The Lab, coming to a broker near you

NCB Capital Markets is readying a number of new public share issues to come to market by the summer this year.
Numbered amongst them are, The Lab that styles itself as a fully integrated 100 percent Jamaican born and bred advertising agency with global reach and an island swagger. “We are a strategic, creative, passionate solutions oriented and no nonsense group with a heavy emphasis on getting stuff done.” Kimala Bennett is the company’s Managing Director. Clients include National Commercial Bank, JPS, Wendy’s, Dominos, Supreme Ventures, Wray and Nephew, Grace Kennedy, Caribbean Broiler and Digicel. Persons in the know say this is one of those IPOs to plan for, it unique and profitable. QWI Investments is another that NCB Capital Markets is readying to take to the Jamaica Stock Exchange main market by early summer.

Kimala Bennett, Managing Director of The Lab.

Another that will be coming to market is Sagicor Select Funds Limited an Exchange Traded Fund. According to a note in the Sagicor Group audited financial statements, “It is the intention of the company to apply to the Board of the Jamaica Stock Exchange for admission of the shares to trading on the main market if subscriptions of at least $5 billion are raised.”
The above will come on top of the current public offer of Wigton Windfarm that opens next week to raise $5.5 billion, earmarked to be paid over to the government after expenses associated with the offer.

Is C&W buy out back in vogue?

Cable & Wireless HQ – The company’s stock traded at a high of $1.87 in November 2014.

Interest in buying shares of Cable & Wireless at the end of 2016 was lukewarm at best, with sellers out numbering buyers 2 to 1, after 7.6 million units were sold as low as 72 cents on the last day of 2016. On January 11, more than 51 million shares traded between 87 cents and 92 cents, including a 40 million cross by Mayberry Investments.
On Friday last, the stock traded 603,857 units between 92 cents and $1.08. The order book for the stock changed markedly, from a bearish posture to a more aggressive one. Unlike the end of January when sell orders dominated buyers, the situation at the close on Friday was reversed, with buyers almost twice the number of sellers. Importantly, Mayberry’s 30 million units sell order at $1.50 for own account, is removed.
The market activity, suggests that something major is in the offing. In 2015, a group of large minority shareholders approached Cable & Wireless PLC to buy their shares. The Liberty Global takeover of the London listed company intervened. Local investors were expecting that the local company’s minority shareholders would have been made an offer for their shares. After not seeing an offer, interest in the stock fell and took the price with it, down to 65 cents. IC Insiders’ source indicates that a potential offer is likely to be in the making.
Cable and Wireless struggled for years as Digicel, its main rival, clobbered it in the Cell phone market, but the company has been making big strides in reversing the trend. In addition C&W that focused attention on data service, is seeing that strategy paying rich dividends. The company reported just a small loss of $200 million in the September quarter and seemed to be on the way to making positive profit for 2017 onwards, with revenues growing 15 percent in the quarter and 13 percent for the six months. On the other hand Digicel is struggling as the market has moved towards data than voice and C&W grabs a larger share of the mobile market locally, leading Digicel to be looking at a sharp cut in staff numbers in the not too distant future.
With revenues likely to continue to grow for a while, around $3 billion per year, C&W seems on target to make huge profits down the road, with the prospects of big gains in the stock price ahead. Not many investors seem to see this picture, instead they focus on the short term developments, raising foolish questions about dividend payments and debt, when the two can’t be avoided. Under the companies Act dividends can’t be paid based on the large accumulated losses that have to be cleared first, while debt has been used to support the operations while it went through restructuring. The company is now cash flow positive and that should lead to debt reduction going forward subject to any large acquisition. Some minority shareholders who sought legal advice indicates that there were transactions that were effected that were not in the interest of the company.

RJR Gleaner pre-emptive move

TVJ one of RJR's subsidaries

TVJ one of RJR’s subsidaries

The Gleaner Company and RJR Group hinted that their planned merger of the media operations was spawned in part by the introduction of new media entities by the two telecom providers and heavy advertisers, Digicel and LIME.
The statement avoided naming entities but there are only two telecom companies in the island. Digicel started online media start-up LOOP, acquired cable company TELSTAR and regional cable channel SportsMax within the year. While LIME (C&W) regionally acquired Colombus Communications which trades as FLOW locally. Additionally the IC Insider understands from impeccable sources that talks broke down between LIME and an online media entity set for acquisition.
These moves however came within the context of what the media entities described as an already “challenging local climate”, according to an acquisition statement on a dedicated page on the Gleaner’s website.
“Further, recent moves by the large foreign owned telecom players have introduced a new dynamic where they themselves are increasingly offering media services, competing for local advertising dollars with the traditional players. Our two entities have sought to counter these developments by consolidating to shore up our financial bases in preparation for the heightened competition,” according to the statement on the dedicated merger question and answer website.
The developments in media and telecommunications so far this year could put many Jamaican media companies into the red, facing massive cut back in resources and even closure. This transaction is therefore necessary for financial sustainability of the two businesses. Jamaica needs a strong locally-owned media entity to maintain and expand our offerings globally, added the statement.

C&W booked Digicel’s claim before

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CWJ old OffNews broke on Tuesday that Cable & Wireless Jamaica is to pay Digicel $1.5 billion from wrongly withheld funds for interconnection calls made by cable & wireless fixed line customers. The stock plummeted 20 percent to close at 40 cents on the news. This is a classic case of sell first and ask questions after.
Information in the company’s last audited accounts indicate that the amount was already accounted for in full or in part, the March 2014 financial statements. According to a note in the financial statements, a suit was filed by Digicel against Cable and Wireless for $349.3 million plus $1.3067 billion claiming bad debt retained by the company under the interconnection and in respect of the company’s “homefone” service. This matter was consolidated with another claim filed by Digicel seeking an account of amounts charged and withheld under the interconnection agreement. The company counter claimed for $525.5 million being retention billed from 2003 to 2007. There are provisions with respect to the portions of this consolidated matter.
Even if the company had to pick up the full cost in 2014/15 accounts, it would effectively be of a one off nature and should not affect 2015/16 results which is what investors should be focusing on. At any rate, investors ought to be looking at results based on normal operating income and expenses to determine investment decisions.

NCB dominates as market rises again

NCB Financial dropped $8 on Friday.

Tuesday’s activity on the Jamaica Stock Exchange, resulted in the prices of 9 stocks rising 7 declining as 27 securities changed hands, ending in 11,536,610 units trading, valued at $173,915,246, in all market segments.

National Commercial Bank that dominated trading on Monday with 27,173,167 units, was again the lead trade on Tuesday, with 7,970,682 shares valued at $163,393,196. The majority of shares traded was done by way of a cross executed by Sagicor Investments.
Main Market| The JSE Market Index gained 326.79 points to 77,528.25, the JSE All Jamaican Composite index rose 365.36 points to close at a 85,398.48 and the JSE combined index gained 256.46 points to close at 79,427.70.
JSE sum 3-2-15 IC bid-offer Indicator| At the end of trading, in the main and junior markets, the Investor’s Choice bid-offer indicator shows 8 stocks with bids higher than their last selling prices and 3 stocks with offers that were lower.
Gains| Stocks gaining with last traded prices, at the end of trading in the main market are, Jamaica Money Market Brokers trading 22,500 ordinary shares and put on 23 cents to $7, National Commercial Bank traded 7,970,682 shares to end with an increase of 30 cents to a 52 weeks’ high of $20.50. Sagicor Investments bought and sold 7,927,299 units of the amount traded, in two lots. Sagicor Group traded 14,298 shares while gaining 50 cents to $10.50. The Sagicor Real Estate Fund closed with 20,775 shares changing hands as the price gained 4 cents to $6.74, Scotia Group traded 31,119 units and put on 20 cents to $20.25 and Supreme Ventures put in 94,445 shares to end with an increase of 10 cents to $2.10.
Firm| The stocks in the main market to close without a change in the last traded prices are, Berger Paints finishing with 3,039 units changing hands at $1.56, Carreras in trading 98,550 shares closed at $41, Desnoes & Geddes closed with 30,000 shares trading at $4.90. Gleaner had 31,693 units trading at 81 cents, Jamaica Broilers closed with 123,928 units at $4, Jamaica Producers ended with 955 shares changing hands at $17. Proven Investments finished with 9,646 units traded at 21 US cents, Radio Jamaica ended with 4,657 units trading at $1.10 and Seprod finished had 14,348 shares changing hands at $11.90.

Cable & Wireless dropped 20% to 40 cents on Tuesday

Cable & Wireless dropped 20% to 40 cents on Tuesday

Declines| The last traded prices of stocks with losses at the end of trading in the main market are, Cable & Wireless ending with 2,013,234 units trading, losing 10 cents to 40 cents as investors reacted negatively to news that the company has to pay Digicel $1.5 billion for interconnection charges. Grace Kennedy had transactions in 9,900 shares to close lower by 10 cents at $61.90, Pan Jamaican Investment closed with 3,816 shares changing hands, 50 cents down at $52 and Scotia Investments in concluding trading in 854 shares lost 4 cents to $22.51.
Preference| Proven Investments 8% preference share closed with 247,500 units trading at $5.

72% Customer Satisfaction for CWJ

Cable & Wireless Jamaica (CWJ) trading as Lime, ranked highest in customer satisfaction among all of Jamaica’s utility providers, according to a survey by the Office of Utilities Regulation, OUR CWJ said in a release recently.
CWJ old 1According to the report the Regulator said 72% of respondents reported that they were satisfied doing business with Cable & Wireless.
Among its telecommunications rivals Digicel, Flow and other utility providers, customers gave the company, the highest marks for product quality and accurate billing and placed them on top for customer care that makes them feel valued and respected.
“We have consistently put customers at the center of our strategic commercial decision-making and these objective survey results are the just reward for those efforts.” Garfield Sinclair Cable & Wireless CEO stated in response to this latest round positive public perception.
Cable & Wireless also received coveted recognition for being the only Telecommunications provider to register a double-digit increase in service quality over the 12-month review period.

Digicel joins the rate cut race

Following on the announcement last week by Cable & Wireless to cut all prepaid rates to $2.99 across all networks and to overseas, Digicel Jamaica unveiled a range of new plans that involves the lowest rates per minute. The new plans goes into effect at 12.01am on Friday morning.

Customers are now able to choose from one of six plans that best suit their individual needs a release from the company said.

Digicel’s line up of plans includes the Brawta Plan, the Gimme Five Extra Plan, the Double Bubble Plan and the $2.99 Plan all with per second billing plus the $2.49 Plan and $2.89 Sweet Plan with per minute billing.

Digicel Jamaica CEO, Barry O’Brien commented; “We asked our customers what they wanted and the answers we got were great value, lots of choice and more freeness.”

The details of each plan as provided by Digicel are:

Digicel_logo150x150The Brawta Plan and Gimme Five Extra Plan see customers getting even more freeness than they got with Gimme Five. Customers will now get 55 minutes of free Digicel Talk, 200 free Digicel Texts, 10 MB of free Data with free Nights, 55 free International minutes, monthly free Credit and Cash Back after talking for five minutes, sending five texts or topping up with $200 or more.

The Double Bubble Plan with per second billing sees customers getting double the value of their credit every time they top up with $200 or more. But that’s not all. Double Bubble customers will also get 10 minutes of free Digicel Talk, 10 free Digicel Texts and 25 free International minutes once they have talked on net or internationally for five minutes or sent five texts.

The $2.99 Plan with per second billing means customers get a great low rate on net and to the other mobile network at any time.

The $2.49 Plan with per minute billing is perfect for those customers who make longer calls and want the lowest rate in the market. Both of these new $2.99 and $2.49 Plans come with 25 free International minutes after the first five minutes.

Best suited to customers who like making long calls, the $2.89 Sweet Plan with per minute billing offers 10 minutes of free Digicel Talk, 100 free Digicel Texts, 10 MB of free Data with free Nights, 25 free International minutes, free Credit and Cash Back to customers once they have talked for five minutes, sent five texts or topped up with $200 or more.

Digicel Jamaica CEO, Barry O’Brien, continues; “We know that everybody loves freeness and presently over half our customers talk time is free and over 90% of Digicel texts sent are free.  For example, with the new Gimme Five Extra Plan, with Free after 5, a customer now gets 200 free texts which equates to $600 of free texts when you spend $15.”

To guarantee the customer experience, Digicel invested $7 billion in network improvements and upgrades last year and a further $3 billion investment is planned for this year.