Flat profit for Ansa McAl

Ansa Mcal profit stable after a big fall in 2017.

Trinidad’s conglomerate, Ansa McAl reported flat profits of $216 million before corporate tax for the quarter to March 2018, up marginally from the $214 million in 2017.
Profit after tax attributable to shareholders’ of the group, rose 4 percent to $138 million for the period. The results, although modestly higher than for 2017, marks stability compared to a big decline in the full years results for 2017 when they reported a decline from $691 to $544 million.
Improved profit was achieved from a 7.7 percent rise in revenue to $1.5 billion from $1.4 billion for the March 2017 quarter. Growth in revenues drove profit before finance cost up to $219 million from $216 million as profit margin remained at 15 percent in both periods. Finance cost rose from $9.9 million to $11.4 million, taxation was flat at $59 million in both periods.
Segment results show progress, except for Insurance and Financial Services that reported flat revenues and a 35 percent fall in profit and the Media business where revenues declined 3 percent but had a 33 percent rise in profit. Manufacturing, Packaging and Brewing increased revenues by 16 percent and profit by the same level

Carib Beer brewed in Trinidad by Ansa McAl Group

while Automotive trading and distribution enjoyed a mere 6 percent increase but that was enough to drive profit up by a strong 35 percent.
Earnings per share amounted to 79 cents, giving it a PE ratio around 18. Net book value per share is $39 while the stock trades at 1.5 book with the last price of $59.
Ansa is one of Trinidad’s major conglomerate, owning media houses, Carib Beer brewery, and now Berger Paints and other paint brand out of Trinidad to name a few of the entities it is involved in. At the end of March, shareholders equity stood at $6.86 billion.

Q3 profit jumps 73% at Lasco Manufacturing

Lasco Manufacturing products.

Lasco Manufacturing profit, jumped 73 percent in the December quarter, to $195 million from $113 million in 2016. For the nine months to December, profit fell 24 percent to $533 million from $700 million in 2016.
Sale revenues rose 22 percent for the quarter, to $1.78 billion from $1.46 billion but fell 3 percent for the year to date, to $5.28 billion from $5.42 billion in 2016.
Improvement in profit margin in the first half of the year, declined in the December quarter to 32 percent from 34 percent in the 2016, for both the quarter and year to date period, as input cost climbed 27 percent, compared to just 1 percent for the year to date period. The effect, operating profit rose just 12 percent in the quarter to $561 million from $503 million but fell 9 percent for the year to date, to $1.66 billion from $1.83 billion in 2016.
Other operating expenses fell 10 percent to $301 million in the quarter but rose 5 percent in the nine months period to $698 million. Finance cost declined in the quarter, to $34 million from $42 million in 2016 and from $126 million to $99 million for the nine months period.
Earnings per share came out at 5 cents for the quarter and 13 cents for the nine months and should end the fiscal year ending to March around 20 cents.

Bottle heating machine at Lasco Manufacturing.

Revenues and profits were impacted earlier in the year, by a number of factors including phasing down production in April and May, and additional marketing and brand building investments to support the brands and distribution discounts to support sales. The phasing down of production allowed for critical plant upgrades necessary for sustained improvements in output, cost efficiencies and quality. The expected improvements have materialized’ the Managing Director, James Rawle, stated in his report accompanying the quarterly.
Gross cash flow brought in $694 million but growth in receivables, inventories, addition to fixed assets offset by loan inflows and increased payables and paying $143 million dividends net overdrawn position ended at $518 million. At the end of December, shareholders’ equity stands at $4.84 billion with borrowings at just $1.75 million. Net current assets ended the period $1.52 billion well over Payables of $1.05 billion.
The company rolled out new juice drink in the December quarter and plan to launch carbonated beverages and an energy drink in the March quarter.
The stock traded at $4.40 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 22 times 2018 earnings. The company will go into a new year, come April, that should result in a lowering of the PE with IC Insider.com forecasting 30 cents per share for PE of 15 times earnings.

Access Financial Q3 profit up 12%

Access Financial reports profit of $158 million in the December quarter, up 12 percent from $142 million in 2016, from trading revenues that grew 18 percent to $423 million from $358 million net of interest cost.
Net profit rose to $505 million, for the nine months over 2016, an increase of just $10.6 million, a mere 3 percent over the similar period in 2016, with provision for loan losses doubling.
Total trading income for the nine months to December, grew 23 percent to $1.22 billion, an increase of $225 million over 2016 and for the December quarter the increase was $65 million to $423 million from $358 million for an increase of 18 percent.
Loans income, rose $97 million or 10 percent to $1.04 billion for the nine months and by 21 percent to $379 million for the December quarter. Net fees and commission income jumped by 91 percent for the nine months to $270 million but by just 5 percent to $73 million in the December quarter.
Amounts set aside for loan losses increased just 12 percent in the quarter to $63 million and a sharp increase of 99 percent for the nine months, to $186 million, with the latter being well ahead of the increase in income for the period. Staff cost rose 24 percent for the December quarter to $99 million and by 42 percent to $277 million for the year to date period.

Access has a long history of consistent growth in income & profits

Total operating expenses for the nine months, increased by 33 percent to $698 million over 2016 and by just 10 percent to $238 million for the last quarter.
Total assets climbed to $3.43 billion at the end of December, from $2.96 billion in the prior year with the loan portfolio rising to $2.87 billion from $2.65 billion at the end of 2016 and $2.62 billion as of March 2017. Shareholders’ equity rose to just over $2 billion.
Earnings per share for the December quarter came in at 58 cents and for the year to date period to $1.84 and should end the full year around $2.60 for the full year for a PE of 17 times. IC Insider.com is forecasting earnings of $4.50 for the 2019 fiscal year for a PE of 10 times projected earnings. The stock last traded on the Junior Market of the Jamaica Stock Exchange at $45.15.

Elite Diagnostic IPO opens February 5

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Elite Diagnostics could be in the Junior Market TOP 10 by the end of 2018.

Elite Diagnostic initial Public offer that was put off due to errors in the prospectus seems set to open this week, according to the brokers for the issue an advertisement in the Sunday Gleaner states.
According to the advertisement, the issue will open on Monday February 5 and is scheduled to close on February 12. The updated prospectus is expected to be posted on the Jamaica Stock Exchange website this Monday.
The issue was slated to have opened on January 22 at a price of $2 per share with the share and was scheduled to close on January 29 for a total of 70.68 million shares being offered to raise $141 million. Omission of depreciation charge from the profit statement, resulted in an overstatement of the profit for the September quarter resulting in an addendum to the report being released. The addendum did not address errors in the balance sheet relating to fixed assets and some other items, resulting in the cancellation of the opening of the issue. IC Insider.com gathers that the Jamaica Stock Exchange and the Financial Services Commission were reviewing the report last week to ensure that it reflected the correct position.
Of the shares available for subscription in the IPO, 18 million units are reserved for subscription at $2 each. The company currently has 282 million issued shares. The proceeds of the IPO will put the company in a position to repay a substantial part of the debt due lenders amounting to $202 million.
For the financial year ended June last year, the audited financial statements show revenues increasing to $263 million and net profits moved to $44.2 million from $29 million in 2016. Gross Profit margin is very attractive at 67 percent for the 2017 fiscal year with administrative expenses at 31 percent of revenues, excluding depreciation.
Notwithstanding the errors in the interim figures, Elite shares remain BUY RATED with IC Insider.com forecasting profit of 22 cents per share for the current year to June and 35 cents for 2019. The shares are expected to be listed on the Junior Market.

General public oversubscribed GWest 100%

GWest complex in Montego Bay,

Montego By based GWest Corporation’s Initial Public Offer of 169,689,500 shares, closed on the opening day, December 7, was oversubscribed by 41.3 percent, but the oversubscription by the general public exceeded 100 percent.
The level of oversubscription by the general public is amazing for company that is its infancy and generating a loss in its current fiscal year, with limited data on which to judge future earnings. Details of the level of subscription for the IPO was released by the broker for the issue, JMMB Securities.
Applications totaling 1334, were received for shares valued at $599,310,000. All the shares that were reserved were fully taken up, while General Public for which 69.7 million shares at $2.50 each, were available to purchase, received the first 10,000 shares applied for and 45.941 percent of the balance.

Dr. Konrad Kirlew, chairman of GWest.

GWest made a loss of $29 million in the six months to September this year and for the full year to March 2018, a loss of $111 million is projected, and is estimated to swing sharply to a profit of $166 million in 2019 and $388 million in 2020 as revenues rise from an estimated $158 million in 2018 to $803 million in 2019 to $1.2 billion in 2020. The shares are slated to be listed on the Junior Market of the Jamaica Stock Exchange.
Elsewhere, IC Insider.com gathers that VM Investments received applications in the range of more than 3,000, but less than 5,000, with the basis of allocation to be considered by the board on Thursday.

18.9% of applications for FosRich to public

The general public in the FosRich Company Initial Public Offering shares have been allocated 5,000 with the balance in excess of 5,000 units to be allocated at approximately 12.70 percent or around 19 percent of all the shares they applied for.
According to Stocks and Securities Limited (“SSL”), lead broker to the issue, 1,084 applications with a total value of J$140,103,400 were received from the general public. The issue had just over 10 million shares slated initially for the public. Company Reserved Shares that was initially allocated took up 82 percent of their allotment hence the rest went into the pool for the public.
Overall SSL received a total of 1,165 applications totaling J$324.2 million. The Company’s offered 100,455,111 shares to raise J$200,910,222. SSL and Key Partners received the full allotments. The Company will endeavor to return cheques or make refunds via RTGS to applicants whose applications were not accepted, or whose applications were only accepted in part, within 10 working days of the Closing Date, December 4.
The original allocation of the issue was as follows: The general public just 10,070,111 units, Stocks and Securities, 50 million units and key partners and staff 40,385,000 units.

300M IPO VM Investments shares next week

VM Investments Limited, the immediate parent company of VM Wealth Management (VMWM), will offer just over 300 million shares for sale, on Monday December 11 at $2.45 per share, to raise $689 million.
A total of 225,003,750 Ordinary Shares in the Offer are initially reserved for staff and customers of the VMBS Group, discounted at $2.08 to $2.33 each, and 75 million for the general public, at $2.45 each.
The offer which opens on December 11 is scheduled to close on December 18. It is the intention to list the company on the main market of the Jamaica Stock Exchange, after the issue closes.
The company intents to use the proceeds to build its capital base, to enable it to provide financing solutions and to capitalize on new business opportunities. In this regard the CEO Devon Barrett stated that they intend to allocate $1 billion per year to meet the needs of the small business sector, where data shows that there is an annual demand for $20 billion in financing.
The Directors expect to distribute up to 75 percent of the after-tax earnings as cash dividends, up from 55 percent on average to date.

VM Investments press conference for launch its IPO. from left is Michael McMorris – Chairman of VMBS, Courtney Campbell Group CEO, Devon Barrett CEO of VMIL and Janice McKenley – Group Chief Financial Offer.

Over the last five years, the revenue stream has evolved from predominantly, fixed income and securities trading, with approximately 70 percent of its total revenues coming from net interest income. Since 2011, VM Wealth has diversified its revenue streams, becoming active in the asset management and capital market space, with a comprehensive range of products and services. This has resulted in VM Wealth earning approximately 70 percent of its revenue from non-interest income sources.
The company reported after taxes profit of $326 million, surpassing $310 million in 2015. Up to September this year, profit of $273 million was achieved, putting in on track for $360 for the year or 30 cents per share. VMWM’s total operating revenue for 2016 was $1.28 billion, down from $1.37 billion in 2015. To September this year, $1.1 billion in revenue was generated. Revenues in 2016, comprised mainly of Net Interest Income of $251 million, gain from investment activities of $279 million and net fees and commissions of $280 million. Up to September, Net Interest Income came in at $191 million, gain from investment activities of $171 million and net fees and commissions of $370 million.

Devon Barrett CEO of VMIL addressing invitees at the formal announcement of the IPO, Beside him is Janice McKenley.

Shareholders’ equity stands at $2.12 billion as of September this year, with 1.2 billion shares issued and assets that include mostly investment securities. Third party assets under management increased by $4.4 billion or 55 percent, from $8 billion in 2015 to $15 billion in 2016 and assets under custodian arrangements amounts to $23 billion up from $20 billion in 2015. This was due mainly to increased promotion and the introduction of new unit trust product with 6 new portfolios – three US$ bond portfolios, one J$ bond portfolio, one local equities portfolio and a real estate portfolio.
The strong growth in net fees and commissions is very appealing as it will provide the base for good consistent growth in revenues and profits going forward.
DEVON BARRETT, MBA, is the Group Chief Investment Officer & Chief Executive Officer, Victoria Mutual Wealth Management.
With the 1.2 billion shares now in issue earnings per share is 30 cents for 2017 giving it a PE of 8. At a price of $2.45 and a PE of just 8 times 2017 earnings, the stock is price to enjoy a decent bounce ahead of 2018 earnings that should be higher than that of the current year’s, making it even more attractive.
The nature of the earnings can result in higher or lower profit from year to year but the longer term trend ought to be up, all things being equal especially as the more predictable fee income is growing at a faster pace that the others.

FosRich IPO fair value

FosRich Company is heading to the capital market to raise $200 million from sale of just over 100 million shares at $2 each. The general public have been allocated 10,070,111 units, Stocks and Securities, broker for the issue is allocated 50 million units, key partners and staff have 40,385,000 allocated to them.
Reserved shares, if not fully taken up, will be available to the general public. The issue opens on Monday December 4 and is scheduled to close on December 11 with the minimum application of 5,000 Shares.
The Board intends to use the proceeds of the invitation in order to expand the capacity of the Company to provide electrical and energy solutions to its customers and in particular, to expand its ability to provide industrial products. The Company will also pay down existing loans and pay the expenses of the Invitation.
The company has built up a name for itself by way of advertising through electronic media and will benefit further from the increased publicity that will be generated by listing.
Importantly, the company currently has interest debt of $300 million and carries a high level of inventories of just under a year’s supply. In 2014 the company booked through its equity reserves a mark down of $129 million for impairment of inventory and receivables. For the nine months to September this year gross cash flow $50 million before working capital needs and after it ended at a net outflow of $9 million. With those numbers bank financing for expansion is going to be challenging. The capital raised should go a long way in easing this constraint.
The Company major Jamaican wholesaler and retailer of a wide range of electrical, lighting and energy products, opened in November 1993 and it has operated at its flagship location 77-79 Molynes Road for over 24 years. The location serves as the Company’s headquarters and comprises a 25,000 square foot area including warehouse and office space and showrooms. FosRich currently has a staff complement of 84. Apart from its head office in Kingston, they also operates in Montego Bay and Mandeville.

Mark Croskery Managing director of Stocks & Securities brokers fro teh IPO speaking to Cecil Foster, Managing director of FosRich.

According to data presented in the prospectus the average annual growth in sales since was 15 percent and the average annual growth in gross profit over the same period was 20 percent.
Unaudited gross profit for the year to September 2017 was $360 million compared to $346 million for the same period in 2016, for an increase of $14 million. This improvement was mainly driven by improvements in selling prices, which compensated for the reduction in sales revenue by J$60 million to J$796 million compared to the same period in 2016 of J$856 million. The full year results should see the company generating sales of just over $1 billion and profit of approximately $40 million before taxation having made $31 million in pretax profit to September.
The historical record of profits are mixed with pretax profits at $42 million in 2012 rising to $60 million in 2013, in 2014 they made $43 million, just $10 million in 2015 helped by bad debt recovery of $10 million and $35 million in 2016.
The directors are, Marion Foster, Steadman Fuller, Ian Kelly, Peter Knibb and Rosalyn Campbell.
Based on estimated earnings for 2017 of $40 million the shares are priced at 20 times 2017 earnings but when viewed against 2018, that will benefit from lower interest cost and some pick up in sales, profit could reach $108 million or earnings of 22 cents per share. Based on 502 million shares in issue after the IPO, the PE would be 9, on this basis, the price could deliver a 120 percent rise in 2018. The stock is priced at just over 2 times net book value and would be one of the lower valued Junior Market company based on net asset value.

Grace Q3 results show some progress

Grace Kennedy Head Office

Grace Kennedy results for the third quarter showed some progress with the net operating profit before other income growing an attractive 26 percent in the September quarter compared to just 4.6 percent year to date.
In the June quarter operating profit before other income declined from $977 million to $956 million and year to date $1.876 billion down from $1.96 billion. Net profit for the quarter to September, rose $568 million or 57 percent to $1.56 billion. Importantly, the result includes one off gains of $419 million, excluding this gain, profit would have been up just 15 percent.
The big question, can these gains be sustained, if not accelerated going into 2018?
An increase of $51 million resulted in net profit of $3.75 billion for the nine months period from revenues of $69.3 billion, up 4 percent or $2.6 billion over the same period in 2016 with $66.65 billion. Revenues for the quarter, ended at $22.93 billion versus $22.53 billion in 2016.
Earnings per share for the quarter came in at $1.43 inclusive of the one off gain and $3.34 for the nine months the same as in 2016 a period that had large one off gains.
The third quarter shows much progress
“We have been steadily executing our strategy and are seeing the results. We are pleased with the performance of the Group and expect to finish 2017 on a strong note. With our customers at the focus of our entire operation, innovation, convenience and new technology are shaping our view of the future and how we deliver our goods and services,” Don Wehby, Group CEO said.

Group Chief Executive Officer, Don Wehby.

“We are quite optimistic about Consumer Brands and its capacity to add value to our shareholders. We have made, at the outset, a non-recurring gain of $418.5 million on the acquisition. We expect the business to continue to do well, given its knowledgeable and competent team and the Proctor and Gamble portfolio of products,” Wehby stated.
“In 2016 a non-recurring gain was attributable to the liquidation of non-operating subsidiaries. In 2017, we recorded $455 million in non-recurring gains due to liquidation of non-operating subsidiaries and an acquisition. Without these gains, net profit would have been higher than the corresponding period of 2016 by 0.7 percent. For Q3 2017, without the one-off gains, net profit for the three months ended September 2017 would have increased by 14.6 percent over prior year,” Frank James, the group’s Finance Director said.
He added that: “Shareholders will receive a dividend of .45 cents per stock unit, bringing dividends year-to-date to $1.13, an 11 percent increase over the corresponding period.”
Management commented on the various regions and divisions within the group. According to them “The Food Trading segment, which includes operations in Jamaica, Canada, the USA, the UK and Ghana continues to perform well. Some highlights include growth in the Florida and Georgia markets for GraceKennedy Foods (USA) and expanded relationships with CostCo Wholesale and other retailers in Western Canada for Grace Foods Canada.

Some of Grace Kennedy’s products.

While Grace Foods (UK) experienced lower sales than projected, a bold campaign featuring Daniel Sturridge as the new brand ambassador for the food drink Nurishment, is expected to have a high impact.”
“Grace Foods Latin America & Caribbean continues to be affected by the slow recovery of corned beef sales following a ban on the sale and distribution of corned beef in several markets in March 2017. Additionally Hurricanes Irma and Maria disrupted operations on the islands of St. Maarten, British Virgin Island and Dominica. Distribution partners in those countries continue to work toward restoring normalcy to their operations.”
First Global Bank (FGB) experienced growth driven mainly by net interest income and higher gains on securities sold when compared to the same period in 2016. Lower provisions against loan losses also contributed to the favourable performance as the bank continues to focus on delinquency management. FGB’s new direction, includes branch expansion through FGB Money Link. Money Link will see 28 new mini branches being established in locations across the island by 2018.”
The Money Services segment through Grace Kennedy Money Services (GKMS) reported growth in both revenue and pre-tax profit over the corresponding period of 2016. This is due to increased transaction volumes in the remittance business most notably in Trinidad and Tobago, Cayman and Guyana.
The Insurance segment declined in both revenue and pre-tax profit when compared to the corresponding period of 2016. This outcome was influenced by reduced investment returns and increased claims activity from Caribbean territories that were affected by hurricanes in September. The potential impact of claims relating to these hurricanes is still being assessed. GK General Insurance continues to maintain a robust reinsurance programme with highly rated international reinsurers which will lessen the impact of these claims.
Grace shares closed trading on the Jamaica Stock Exchange on Friday at $42.70 and is one of the cheaper priced stock on the market with a PE ratio around 10 times 2017 earnings.

67% premium for Berger T&T

Minority shareholders of the Trinidad and Tobago listed Berger Paints are set to get a 67 percent premium on their shares, with Ansa Coatings offer of TT$6.76 for the shares.
The shares were trading at TT$4.05 on the last trading day, prior to the public announcement of the takeover by the Ansa Coatings.
On July 31, Ansa completed the purchase of 500,000 shares from Chan Ramlal Limited being 9.69 percent of the issued shares at the price of offer price. The transactions triggered an obligation by the Group to make a mandatory bid for the remaining shares at the price paid for the Chan Ramlal shares.
According to Ansa, “a consequence of the LBOH Acquisition and the purchase of the Chan Ramlal shares, ACI is the beneficial owner of 3,613,011 Shares and the registered owner of 500,000 Shares amounting in total to 4,113,011 Shares and together with the 60,606 Shares owned by Sissons Paints Limited, ANSA McAL is the deemed beneficial owner of and controls approximately 80.86 percent of the issued share capital of Berger.”
Berger Paints’ Jamaica minority shareholders were offered a negative price to that at which the stock was trading at locally, which was rejected by shareholders, holding 94 percent of the minority shares.