Indies gains 167% since Junior Market IPO

Newly listed Junior Market stock, Indies Pharma jumped to a record $4 on Thursday, in recording gains of 167 percent since the IPO issue in July, at $1.50 per share.
The stock seems to have benefited from information from the company indicating the likely acquisitions and new products to come to market. Additionally, a look at the order book indicates very few stocks being offered for sale. Blue Power and Medical Disposables are two stocks that have benefited from good results recently to help push them to record closing highs on Thursday but AMG Packaging closed at a 52 weeks’ low.
The Junior Market having retreated for two consecutive days recorded gains at the close of trading on Thursday, with the market index rising 8.83 points to close at 3,365.20, as it pulled back from 3,388.43 high reached in the morning session.
Trading resulted in 25 securities, the same number that changed hands on Wednesday, leading to 11 advancing, 7 declining and 7 remaining unchanged, as investors exchanged 2,749,388 units valued at $12,888,595, compared to 3,271,099 units valued at $12,971,060 on Wednesday.
IC bid-offer Indicator| At the end of trading, the Investor’s Choice bid-offer indicator reading had 5 stocks ending with bids higher than their last selling prices, 4 closed with lower offers.
Trading closed with an average of 109,976 units for an average of $515,544 in contrast to 130,844 units for an average of $518,842 on Wednesday. Trading for the month to date averages 732,567 units for an average of $4,441,049 and on the prior trading day, an average of 806,685 units for an average of $4,908,371. Trading in August, averaged 244,613 units at $1,348,298 for each security traded.
At the close of trading, Access Financial closed with a gain of $2.50 to close at $50, with an exchange of 250 shares, AMG Packaging ended with a loss of 1 cent at a 52 weeks’ low of $1.89, with 5,662 stock units, Blue Power concluded trading of 24,100 units and gained 50 cents to end at a 52 week’s high of $6.50, Cargo Handlers settled at $13, trading 5,187 shares, Caribbean Producers finished trading 1,143,307 units at $6. Consolidated Bakeries closed with a loss of 5 cents at $2.45, with 100 shares changing hands, Derrimon Trading ended at $3, while exchanging 566,924 shares, Dolphin Cove concluded trading 240 shares at $17, Elite Diagnostic finished trading of 141,028 stock units and rose 6 cents to $3.50. Everything Fresh dropped 34 cents in trading 69,825 shares to end at $2.10, Express Catering closed at $8.18, with 70,042 shares changing hands, FosRich Group traded with a loss of 5 cents at $3, exchanging 7,670 shares, Honey Bun ended 5 cents higher at $4.05, with the swapping of 24,500 units, Iron Rock concluded trading at $3.50, with 32,151 shares changing hands. Indies Pharma gained 35 cents with 235,244 shares changing hands to end at a record close of $4, Jamaican Teas jumped 45 cents to $4.65, with 120,000 shares trading, Jetcon Corporation ended trading 6,879 stock units and rose 5 cents to $4, Key Insurance traded 67 cents higher at $3.75, with the trading of just 900 units, Lasco Distributors ended with a loss of 23 cents at $3.77, trading 15,700 shares. Lasco Financial concluded trading with a loss of 45 cents at $5.45, with 58,922 stock units changing hands, Lasco Manufacturing closed with a loss of 9 cents at $3.90, in exchanging 94,100 units, Main Event settled 2 cents higher at $6, with 16,494 shares traded, Medical Disposables ended trading a mere 300 shares and gained $1.25 to a new high of $7.95 and Stationery and Office finished trading 29,363 stock units and rose 1 cent to $9.
Prices of securities trading for the day are those at which the last trade took place.

Big bounce in Fosrich profit

FosRich profits rose sharply in 2018

Fosrich Group reported profit of $30 million for the June quarter, an increase of 630 percent over the $4 million reported for the prior year’s reporting period.
Profit before tax climbed to $60.6 million for the half year to June, for an increase of 144 percent over the $25 million for the similar period in 2017 and by an increase of 234% over the post-tax profit of $18 million, reported for the prior reporting period.
Having listed on the Jamaica Stock exchange Junior market in 2017, profits are now free form taxes for a period of 5 years. Earnings per stock unit ended at 12 cents for the half year and 6 cents for the quarter and should end up just around 27 to 30 cents, if the trend continues.
During the second quarter, the company enjoyed an 18.7 percent hike in income to $320 million, from $270 million for the prior year. For the half year, sales revenues were just up by 5 percent to $592 million from $565 million in 2017.
Gross profit for the quarter, rose 23 percent to $141 million from $115 million, in the prior reporting period and for the six months to June gross profit increased just 6 percent to $269 million. Gross profit margin slipped from the first quarter to 44 percent with the margin for the six months ending at 45 percent. Other income for the year-to-date benefited from foreign exchange gains of $15 million.
Administrative expenses fell $14 million for the half year, to $198 million and slipped just slightly for the quarter to $102 million from $103 million. According to the Managing Director, Cecil Foster, “the decrease was driven primarily by efficiencies gained from the management of staff and related costs, reductions in selling and marketing expenses, reduced insurance costs and reductions in damaged goods write-off and warranty expenses. The cost savings were partially offset by increases in staff training, legal and professional fees, rent and bank charges,” management indicated.
Finance cost for the year-to-date was $28.5 million compared to $19.6 million for the prior reporting period, but rose 68 percent in the June quarter to $17.5 million. “This increase is being driven by a new working capital line of credit obtained to assist with the financing of operations. This new facility was obtained at more favourable rates than the previous bank facilities,” Foster advised, in his commentary on the interim results.
Inventories rose sharply from $625 million in December to $808 million in June, receivables declined to $148 million from $156 million. Amounts due to creditors fell sharply from $297 million as of December to just $35 million. The company paid off amounts due on overseas line of credit thus reducing foreign exchange risk. The switch contributed to a sharp rise in loans from $384 million to $795 million.
“The company continues to closely manage inventory balances and the supply-chain, with a view to ensuring that inventory balances being carried are optimised, relative to the pace of sales, the time between the orders being made and when goods become available for sale, to avoid both overstocking and stock-outs. Monitoring is both at the individual product level and by product categories,” foster advised shareholders.
Part of the loans was on lent to an affiliated company that is completing an apartment complex on Shortwood Road, the managing director confirmed to IC Insider.com. The financials show $243 million due form them. The amount due incurs interest at 12.5 percent rate, Foster stated. The line allowed the company to stock up on some commodities at low prices relative to what normally obtains in the trade.
Shareholders’ equity now stands at $670 million, up from the $609 million at December 2017. Fosrich trades on the Junior Market at $2.80 on Tuesday, just around 10 times earnings.

NCB Financial remains on high alert

The Jamaican stock market, scaled new heights last week, helped by NCB Financial hitting a record high of $115, as supply of the stock being sold remains limited.
More buying came in for the stock on Friday and investors should be on the watch again as the price could go higher during the current week.
Grace Kennedy is another of the main market stocks to keep an eye on, as it slowly tries to move higher. Caribbean Cement moved back to $50, on Friday and could go further in this week as increased demand came in for the stock. It clearly one to watch but investors will need to determine if Friday’s move is a part of the usual month end window dressing. Kingston Wharves closed at $61.80 but traded as high as $65, supply remains low, thus favouring further price gains, even as the stock is carries by far the highest PE in the market. Watch for Scotia Group that should be releasing third quarter results, this week Thursday and Sygnus Credit Investments that posted full year results in line with expectations of US$1.4 million.
In the Junior market, Indies continue with strong demand existing for the stock, with news of potential acquisition and new products, the stock is worth watching for more gains. General Accident could move higher as more demand comes in for it with limited selling.
Caribbean Flavours seems to be following its parent, Derrimon Trading, continuing to rise with limited volume on sale currently. Medical Disposables, declined during the previous week, recovered last week and .should be moving higher going forward, continue to watch this one, as well as Derrimon Trading that has contracted to distribute products of a Trinidad producer.

Kingston Wharves jumped to close at $60 on Tuesday.

Stocks with scarce supplies that could spring surprises include Barita Investments, Grace Kennedy, NCB Financial, Berger Paints, Caribbean Cement, Kingston Wharves, PanJam Investment, Sagicor Group, Salada Foods, Seprod and Scotia Group. The main market is not the only segment with limited supplies. The Junior Market supplies continue to be limited for many of the listings. The list includes, Caribbean Flavours, Cargo Handlers, Derrimon Trading, Express Catering, General Accident, Caribbean Cream, Medical Disposables, Stationery and Office Supplies and tTech.
An overall view of stocks indicates that the main market continues to be steered higher by an upward sloping support line as well the 45 and 125 day moving averages, lending support just below. The Junior Market now at a 15 months’ high, is being steered by an upward rising long-term support line and a golden cross. The golden cross is a very strong bullish long-term signal.

Access, Fosrich, JMMB now in IC TOP 10

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Both the Jamaica Stock Exchange, main and Junior markets reached higher levels during the past week, with the main market hitting a series of new record highs. The coming weeks should see more gains as investors seek out opportunities as fixed interest returns have tanked.
The Top 10 has 3 changes, with Medical Disposables and Caribbean Producers moving out and making space for Access Financial and Fosrich Group in the Junior Market and JMMB Group coming in for is Berger Paints, with the latter jumping to $21.50 by the end of the week from $18 the week before.
Access Financial produced decent June quarter results with profit rising 16 percent to $217 million from $188 million for the 2017 quarter. The company is in the process of another acquisition, this time overseas, this should continue to help boost profit going forward. Fosrich posted good second quarter results and is on target to reach IC Insider.com’s forecasted earnings of 30 cents per share. Fosrich too, could be making an acquisition later this year, or early 2019, unofficial, but credible reports suggest. JMMB Group posted good first quarter results with a 59 percent increase in net profit. Some of the strong gains came from the relatively sharp fall in the value of the Jamaican dollar in the period that is not expected to continue.
The PE ratio for Junior Market Top stocks average 8.5 up marginally from 8.4 last week, as the market continues to revalue the multiple higher. The latest valuation compares to an average PE for the overall market of 13, based on 2018 estimated earnings. The main market PE is now 8.5 and is up from 8, last week, for the top stocks, compared to a market average of 13.7, a clear indication of the level of potential gains that can be made by owning these stocks. Work done by IC Insider.com suggests that the PE ratio is likely to end 2018 around 16 to 18 times earnings, as investors continue to upgrade the multiple they are prepared to pay for stocks, which would lift prices sharply over the next several months from current levels. The latest government bond offer with a 4.58 years tenor, was heavily oversubscribed, resulting in rates dropping to 3.95 percent, suggesting that investors are satisfied that the economic policies will continue to lead to low inflation for a considerable time. These rates suggest more funds will be going into stocks as liquidity remains high in the financial system.
The TOP 10 stocks now trade at an average discount of 35 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 38 percent to the market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.

SOS back in, Lasco Financial out of TOP 10

Stationery & Office Supplies is back in the TOP 10 but could fall in prive this week before moving higher.

A number of companies reported results in the past week, with some in the TOP 10 not getting much help from the new information and some of the top stocks earnings being downgraded, based on new information conveyed by the latest results.
Lasco Financial posted a strong 37 percent rise in profit, from $162 million to $222 million, but with slightly lower March quarter profit of $55 million, from $62 million, based on sharply increased finance cost that rose from $2 million to $14 million, as revenues grew more than 41 percent in the quarter, from $288 million to $405 million. Based on the new numbers, IC Insider.com places earnings for the current fiscal year at 50 cents per share or just around $650 million. The forecast is not enough to keep it in the Top 10 but it remains a solid buy, just below. Replacing Lasco Financial is Stationery and Office Supplies with the price pulling back during the week to close at $8.06. The price looks as if it could fall to the $6.50 region which would make it an even better buy.
All main market stocks remained in the top spots, but earnings for JMMB Group was downgraded following the March results and so too was Berger Paints. Radio Jamaica reported a loss in the March quarter and a loss for the full year, with a portion of the losses coming from one off items. The charge for depreciation and amortization is $255 million for the March 2018 fiscal year, well in excess of the loss reported for the year, resulting in a positive cash flow operation.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 6 compared to an average PE for the overall main market of 11, based on 2018 estimated earnings. The main market PE is 7.6 for the top stocks, compared to a market average of 13.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 44 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 41 percent to the market. Investors should keep an eye out for Scotia Group that should release half year results on Wednesday.

Palace & Lasco Financial back in TOP 10

Palace Amusement, Lasco Financial and Caribbean Flavours are back in the TOP 10 for this week, out goes Salada Foods, ForsRich and Caribbean Producers.
Salada Foods rose to $15 from $13.10 at the close of the previous week, as investors continued to react good half year results. Caribbean Flavours stock price dropped to $10 by the end of the week and that was enough to make its return to the top list. Lasco Financial just reentered the list as the price fell to $.20 by week end. IC Insider.com upgraded 2019 earnings for Palace based on sensitivity that the company’s patronage and revenues have to employment data. Economic growth and increasing employment that Jamaica is enjoying bode well for continuation of an elevated level of profitability, even after totally discounting the exceptional increase for the current year that ends in June, based substantially on the success of the Black Panther movie.
Radio Jamaica, stock price fell from $1.35 to $1.02 on Friday with the stock moving back up in the list.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 6 compared to an average PE for the overall main market of 10, based on 2018 estimated earnings. The main market PE is 7 for the top stocks, compared to a market average of 13.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 40 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 46 percent to the market.

Grace & FosRich in TOP 10 stocks

Grace Kennedy is in TOP 10

Out go Palace Amusement and Lasco Financial, in comes Grace Kennedy and FosRich Group into the TOP 10 listings this week.
Lasco Financial climbed to $5.65 at the end of last week while the bid on Palace climbed to $1,000 thus leaving room for Grace Kennedy and FosRich that fell to $2.35, to enter, in a week that saw the main market trading in record territory and the Junior Market recording gains in the index for the week.
The next two weeks should set the tone for the market in the medium term as most companies will be releasing results for the March quarter. Based on early releases, only a handful of results have positive effect on prices. The latest results from Supreme Ventures with a 49 percent rise in the first quarter profit seems set to push the price higher.
Investors responded positively to Berger Paints prospects, with active supply below $20 per share having declined sharply, leaving the price to close the week at $19.
Buying continued for Barita Investments with the price hitting $10 during the week. JMMB Group pulled back by the end of the week to $26.98 from $28.32, as the block out period for insiders to trade in the stock is in place until full year results are out. Resistance for the stock price is just over $31 an area investors should be on the lookout for, in the short run. Caribbean Cement first quarter profit was slightly down on last year, but the company is set to do better in the June quarter with the buyout of the expensive lease of equipment and prospects of lower operating cost, with the major repairs behind them and increasing demand for cement likely, ahead of the 6 percent growth in the first quarter. The stock may remain around current price levels for a while. Iron Rock reported vastly improved results for first quarter and appears to be on the way to their first profit since listing. The stock climbed to $3.50, following release of the results.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 6.1 compared to an average PE for the overall main market of 10 based on 2018 estimated earnings. The main market PE is 7.2 for the top stocks, compared to a market average of 13.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 39 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 43 percent to the market.

Some impressive profit results

The latest set of listed companies to report financials show an array of impressive profits for a number of them, turn around situation in one and flat results for a few.

C&W reported a small loss of $138M for 2017 before tax.

Cable and Wireless reported a very small loss for 2017 down sharply from a billion loss in 2016 and is about to break out into a highly profitable period starting in 2018. The company that has chalked up accumulated losses of more than $48 billion reported losses of only $138 million before tax for 2017, and just $383 million after tax, flowing from a 9 percent rise in revenues to $27 billion with a big rise in mobile revenues by 54 percent to $15 billion while interest cost at $5.2 billion the company lost the year, down from a loss of $1.4 billion in 2016. With the sharp fall in interest rates locally interest cost should drop by around $2 billion in 2018 and plunge the company into an excellent profit position with continued growth in revenues. Unfortunately, the parent company wants to take over the company at a low price, after local shareholders have suffered losses for many years at just the stage when good times seem to be returning.
Newly listed FosRich Group posted an 81 percent increase in profit to $55 million and earnings per share of 14 cents from revenues that fell 9.5 percent to $1.05 billion, but helped by other income of $42 million comprising mostly interest and foreign exchange gains.
Jamaica Producers enjoyed strong gains in operating profits with an increase of 77 percent to $662 million after adjusting the 2016 results for non-recurring gains of $3.7 billion. Operating income for the year was up an impressive 34 percent resulting in gross profit rising from $3.24 billion to $5.14 billion. Earnings per share came in at 59 cents.
Stationery and Office Supplies that listed in August last year enjoyed a 29 percent bounce in revenues for the full year and 37 percent rise in the December quarter to record full year revenues of $906 million and a 78 percent rise in profits to $83 or earnings per share of 38 cents.
Kingston Wharves profit climbed 18 percent from $1.29 billion to $1.63 billion for 2018 from revenues that moved from $5.41 billion to $6.37 billion for a rise of 28 percent and ended with earnings per share of $1.14.
Grace Kennedy continues to struggle to increase profits ended 2018 with flat results of $4.15 billion versus $4.12 billion in 2016. The 2016 figures and one off gains that makes the 2018 better that it appears on the surface. Revenues rose from $88.3 billion to $92 billion in 2018 and other revenues slipped from $2.38 billion to $2.1 billion. The group reports $4.15 in earnings per share.

FosRich profit rose 77% for 2017.

Supreme Ventures reports earnings per share at $44 cents from profits that are virtually flat with 2016 results coming from a 25 percent rise in revenues to $56.2 billion. Profit for the year ended at $1.197 billion from $1.178 billion. The 29017 suffered from write off of assets and impairment amounting to $484 million while repairs and maintenance rose by $110 million.
The 2017 listed Victoria Mutual Investments reports a 9 percent rise in profits to $346 million from a 19 percent rise in net income of $966 million and produced earnings per share of 29 cents.

Barita is back VM Investments out – TOP 10

There is only one change to the TOP 10 lists, since we last reported on it, with Victoria Mutual Investments rising to more than $4 from the IPO price of $2.45, after listing in December and is replaced by Barita Investments.
Junior market stocks show some noted position change due to price movements. Key Insurance slipped in price to move atop that list, while Jamaican Teas gained and moved into the second half of the listing. CAC2000 posted results that were just 2 cents lower than IC Insider.com’s forecast of 80 cents, with the price climbing to $7.31 at close of the week and should really be going higher based on those numbers. Access Financial climbed back to $42, pushing it to the bottom of the list.
Former TOP 10 listing, Main Event reported a 79 percent jump in earnings for 2018, to 38 cents per share before taxation, the price may bounce about for a while around the $6, until it is clear that 2018 earnings should hit 55 cents per share.
With the Initial Public offerings (IPOS) out of the way, more life returned to the secondary market this past week with the main market enjoying buoyant volumes and the Junior Market recording some recovery with more buying interest.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 8.6 and 8.4 for the main market TOP 10. The average PE for the overall main market is 15 and 13.6 for the Junior Market, based on 2017 estimated earnings.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 37 percent to the average of the market for Junior Market Top stocks and 44 percent for the main market.
Market Watch| Investors should still keep a keen eye on Caribbean Cement for which supply seems to be declining and word that the company is close to an agreement in refinancing the leased assets that is expected to result in major savings in cost for 2018 onwards. FosRich and GWest Corporation, pulled back from their highs this past week with FosRich hitting $2.50 in trading on Friday, this one could see some rebounding but GWest Corporation could decline some more. Others to be watched are, CAC2000, General Accident, Cable & Wireless, NCB Financial, Berger Paints, JMMB Group, Main Event, Lasco Financial, Paramount Trading and Stationery and Office. Wisynco pulled back this past week to $10.80 and may well trade around this level for a while with a PE of 15 times 2018 earnings, as profit taking continues.

TOP 10 stocks – Watch for Wisynco

Wata produced by Wisynco

Movement in the TOP 10 lists, resulted in just one move out, while some changed positions notably on the list. Main Event was the sole stock dropping from the top list leaving room for Caribbean Cream to move in.
With the Initial Public offerings (IPOS) out of the way, more life returned to the secondary market this past week with the main market gaining strongly but Junior Market stocks continue to struggle but helped by gains in price of two new listings.
The year ahead will see a number of changes to the TOP listings with several of the current listing carrying over. Only ISP Finance so far is showing as a new likely TOP 10 listing for 2018 in the Junior Market. The main market list is likely to see about 4 new entrants for 2018, with Cable & Wireless, Barita Investments, Palace Amusement and Wisynco depending on when it list, joining the top stocks. Radio Jamaica sits just below the TOP 10 and could well squeeze into the 10 by the start of 2018. Profit results for the fourth quarter, are likely to impact prices of most stocks as the information will provide important fuel for price movements.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 7.9 and 8.2 for the main market TOP 10. The average PE for the overall main market is 14.2 and 13.4 for the Junior Market, based on 2017 estimated earnings.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 41 percent to the average of the market for Junior Market Top stocks and 42 percent for the main market.
Market Watch| Investors should still keep a keen eye on Caribbean Cement for which supply seems to be declining with the focus on refinancing of leased assets that is expected to result in major savings in cost for 2018 onwards. FosRich and GWest Corporation, the recent IPOs, started trading on the Junior Market last week with strong gains so far, they should be watched in the few trading days left for the year, to glean further directions as both are now richly priced. Others to be watched are, General Accident, Cable & Wireless , NCB Financial, Berger Paints, JMMB Group, Main Event, Lasco Financial, Paramount Trading and Stationery and Office. Wisynco could start trading this week and is expected to create some excitement with the issue more about twice oversubscribed.

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