Shuffling of stocks in the TOP 10 list was quite pronounced this past week with two companies exiting and entering each list. Jetcon Corporation and CAC 2000 slipped out of the Junior Market TOP 10, and were replaced by Dolphin Cove and Lasco Financial.
Entering the TOP 10 main market list are Berger Paints, returning after a recent fall from the list and Grace Kennedy that dropped out previously.
In the main market of the Jamaica Stock Exchange, Scotia Investments earnings per share have been sharply reduced with the latest results for the half year showing no growth, with the stock falling off the TOP 10 list as a result, while Salada Foods price rose to $10, resulting in it being pushed off the list.
In trading last week, tTech demand is building while selling has eased with limited supply being shown in the market. Elsewhere, NCB Financial Group is hitching for a major breakout from a wedge formation.
As indicated in recent weeks, market movement continues to be constrained by near term resistance levels which is acting as short term restraint to a break out from current levels for the time being.
The average PE ratio for the Junior Market Top stocks is 7.4 and 7.2 in the main market, these compare favourably with 13.8 for the overall main market and 13 for Junior Market, based on 2017 estimated earnings. Several stocks are trading below the average, and have the potential for more gains for the rest of 2017, barring major negative developments.
In a number of cases, the TOP stocks will need to deliver results in the upcoming quarter in order to send a message that the potential they have will be manifested.
At the close of the week, IC Insider.com’s TOP 10 Junior Market stocks now trade at an average discount of 45 percent to the Junior Market average, while those in the main market are trading at a 48 percent discount, to the average of the market, leaving stocks with room for growth in the months ahead. At the end of April the reading was 35 percent discount for the juniors and 53 percent for the majors.
Cable Bahamas list on JSE Friday
This Friday June 2, will see the latest listing of a new company on the Jamaica Stock Exchange. The Bahamian based Cable Bahamas will see its shares available for trading on the local exchange for the first time.
Earlier this month the exchange approved the listing of the company’s shares. Information available to IC Insider.com is that the list will be on the US dollar exchange and will comprise ordinary and preference shares.
According to the company’s financials there are 43,884,754 ordinary shares and 8 different category of preference shares issued. The net asset value of the ordinary shares are around BH$2 each but the stock trades in the Bahamas at BH$4.05, with 1,000 units trading. Selling by investors is at $4.40 and above with buying interest at $4.05 and below. The 52 weeks high is $6.76 on June 9, 2016 and a low of $3.80, on the 9th of February, this year.
Revenue earned for the 2016 December quarter, was BH$47.887 million compared to BH$41.730 million and for the year to December BH$180.588 versus BH$165.678. The company reported losses of BH$9.2 million in the December quarter inclusive of a fixed asset write off of BH$5.8 million and $7.8 million for the year. Total shareholders’ equity stood at BH$91 million at the end of December 2016 and losses incurred in the March 2017 quarter of BH$7 million pushed shareholders’ equity down to BH$84 million at the end of March this year. Revenues in the March 2017 quarter rose 17 percent to $51 million up from $43.7 million in 2016 but operating cost jumped even faster by 60 percent to $46.6 million from $29 million with depreciation and amortization rising from $9 million to $16.8 million.
Two other listing should be heading to the market within weeks as Stationery and Supplies and the Musson subsidiary Productive Business Solutions with operations in the Caribbean, Central America and the USA come to the market with a US$41 million offer of ordinary shares.
47% surge in Access profit
Looking at the Access Financial results to March without dissecting it would lead to a conclusion that things have slowed with earnings per share of $2.49 versus $2.19 as the comparative reported in the audited financial statements for 2107.
Those numbers disguise the full impact of the 2017 fiscal performance that is up nearly 47 percent after tax, compared to the previous twelve months period. The company that made its name lending workers supported by employers making payroll deductions for repaying the loans, made profit after tax of $678 million versus $463 million when the 15 month period is adjusted for the extra 3 months. The growth continues the strong growth of the company as loans keeps on growing year after year and being up $514 million in the last twelve months to $$2.6 billion. Access has shareholders’ equity of $1.7 billion and should exceed the $2 billion mark during the current fiscal year as profit for the current fiscal year.
IC Insider.com is forecasting profit for the year to March 2018 to exceed $1 billion with earnings per share of $4 with $6 for the 2019 fiscal year.
Dividends paid during the year to March 2017 amounted to $178,431,396 or 26 percent of profit. The stock traded at a record high of $50 on Tuesday on the Junior Market of the Jamaica Stock Exchange.
Sagicor Barbados undervalued but
The Barbadian based Sagicor Group is reporting net profit of US$23.4 million for the first three months of 2017, compared to the prior year of US$22.3 million. Profit flowed from revenues for the quarter of US$282.5 million, compared to US $264.4 million for the corresponding period in 2016, an increase of US$18.1 million.
Profit attributable to shareholders’ of the group ended at US$13.3 million, compared to US$13.9 million for the 2016 period. Earnings per common share was 4.4 US cents, compared to the prior year of 4.6 US cents.
Net premium revenue rose t0 US$167.7 million, exceeding the prior year amount of US$157.3 million. Net investment income and other income rose to US$114.8 million compared to the prior year’s US$107 million.
Operating expenses rose to US$115 million from US$101.4 million for the same period in 2016. “Higher administration costs were incurred as a result of the expansion of cards and payments business in our Jamaica segment, along with the incurrence of some non-recurring costs also relating to our Jamaica segment”, Stephen McNamara, Chairman, stated in his report to shareholders. Policy holders’ benefits inched to US$137.2 million from US$134 million for the previous year.
Total comprehensive income grew to US$28.6 million, compared to US$19.9 million for the same period last year. Included in comprehensive income were net gains on financial assets of US$7.9 million. “Retranslation losses Sagicor Group Jamaica, a subsidiary of the Barbados company.[/caption] amounted to US $0.7 million, compared to US $6.4 million reported in the prior year, and resulted from declines in the Jamaica and Trinidad currency against the United States dollar”, the Chairman stated.
Total assets amount to US $6.6 billion, with liabilities of US$5.8 billion and shareholders’ equity of US$818 million. The Group’s debt, which is included in other liabilities, was US$405.3 million.
The group’s stocks traded on the Trinidad and Tobago Stock Exchange atTT$8.99 and in Barbados at BD$2.45, (around US$1.30 per share. The price puts the PE ratio around 7 times 2017 earnings. The problem is that Barbados where the company is head quartered is in the midst of major economic problems that could make investing in the stock riskier than normal.
Audit wrongly states ISP earnings as 32c
ISP Finance earned $40 million for 2016 or earnings per share of 46 cents based on an average of 87 million shares in issue for the year, but the audited statement reported only 32 cents based on a non-existence average of 126.5 million.
The company only issued 105 million shares hence it is not possible for the average to be greater.
The above error along with glaring errors elsewhere in the financial system at large raise the question about the investing public being adequately protected, in spite of regulators in place to do police the system?
Auditors are required to use care and due diligence in undertaking their duties to ensure that the companies they audit maintain proper records that will give a fair view of a company’s profit and financial position. Users of audited statement is not expected to see glaring errors in them. It raises questions about the quality of the audit and the management of the company as well.
Knutsford Express’ audited reports for 2014 and 2015, were filled with errors or questionable treatment of transactions, raising questions about the accuracy of the entire reports.
The earnings per share for 2014 was overstated due to inaccurate computation of the average number of shares issued in 2013, while showing earnings per share of $1.07 for 2014. The income statement erroneously stated by way of note, that “using the weighted average number of shares at end of 2015 would result in earnings being 50 cents for 2014.” Since no new share were issued in 2015 there can be no there is no need for a computation of an average and there can be no change to the earnings for 2014 if the correct average was computed for 2014 in the first place.
The report had further stated “During January 2014, the company raised additional capital of $99,862,700 from its initial public offering of 99,999,003 shares for its enlistment on the Jamaica Stock Exchange Junior Market”. The company in fact issued 26 million bonus shares in 2013 while the public offering was for 20,000,000 ordinary shares, only 4,867,338 new shares were offered by the company while 15,132,662 shares existing shares were sold to the public in the IPO by shareholders. At the time the IPO, 95,132,662 ordinary shares were already issued, the average number of shares should be approximately 60 million rather than 46.8 million used to compute the 2014 EPS, which would have worked out around 83 cents.
According to ISP Finance prospectus, 1n January 2007 the company was incorporated with an authorised share capital of 10,000 ordinary shares at J$1 per share. In June 2007 the company’s authorised share capital was increased to 5,000,000 ordinary shares with all being subscribed for at $1 each.
On February 11, 2016 the company’s authorised share capital was increased to 105,000,000 ordinary shares. Of the 100,000,000 ordinary share increase, 51,017,500 shares were allotted to Gencorp Limited at J$2 per each being the same price at which shares were offered in the IPO. Of the balance just over 48.98 million units were offered to the general public in the IPO.