.

Access Financial Services’ profit jumps 29% in Q1.

Investors have not reacted positively to the 29 percent gain in Access Financial Services profit for the June 2016 quarter over the results of the 2015 quarter, but they probably should, with earnings set to exceed $2 for the full fiscal year with the stock price below $20.
The company reported a moderate 10 percent growth in loan interest revenues to $301 million in the quarter over that of 2015. The loan portfolio for the June is 8.6 percent ahead of March, if the rate of growth continues, loans would end at $2.84 billion versus $2.1 billion as of March.
Total revenues moved by 10 percent from $315 million to $347 million for the June quarters while profit after tax for the quarter grew 29 percent to $146 million or 53 cents per share, compared to $112 million or 41 cents for the June 2015 quarter.
Cost was well contained at $184 million for the quarter, down from $186 million in 2015. Loan loss provisions fell from $54 million in 2015 quarter, to $43 million in 2016. IC Insider projects the provision to rise to $187 million for the full year, up from $184 million for the 12 months to March 2016, while earnings of $800 million or $2.90 per share are projected for the 12 months to March 2016, with growth to $4 per share or $1.1 billion in profits after tax, for 2017.
At the end of March, shareholders’ equity stood at $1.3 billion and borrowings at $1.1 billion with cash and equivalent at $299 million out of total assets of $2.7 billion.
The stock which remains BUY RATED last traded at $17.50 giving it a PE based on the above forecast at an attractive 6.

Buy Rated stocks set for growth

TTSE has declined almost 10% from peak and could fall another 9% from May to hit support around 1,600 points. (See orange trendline).

TTSE has declined almost 10% from peak and could fall another 9% from May to hit support around 1,600 points. (See orange trendline).

May is a period in the Jamaica stock market when prices usually sag, with a tendency to hit bottom between June and July. This was not the case in 2016 as the market peaked on the 4th of February and bottomed on April 21, based on the all Jamaica Composite Index.
In Trinidad, the market drifted from a peak in the all T&T index at 1,956.55 on December 8, 2015 to a 2016 low of 1,758.40 on May 19. The movements the Jamaica’s junior market saw the index peaking at 2,357.20 on 12th of January and bottomed out on the 7th of April at 1,762.87 points, for a decline of 24.5 percent but have since recovered most of the decline.
Much have happened with companies releasing results since with a number of the results in Trinidad being flat to declining, while most in Jamaica show good increased profit, while interest rates have declined in Jamaica and been static in Trinidad. Added to the profit out turn, a few companies in Jamaica announced stocks splits which have driven the respective prices of all the companies up strongly. Grace Kennedy, one of IC Insider Buy Rated stocks that has been lagging in performance, came to life as the company reported strong increase in the March quarter results, with the price jumping to $115 and seems to have more room to grow, based on the improved results. Pan Jamaican Investment gained 42.5 percent since it was last reported on at the end of April, helped by a 5 for 1 stock split and is up 82 percent since selected to the BUY RATED list. The company has good long term growth prospect but may have plateaued at the current price, around $26.50.
Honey Bun one of IC Insider's 2015 additions to the BUY RATED list is now placed on Market Watch

Honey Bun one of IC Insider’s 2015 additions to the BUY RATED list is now placed on Market Watch

The stock has been moved to a watch from BUY RATED.
Honey Bun added to the BUY RATED list in November 2015, gained 112 percent since April and 387 percent since being added to the list. Strong growth in profits and a 5 for 1 stock split helped in moving the value of the stock. ISP Finance added in April, is up 20 percent but there is little supply to be obtained, a recipe for a strong rally in the price ahead. Knutsford Express was put on hold when last reported on and has slipped 20.5 percent, is now restored to a buy below $20 while Lasco Distributors placed on a Watch list last time, is up 52.6 percent and is now placed on watch list at current price at $7.60, supply seems to be drying up for this stock, following release of full year’s results. While investors have priced in a potential big inflows from their law suit claim with Pfizer, at a PE ratio around 20 times fiscal 2017 operating profit, investing at the levels could result in an investment that may underperform the market in the medium term.
Cable & Wireless is up 22.5 percent since April and 332 percent since it debuted on the list in February 2014. The company reported a small profit from operation, for this year to March, and seems headed for earnings around 20 cents per share for 2017. The price should be heading higher before too long, but demand is not electric currently.
Buy Rated upd 6-16General Accident and Honey Bun are placed on the watch list with the former unable to get profit to rise outside the range of 30 cents per share and the latter now being priced at a PE of 18, well ahead of the average for the junior market. Honey Bun supply notwithstanding the 5 for 1 stock split, is scarce but profit growth could continue to be strong thus lending support to the stock going forward.
Companies in Trinidad are not doing well but their performance is not disastrous in the main with the price of a number of stocks have pulled back sharply and will offer good entry points when it is time to buy into that market. The time may not be right to enter that recession affected market just yet. Technical reading of this market shows it peaking at 2,032 points and have lost 13.5 percent since then and could fall another 9 percent from the May 2016 levels to reach 1,600 points before the decline is over. A look at the trading report shows that the prices of some major companies remain under pressure and is likely to fall as demand remains weak.
Technical and fundamental assessments suggest that Access Financial, Caribbean Cream, Medical Disposables and National Commercial Bank are due for a break out sooner than later, with Caribbean Cement to follow.

Jetcon listing slated for Thursday

Jetcon 03-16Jetcon Corporation coming on the heels of a successful issue of shares to the public that opened on Monday March 14, in respect of 44,500,000 ordinary shares is expected to start trading on Thursday, March 24 with the listing committee meeting on Tuesday to consider and approve the listing.
The offer closed shortly after opening on Monday after it was oversubscribed. A total of 256 applications covering $113 million were received. Applications of all reserved shares were fully satisfied while the general public got the first 5,000 Shares applied plus 83.11 percent of the balance. The shares were sold to the public at $2.25 each. the closure left some investors out in the cold as they missed the early closing time of the offer.
Listing on the junior market will result in no corporate taxes being paid for 5 years from the time of listing. Jetcon reported profit of $50.6 million for the 2015 year and enjoyed 45 percent increased revenues for the first two months of 2016 ahead of the similar period in 2015, accordingly, IC Insider rate the stock Buy Rated.

BUY RATED top Carib markets with 830%

The JSE stock racked up huge gains in 2015

The JSE stock racked up huge gains in 2015

IC BUY RATED stocks were top of the Caribbean markets in Jamaica and Trinidad and Tobago for 2015, with Jamaica Stock Exchange share, chalking up a massive gain of 830 percent since IC Insider elevated it to BUY RATED status.Caribbean Cement followed with gains of 640 percent, Caribbean Cream with 444 percent and Trinidad Cement with a 299 percent increase on the Trinidad market.
While it was easy to make money in Jamaica, with profits rising and interest rates falling, developments in Trinidad went in the opposite direction, with interest rates rising and profits under pressure with the economy ended in recession.
At the beginning of 2015 of the 14 junior market selections, few recorded gains and only Knutsford Express with a 17 percent increase reflecting any meaningful positive movement. Losses were large, with AMG Packaging down 39 percent, Blue Power 31 percent, Caribbean Cream 23 percent, Jamaica Teas 28 percent, Lasco Financial 37 percent and Lasco Manufacturing 32 percent. What a difference a year can make? By the end of 2015, gains were all over the place with the list having 17 companies with two being dropped. There were no losing stocks in the list that had a new addition, tTech which could be listed this week. Honey Bun was added to the listing in November and gained 9 percent since. Eight stocks have more than doubled, four gained 40 percent to 91 percent. Caribbean Cream jumped 292 percent to be the top selection in this market, followed by Lasco Distributors up 274 percent. Blue Power was removed from the list in July with a small gain.
In the JSE main market, at the start of 2015, Hardware and Lumber was the best performing stock with gains of 62 percent followed by Cable & Wireless with 47 percent and Jamaica Broilers had the worst performance with a loss of 24 percent. In all, 7 of the 15 selections were lower than at the time they were BUY RATED.
By year-end, all selections in the JSE main market were up, with Scotia Investments having a mere 15 percent increase, being the poorest performer. This stock is being moved to Market Watch as the 2015 profit performance was far too disappointing to warrant buying now, while Hardware and Lumber remains a hold. The rest, present opportunities for continuing profit making. BUY Rated fn 12-15JMMB Group ended with just 28 percent gain, but seems undervalued at the current price. While the list had a few lousy performers, the same can’t be said about a 640 percent gain in Caribbean Cement and 830 percent increase for Jamaica Stock Exchange share. In all, 9 stocks posted gains in excess of 100 percent and 4 below 100 percent but with a 50 percent increase and more.
There were 13 selections in the Trinidad market with Trinidad Cement being the best performer with gains of 150 percent, the next was Point Lisas with 11 percent at the start of 2015. Five stocks suffered losses with the highest being 22 percent and the next 18 percent. For 2015 the price of Trinidad Cement is up 299 percent followed by National Flour with a 59 percent gain.
Looking ahead, the junior stocks should continue to grow, with several of the companies actively expanding resulting in profits climbing at a fast pace. There are a few stocks to be cautious of just now. Lasco Distributors selling at almost 16 times 2016 March earnings. Growth should be strong but unless investors have a long term objective they should be careful buying at current price level, the same applies to Lasco Financial that is selling at 15 times earnings. Dolphin Cove remains a hold at this time.
The Trinidad market needs to be watched at this stage, with the country needing to adjust to the lower price of oil and the recession now being endured.

JSE stock up 887% could end higher

JSE fnt vw 12-15The Jamaica Stocks Exchange stock rocketed from $1.57 to a record $15.50 topping the market as the best performing stock over 52 weeks with gains of 887 percent. The JSE benefitted from a big jump in profits from $8 million in 2014 to $139 million in nine months to September this year, as revenues jumped from $242 million in 2014 to $521 million.
For the quarter, profit amounts to $37 million up from $11 million in 2014, from operating revenues of $157 million versus $89 million in 2014. In addition to operating revenues, the JSE earned $16 million from investment income in the latest quarter, compared to $8 million in the September 2014 quarter and $34 million in the nine months in both years.
Earlier in the year, IC Insider stated, “the stock remains IC Insider BUY RATED and is now available at $3.50 which it last traded at, but won’t remain that way forever and investors should be buying this one for big long-term gains,” since then the stock has shot up to $15.50 for a gain of 933 percent for the year.
JSE trade data 12-15For the September quarter, cost rose from $90 million to $109 million due mainly to staff cost jumping b $12 million. For the nine months, cost rose from $273 million to $340 million with staff cost accounting for $20 million of the increase and securities commission fees jumping to $37 million from $10 million in 2014.
The exchange has cash and investments of $448 million with a working capital ratio of 2.4:1 and equity of $624 million, there is no borrowed debt on the books.
Factors that investors should be considering looking forward which will be critical to the fortunes of the stock exchange are the levels of trading that could point them to future income and profit. Up to December 4, this year, the JSE traded $8.4 billion in normal trades compared to $3.7 billion in December 2014, in the September quarter, trading amounted to $8.68 billion up from $3.74 billion in the June 2015 quarter and $5.15 billion in September 2014. The increase in the 4th quarter stock trading activity to date, is just below the 3th quarter level, in addition there will be a full quarterly income from repo business.
JM Sign buildIn the March quarter 2015, a total of $4.9 billion was involved in trading up from $3.8 billion in March 2014. Both the December and the March quarters in 2015 have a few one off type trades, regardless the trend is pretty clear pointing to the possibility of a strong 2016. The last two quarters suggest that trading levels in dollar terms could be up around 40 percent and it could be more. That would mean a sharp increase in revenues for the exchange in addition the managing of the repo business will provide added income for the entire year compared with two months in the September quarter and 5 months for the year to December.
Back in 2004, the market traded $28 billion in regular trading activity when the Jamaican dollar was trading around $62 to the US dollar with trading in 2005 being slightly behind at $26 billion. Trading would need to get to $51-55 billion for a year to match trading levels back in 2004 and 2005.
Profit should close out the year on a high with monetary trading levels set to exceed that of the third quarter and well ahead of the fourth quarter of 2014. IC Insider is forecasting earnings of $1.40 for the 2015 not factoring the trade that could flow from the Heineken buyout of the minority shares in Desnoes and Geddes.

Caribbean Flavour(ing) future profits

CFF fact 2014“With the price of the stock, trading at $2.55 for a PE of just over 3 and 2.3 based on IC Insider’s forecast, (is) indicative of much upside potential,” was how Caribbean Flavours was assessed back in August this year, as the stock was elevated to the BUY RATED ranking after the company released its full year results to June.
In the June posting, IC Insider stated, “The company seems poised to hit earnings of 65 cents per share, for the June 2015 financial year, making it attractive for some short-term gains, with the current price of $2.09, at a PE ratio of 3 times earnings.”
Focusing on the end results of Caribbean Flavours & Fragrances for the year to June 2015 with increased profit of 22 percent over 2014 would lead one to look elsewhere, but that would be a big error. For while the nine months to March showed profit down marginally to $39 million from $40 million, profit for the March quarter was up 20 percent over March 2014 quarter, the June quarter increased by 143 percent to $18.77 million from just $7.6 million for June 2014.
The company followed up the improved results for the March and June quarters, with another quarter of strong performance to September, with a 51.3 percent increase in net profit to $20.36 million over the $13.46 million recorded for the similar period in 2014. The improved profit flowed from sales for the quarter jumping 38.20 percent to $87.46 million, compared to the $63.29 million recorded for the same period in 2014.

Caribbean Flavours' produce with ingredients - the stock closed at a new high.

Caribbean Flavours’ produce with ingredients – the stock closed at a new high.

“The improvement to our revenue was primarily driven by increase in the sale of flavours in the domestic market as well as the sale of products to new customers. In addition, there has been a 6 percent year over year increase in the sale of fragrances for the quarter thereby contributing positively to both the revenue and our profitability,” the directors stated in their report to shareholders.
“The gross profit showed an increase of 28.91 percent moving from $25.487 million to $32.856 million as per our first quarter’s performance. The Company will continue to refine and improve our purchasing strategy in order to extract the necessary efficiencies and improve our cost of sales and gross profit.
The company continues to manage its administrative and general expenses within budget and compared to the 2014 quarter, there was only a 4.4 percent increase,” the report went on to state.
The future looks much brighter than the past year, for the company that manufactures and distributes flavours mainly for the beverage, baking and confectionery industries and also sells food colouring and fragrances. In responding to questions posed at the annual general meeting held on Wednesday 25 of November, directors indicated that the strong performance enjoyed in the September quarter continues into the December quarter.
“We have hardly scratched the surface of the potential market” Derrick Cotterell indicated, “we have moved into the Dominican Republic and Canada where there is much potential for growth and with renewed efforts and products the locally Jamaican market as well”. Cotterell stated that they have increased research into new products such as fragrances and this has opened up new opportunities for them. Trinidad, Cuba and Haiti are countries with potential for growth, they indicated but Haiti is said to be a difficult market to break into but they have contacts there that should make it possible. In addition to the focus on research and developments for new products and new customers the company said they were able to source some of its raw material more cheaply than before.
According to the company’s board, in their comments on the 2015 annual results “the economic environment has allowed the company to grow its revenues and profits by securing new markets for fragrances and increasing the volume of sales of flavours to existing and new customers in foreign markets. Based on the outlook for the coming year, it is expected that the company will continue to improve its profits whilst increasing its market share in the domestic and overseas markets”.
IC Insider projects profits for 2016 at $99 million or $1.10 per share with increased sales and improving profit margins and $1.50 for the 2017 fiscal year. Company is free of interest bearing debt and has net current assets of $221 million including cashfunds of $103 million.