Profit climbs at Lasco Manufacturing

Profit rose 23 percent at Lasco Manufacturing for the three months to September to $469 million from $380 million in 2021 and 13 percent from $782 million in the six months to September 2021 to $883 million in 2022.
Gross profit margin fell in the first quarter to just 34 percent but rebounded to 37 percent in the second quarter to September this year, similar to what obtained in 2021 and brought the year to date margin to 36 percent compared to 37 percent the previous year, suggesting the company has now restored the margins to 2020 levels.
Revenues rose 22.6 percent in the quarter to $2.87 billion from $2.33 billion in 2021 and up 17.5 percent for the six months to $5.47 billion from $4.66 billion. Gross profit rose 18.4 percent to $1.07 billion in the quarter, from $870 million in 2021 and climbed 15.3 percent to $1.97 billion for the six months compared to $1.71 billion in 2021.
Operating expenses rose 18.5 percent to $378 million in the 2022 September quarter versus $319 million in the comparable quarter in 2021. They increased 10.75 percent to $690 million for the six months to September 2022 versus $623 million last year.
Finance cost fell to $7 million in the September quarter versus $13 million in the three months in 2021 and $15 million to the half year to September versus $29 million in the prior year, with taxation jumping to $210 million in the quarter versus $173 million in 2021 and to $361 million in the half year to September 2022 versus $327 million last year.

Some of Lasco’s products

Cash Flow generated inflows of $1.38 billion to September. Dividend absorbed $413 million and loan repayment $109 million while working capital took up $720 and $436 million went into short term investments and purchase of fixed assets, resulting in net outflows of $312 million.
Shareholders’ equity of $9.9 billion, up from $8.4 billion at the end of 2021. Long term borrowing is down to just $48 million, with the current portion due to be repaid over the next twelve months being $207 million, other current liabilities amount to $1.5 billion, leading to net existing assets of $5.8 billion after taking into account current assets of $7.5 billion that includes cash and equivalent of $2.9 billion.
Earnings per share was 11 cents for the quarter and 21 cents for the half year, with projecting 60 cents for the entire year, giving it a PE of 6.5 at the stock price of $3.85 it closed at on Friday on the Junior Market of the Jamaica Stock Exchange and earnings of 80 cents per shares for the fiscal year 2024 that could see the stock hitting $15 by then.
According to executive chairman Lascelles Chin, the outlook is that they “remain cautiously optimistic for continued growth in the forthcoming quarters as we have seen an easing of supply chain bottlenecks and material cost inflation seems to have stabilized. With the ongoing geopolitical conflict in Europe, headwinds are, however, possible. Whatever may arise, we will remain focused and proactive in executing our business plan to deliver growth and margin progression.”

Knutsford Express looking good

Jamaica cross-country luxury bus operator, Knutsford Express is all smiles again having turned a loss of $96 million in 2021 into a profit of $78 million before other comprehensive income in the year to May 2022, but the position is even better when the loss of $33 million in the discontinued Florida business is considered.
Revenues for the year ending May 2022, jumped 77 percent to $1.11 billion from a covid19 battered 2021, with $629 million. Other income brought in $21.5 million for the year, with just about all, generated in the last quarter and appears to be from real estate rental. The audited statement says nothing about its source, but there was virtually no other income in the prior year.
The fourth quarter generated revenues of $339 million up 96 percent from $173 million in the May 2021 quarter, with profit surging to $82 million for the quarter, from a minuscule $10 million in 2021 before losses from the discontinued business.
Unfortunately, the company fails to compute direct operating costs, as such gross profit is not reported in their full year or quarterly reports. A clear backward step in an expanding financial space. Based on the audited financial statements, computes gross profit before staff cost at 60 percent for 2022, up from 52 percent in 2021, with fuel accounting for the largest part, coming in at $150 million in 2022 from $73 million in the previous year. Parts and supplies accounted for $59 million, up from $29 million. Insurance costs rose to $37 million from $28 million last year, while Toll fees consumed $35 million against $20 million m 2021.
Operating expenses rose 40 percent to $979 million, from $698 million in 2021, with Salaries, wages and related expenses accounting for $306 million, up from $219 million in 2021, with the number of staff increasing from 178 to 221. Finance costs more than doubled from $15 million to $36.6 million.
Earnings per share for the year amounts to 16 cents, including losses from the discontinued business and 22 cents excluding it, while the fourth quarter delivered earnings of approximately 15 cents per share or 60 cents annualized. projects full year 2023 earnings at 90 cents per share, with the PE ratio at 8.3 times 2023 earnings compared to a market average of just under 13, an indication that the stock is undervalued.
The company generated $267 million in gross cash inflows and expended $223 million on the purchase of fixed assets and was left with $54 million that helped in pushing total funds to $106 million at the end of the year, in addition, investments amounted to $92 million.
Borrowings moved from $487 million to $512 million, while payables rose from $98 million to $151 million. Shareholders’ equity rose from $666 million at the end of May last year to $751 million.
Knutsford Express is a buy, with the price more than doubling by the end of 2023.


Sygnus Credit Investments public share offer that opened on December 18 is scheduled to close on Wednesday, December 23; the shares are attractively priced and should be eagerly taken up as investors traded the shares at $28 and 21 US cents in the last twelve months.
Sygnus is an international business company incorporated under the International Business Companies Act of Saint Lucia. It provides non-traditional financing to middle market businesses. The objective of SCI is to generate attractive risk adjusted returns with downside protection. SCI’s dividend policy is to pay out up to 85 percent of net income.
The company started operating successfully in 2017 in Jamaica, with its shares listed on the Jamaica Stock Exchange in 2018, after offering 90.9 million shares to the public that were fully taken up by investors.
Jamaican denominated shares were then priced at J$13.72 for each and 11 US cents for each US dollar denominated share to raise US$10 million. Investors put down more than $3.8 billion to purchase the shares and the issue was up-sized to US$20.3 million. The FSC has now placed an upward limit on the upsizing of IPOs to no more than 50 percent of the initial amount offered.
The company is now offering 196.4 million shares to the public to raise US$22 million or J$3.3 billion equivalent in an additional public offering. The offer may be upsized to US$32 million or J$4.8 billion. The issue is priced at $14.70 and 13 US cents per share for existing shareholders and team members. The shares are available to other investors at $16.30 and 14 US cents each. The stock last traded on the Jamaica Stock Exchange at $16 and 15.7 US cents. The Minimum Subscription is 1,000 Shares.
Sygnus provides funding to mid-market businesses across a wide cross section of industries including, Manufacturing, Distribution, Energy, Financial Services, Transportation and Infrastructure by way of Notes or bonds, asset-backed debt, preference shares, leveraged debt, bridge financing, mezzanine debt, subordinated debt and other structured private credit instruments.
Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert to an equity interest in the company in case of default, generally, after venture capital companies and other senior lenders are paid.
Sygnus states that its industry exposure is limited to a maximum of 35 percent with no more than 25 percent in any single company or group of companies. The typical tenor is up to 5 years, with a maximum of 7 years in exceptional cases.
All investments they are involved in must have a clear exit strategy, which must be covered by, at a minimum, repayment of debt, sale of position, or Initial Public Offering.
The funds raised are to take advantage of pipeline opportunities in high quality middle-market firms, the company states. Increase flexibility to expand origination in trade, acquisition and asset-backed finance and play a leading role in financing the recovery and growth of middle-market firms. Pay down US$10M bridge notes and allow for more efficient utilization of debt markets in the future that will lower cost and improve the company’s flexibility in funding clients’ demands. Optimize the use of leverage to drive the rate of return on equity expansion and enhance dividends.
The company reports that the average annual dividend yield is 5 percent on USD shares and 5.5 percent on Jamaican dollar shares based on the IPO price of the stock in 2018.
The company has US$62.3 million invested in 29 Portfolio Companies in September 2020, an increase of 117 percent over September 2019, with an outlay of US$29 million in 18 Portfolio Companies. The company has commitments amounting to US$8.7 million to fund.
Investments are within the Caribbean, with 50 percent in Jamaica, the Dutch Caribbean islands account for 17 percent and St Lucia 12 percent, with the rest spread over other countries in the region.
The Company’s portfolio of investments surpassed the US$50 million for the year to June 2020 while generating US$4.5 million in total investment income and US$1.97 million in net profits, 3.8 percent less than the prior year with US$2.05 million. First quarter results to September saw Net profits climbing 51 percent to US$798,000 as total investment income grew 19.8 percent to US$1.3 million and portfolio investments grew 117 percent to US$62.3 million.
Shares will be allotted on a first come, first served basis. In other words, the first set of applicants will get full allotment until all the shares are issued as such late applications may end up getting no shares. projects earnings of $1.80 per share for the current year to June 2021 based on the existing issued shares with a PE ratio of 9 and 12 for the US dollar issue. The company is poised for growth. The stock is undervalued and should be bought for growth and income; accordingly, it gets BUY RATED accolade.

Q3 profit rises 33% at Grace Kennedy

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Grace Kennedy continues to enjoy a phenomenal year, with profit attributed to the company’s shareholders, rising 33 percent to $1.68 billion for the September quarter, from $1.26 billion for the 2019 third quarter and 35 percent for the nine months to September to $4.4 billion from $3.27 billion the corresponding period in 2019.

Don Wehby CEO of Grace

Taxation more than doubled in both periods, but profit before tax grew 49 percent in the third quarter to $2.8 billion and 51.5 percent to $7.3 billion for the nine-months.
Total comprehensive income increased by 5 percent for the three-month period to $2.2 billion but dropped by 37 percent for the nine months to September, from $9.2 billion to $5.8 billion.
The group had one of the best years for growth in revenues so far, with a rise of 16 percent for the quarter to $29.6 billion, from $25.5 billion in 2019 and up 12 percent $86 billion from $77 billion for the nine months. The previous best revenue performance was back in 2009 with a full-year increase of 19.7 percent and then 2015, with an increase of 12.6 percent, thereafter growth declined annually to 2019. Revenues grew 10.7 percent in 2016, 5.5 percent in 2017, 4.8 percent in 2018 and just 5.7 percent in 2019. According to the Managing Director Don Wehby, “the strong growth in revenues was fueled by the food division and particular international food business.”
Contributing to the 2020 growth is added revenue brought in with the acquisition of the majority shares in Key Insurance helping to drive revenue for the Insurance segment by 28 percent over 2019 to garner $7.7 billion. Food and trading segment continues to account for the lion’s share of the revenue tallying $68 billion for the nine months period, an 11 percent increase over 2019. Revenue for the Banking segment increased just 3 percent to $4.7 billion while Money Transfer grew 12 percent to $6.5 billion.

Grace Kennedy new headquarters in downtown Kingston

Expenses inclusive of net impairment losses increased 16 percent to $27.5 billion for the quarter and 12 percent to $81 billion for the year to date over the corresponding periods. While separating direct cost from the administrative cost in their audited accounts, Grace continues to short change investors by lumping all costs together in their interim reports.
Net Cash generating operations brought in $9.7 billion. Total assets grew by eight percent to $168 billion with growth in investment securities and receivables but a decline in inventories. At the end of September, shareholders’ equity stood at $56.5 billion and borrowings at $25 billion.
Profit for the quarter equates to Earnings per share of $1.69 and $4.47 for the nine months and should exceed $6.50 for the full year. The stock last traded at $58 on the Main Market of the Jamaica Stock Exchange with a PE ratio of 9 times 2020 earnings.

Mailpac Q3 profit surges 129%

MailPac Group (MGL) continues to enjoy increasing strong profit growth despite the current pandemic, with revenue jumping 58 percent in the September quarter over the 2019 quarter and profit more than doubling.

Mailpac dominated trading on Thursday with 84% of the total volume of the market on Tuesday.

The company recorded net profit of $149 million for the quarter, a solid 129 percent jump from the $65 million the operation recorded for the September 2019 quarter. For the year-to-date, there was an even more sizeable growth of 150 percent, moving from $203 million in 2019 to $339 at the end of September 2020.
Revenues grew 58 percent over the September 2019 quarter, from $301 million to $477 million, and grew a stunning 30 percent over the June 2020 quarter with revenues of $366 million. For the year to September, revenues rose to $1.2 billion, 42 percent more than the $851 million recorded at the end of September 2019.
Gross profit rose to 50 percent from 44 percent in the June quarter but fell to 48 percent for the nine months compared to 52 percent in 2019.
Direct expenses jumped 57 percent from $150 million for the September 2019 quarter to $236 million for the September 2020 quarter and 15 percent over the June 2020 quarter. For the year to date, the expenses climbed by 52 percent from $410 million in 2019 to $623 million in 2020. Gross profit stood at $240 million for the quarter ending September 2020, up from $150 million in 2019 and $584 million for the year to date versus $442 million in 2019.
Administrative, selling and promotion expenses increased 22 percent over the second quarter and slipped two percent from the September 2019 quarterly figure of $86 million to $84 million. The Executive Chairman attributes the increase in expenses in the third quarter over the second quarter to its expanding operations, the partnership with PriceSmart presumably one such notable factor.
For the nine months to September, selling and promotion expenses amount to $30 million, up from $29 million in 2019, while administrative and general expenses dropped to $199 million, from $218 million in 2019. Overall, these expenses were down seven percent from $246 in 2019 to $228 million at the end of September 2020. The effect, operating profit, rose a strong 140 percent over the comparative quarter to $157 million from $65 million in 2019 and an 82 percent increase for the nine-month period, moving from $195 million to $356 million.
Finance costs rose for the quarter from $352,000 in 2019 to $11 million in 2020, while the nine months to September ended at $31 million from $3 million for 2019.

Mailpac CEO Khary Robinson.

Gross cash flow brought in $346 million but MGL recorded trade and other payables increase of $127 million, spent $12 million on the acquisition of fixed assets and paid $225 million in dividends to end with cash and equivalents of $309 million at the end of September. Shareholders’ equity stood at $467 million. Current assets ended the period at $369 million and Current liabilities at $185 million.
Earnings per share came out at 6 cents for the quarter and 14 cents to September. IC is forecasting Mailpac will end the year at 20 cents per share for PE of 11 times earnings and they should go on to earn 33 cents in 2021.
At the IPO, the company projected a profit of $317 million in 2020, while IC projected $356 and 14 cents per share. The nine months’ results are just below our full year’s forecast.
The stock is priced below the average of the Junior Market of 12 and offers strong upside potential. The strong current growth continues the trend since 2017, when revenues grew 12.2 percent, 25.7 percent in 2018 and 28.8 percent for the first half of 2019. The company offers a convenient way to shop and far less costly than traditional ways. Listing on the stock exchange provides greater credibility that augurs well for increased business. MGL provides clients with physical addresses in Miami, Florida, where they can receive all goods purchased are flown to Jamaica. The company clears all goods and delivers them to the customers at their homes or for collection.
On the negative side, the main asset owned is the brand and technology that drives the business. Other entities could break into the market and squeeze profit margin longer term.
Coming off a robust third quarter, MGL is entering what is normally the busiest time of the year for the company that should continue the solid growth experienced in 2020 so far.
The stock currently trades at $2.13 on the Junior Market of the Jamaica Stock Exchange. The company paid an interim dividend of 5 cents per share in July 2020 and 5 cents per share in October and more is expected, with the company promising at the time of the IPO that the Directors intend to pursue a dividend policy that projects an annual dividend of up to 75 percent of net profits available for distribution.

Profit more than doubles at Kremi

Profit after taxation at the IC BUY RATED Caribbean Cream more than doubled, with a jump of 110 percent for the six months to August and 220 percent in the August quarter, to $74 million from $35 million in 2019 for the half-year and a rise from $14.7 million for the 2019 quarter to $47 million.
Operating revenues rose nine percent for the quarter, to $461 million from $422 million and six percent for the year to date, from $840 million in 2019 to $891 million. For the fiscal year to February, this year, revenues rose by 10 percent to $1.7 billion.
Improvement in profit margin resulted in gross profit rising faster than sales with 15 percent improvement in the first half of the year to $310 million versus $269 million in 2019 and 28 percent in the August quarter with gross profit of $171 from $133 million.
Selling, distribution and administrative expenses declined from $114 million in the 2019 quarter, to $111 million in 2020 and from $221 million in 2019, to $216 million in the six months to August. The decline in cost took place in spite of a sharp increase in depreciation charges in the current year, from $29 million to $59 million. Finance cost increased in the quarter to $6 million from $4 million in 2019 and from $10 million to $9 million for the six months period. Taxation doubled to $10.6 million for the half-year from $5 million in 2019 and moved from $2 million for the quarter to $6.7 million.
Historical results going back to the 2014 fiscal year shows steady annual growth in sales revenue but a more uneven increase in profits. The latter is partially due to the cost associated with expansion and the buying of market share that saw a less aggressive increase in selling prices for its products.
Earnings per share for the quarter came out at 12 cents and 20 cents for the six months.
Gross cash flow brought in $143 million, but growth in inventories, loan repayment offset by loan inflows and reduced payables pushed the cash funds to $152 million at the end of August, up from $58 million at the end of August 2019. With the increased profit for the year to date, shareholders’ equity now stands at $818 million, with borrowings at just $249 million. Net current assets ended the period at $191 million, including trade and other receivables of $63 million, while Current liabilities stood at $162 million.
The company paid 2.49 cents per share as the final dividend for the year ended February 29, 2020, on Friday, October 2. Net asset value is $2.16, with the stock selling at 2.3 times book value.
The results encouraged buying into the stock on Friday, with the price moving from $4.71 it last traded at on Thursday to a high of $5.25. IC forecasts earnings of 60 cents per share for the current year that ends in February 2021 and 95 cents for 2022. The PE is currently 8.5 times the current year’s earnings based on the latest price of $5.15, the stock traded at on the Junior Market of the Jamaica Stock Exchange.

Berger Paints set to surprise

Berger Paints is one of IC’s top stocks for 2020.  It is may not the most popular company listed on the Jamaica Stock Exchange, but it seems set to surprise many investors with its performance in 2020.
It gained much attention with strong growth in profits in the financial year to March 2017, ahead of a switch in majority ownership in August 2017 to the Trinidad based ANSA McAL Group resulting in significant changes in directorship and management. In 2019, the company changed the General manager after a relatively short stint at the helm, a move that could augur well for the company going forward.
In 2019, raw materials accounted for 50 percent of the input into paint production. Most of the raw material used in paint production is petroleum-based, resulting in paint companies benefit when the petrochemical industry goes into a downswing and conversely, a hike in the price of petroleum products raises input costs. Titanium dioxide and crude derivatives form about 50 percent of the raw material cost of paints. In 2019 the average price of crude oil on the world market US$57 for WTI, for 2020 so far, it is at US$43 per barrel, with the current price around US$22 per barrel. If the current trend holds, it will result in lower input costs for Berger for 2020. Management in reporting to shareholders for the year to December stated, “year to date to February 2020, performance indicators are ahead of 2019 with signs of a positive trajectory”.
Between 2012 and 2017, profits increased at an outstanding rate, however, in 2018, the profit was relatively flat and declined in 2019. The company reported lower sales and sharply reduced profit for 2019. The company recorded a two percent reduction in revenues to $1.12 billion for the six months to June and a 6 percent reduction to $1.6 billion for the nine months to September 2019, versus $1.7 billion for the corresponding period in 2018. It ended the year down 7 percent at $2.5 billion. Adverse weather conditions experienced in the third and fourth quarters, negatively impacted revenues, the company told shareholders in a statement accompanying the third and fourth quarter reports. Also affecting sales was the extensive road works that disrupted their customers’ businesses.

Berger Paints is one of IC Insider’s TOP 10 stocks.

The company reported a loss in the final quarter of 2019, a period that generates by far the highest revenues and usually the highest profit. Berger ended with a profit of $29 million compared to the full year compared to $40 million at the end of September. While revenues fell in the fourth quarter to $892 million versus the 2018 period, it was the highest revenues in any quarter with the June quarter of $601 million being the closest. Yet, it recorded a loss when the June quarter recorded a profit of $28 million. Analysis of the reports shows that other operating expenses of $118 million in the September quarter jumped to $254 million for the December quarter. The 2019 fourth quarter also much higher than in the same period in 2018 at $136 million, suggesting there may be some one-off cost that was incurred in the period and distorted the results.
“The company implemented a new an Enterprise Resource Planning Software (ERP) system which provides a fully integrated manufacturing and financial platform and is providing the required details and analytics for the business, the management stated.” The company also introduced a new automotive line of paints to deepen BPJL’s reach into the automotive market.
IC projects earnings per share amounting to $2 for the current year and it now trades at an attractive P/E of just over six times projected earnings.

Buy Caribbean Producers now for 2021

There are few opportunities in the stock market to generate significant gains than from a beaten-down stock that has strong credentials, dominating the sector it focuses on and has been growing. This is the case with the Montego Bay-based, Caribbean Producers that has seen good times and bad times in the recent past but was enjoying a strong rebound in the first two quarters of the 2020 fiscal year.

Caribbean Producers back in TOP 10

The company’s primary market is the tourist industry. With a virtual closure of the industry currently, sales have come under severe pressure and that will hit the bottom-line severely, even if for a few months. Until the adverse reaction of the market to the Coronavirus outbreak, technical indicators showed that the stock was consolidating with the possibility of a break out from the $5 level with six months results coming far better than the disappointed 2018 half-year results. All that has changed for now as the stock nosedived to $2 as heavy selling pressured the stock.
Expectations are that the company’s third and fourth-quarter results will show the negative impact of the closure of hotels on sales and profit. Investors should bear in mind that the fiscal year starting July may not be affected or not as severely as the second half of the current fiscal year. Importantly, revenues rose 11 percent in September and in the December quarters to US$32.4 from US$29.4 million. IC forecast is for a small profit in the March quarter to add to the profit of US$89,000 reported for the 2019 half-year. The stock price collapsed from $5 it was trading at in February to a low of $2 recently. This fall is worse than when they lost US$1.2 million in the year to June 2019 when it still traded above $4. Admittedly, the company has US$39 million of borrowed funds that exposes it to a high degree of risk if the disruption in the business is prolonged. While interest-bearing debt climbed during the year, shareholders’ equity stood at US$22.5 million.
CPJ‘s profit declined 162 percent for the year ended June 2019 to a loss of US$1.17 million compared to a profit of US$1.88 million for the year ending June 2018, with operating revenue for the year amounting to US$94.6 million from US$93.3 million in 2018. The loss resulted from a decline in profit margin in the year and US$679,713 write-off of the cost of developing the inventory IT management system.
For six months to December 2019, gross profit rose faster that growth in revenues at 19 percent to US$8.5 from $7.1 million. Selling and administrative expenses slipped from US$5.8 million in 2018 to US$5.4 million to US$20 million. Finance costs increased in the year to US$791,818 from US$411,143 in 2018 and depreciation jumped from US$609,271 to US$1.4 million.
There are risks in investing in the stock current, but the low price makes it a compelling buy for a big pay off in 2021. IC rates the stock a buy based on full or nearly full recovery, for the 2021 fiscal year.

Big jump in Honey Bun profit

Another major milestone in Honey Bun’s brief history of listing on the JSE Junior Market was reached at the end of the 2019 fiscal year, ending in September, with record revenues and profit.
The full-year results show pretax profit rising 73 percent to $183 million versus $106 million in 2018 and profit after tax rising 67 percent to hit $157 million from a 17 percent rise in revenues to $1.54 billion. Revenues grew even faster in the final quarter by 20.4 percent improvement over the 18.9 that revenues grew in the third quarter over 2018.
The results benefited from improved efficiency with cost sales rising well below the growth in revenues, with input cost increasing 12 percent for the year, driving gross profit margin to 48 percent, an improvement from the 46 percent in 2018. Selling and Distribution expenses rose 16 percent to $250 million from $214, Administrative Cost excluding depreciation rose 18 percent $284 million from $249 million.
Earnings per share rose to 33 cents in the just concluded year from just 18 cents in 2018. Importantly, the company is on the way to earn 70 cents per share for 2020 for a profit of $335 million and should go on to earn $1 per share or $490 million in 2021 and $1.30 or $600 million in the following year when the tax concession for half the regular rate ends.

One Honey Bun’s Products.

The company is benefitting from a capital expenditure of $330 million spent over the last two years to expand the factory and bring manufacturing under one location as well as an expansion of product range. The operations generated gross cash flow of $230 million up from $145 million in 2018.
Shareholders’ equity climbed to $741 million from $618 million. Current assets increased from $209 million to $353 million with net current assets ending at $185 million from $89 million in 2018. Cash and cash equivalents stood at $193 million, up from $100 million, but the company has Investments of $92 million comprising quoted shares and money market instruments treated as non-current assets.
The company manufacture and distributes baked products for the local and export markets.
The stock receives the IC BUY RATED seal of approval. The stock traded at $7 on the Jamaica Stock Exchange Junior Market for a PE of 10.

NCB hikes dividend 29%

NCB hiked dividend to 90 cents from 70 cents in 2018.

NCB Financial hikes dividend 29 percent, to $2.2 billion or 90 cents per share, as profit from ongoing operations jumped 40 percent in the first quarter to December last year to $5.7 million before taxation.
Profit after taxation and one-time gains, resulted in net profit of $7.4 billion for the first quarter of the 2019 financial year, slightly lower than the prior year’s results that included a gain (negative goodwill) of $4.4 billion relating to the acquisition of Clarien Group. Profit for the latest quarter, includes a gain of $3.3 billion from the disposal of 326,277,325 JMMB Group shares at $28.25 per share.
The strong improved results climbed on the back of 24 percent in net income, to $20.7 billion from $16.7 billion in 2017, offset by a 21 percent increase in expenses. Included in expenses is loan loss provision of $1, up from just $146 million in 2017 and seems tied to the need to adjust loan provisioning in line with new Accounting Standards. Depreciation and amortization cost almost doubled to $1.3 billion, from $667 million in 2017. Other operating expenses jumped 29 percent to $6 billion from $4.7 billion in the prior year. The big improvement in revenues flowed from increases in net interest income from $7.55 billion to $9.85 billion, an increase of 30 percent, while exchange trading delivered a third more, at $4.2 billion.
Retail and Small Business Banking segment profit grew a strong 36 percent to $1.34 billion, but Payment Services fell just 2 percent to $1.2 billion. Corporate Banking jumped sharply by 76 percent to $1.25 billion, Treasury and Correspondent Banking was up by just 14 percent to $1.65 billion. Wealth, Asset Management and Investment Banking, grew attractively by 39 percent to $1.2 billion, Life Insurance & Pension Fund Management rose 29 percent to $1.3 billion while General Insurance moved from a loss of $107 million to a profit of $227 million.

NCB giving back to the community.

The Group’s loans and advances, net of provision for credit losses, rose 16 percent to $373.5 billion. NCB stated that “the growth was driven by our Jamaican that increased by 22 percent or $50.4 billion. Non-performing loans totalled $18.5 billion as at December 2018 (December 2017: $15 billion) and represented 4.9 percent of the gross loans compared to 4.6 percent as at December 2017.”  Customer deposits grew just 7 percent to $461 billion. The varied growth rate between loans and deposit is a strong positive for profit as the revenues climb faster than cost.
The group re-launched a revised take-over to acquire up to 32.01 percent of the outstanding shares of Guardian Holdings which, when combined with NCB’s existing 29.99 percent holding will bring the total to 62 percent. The profit of the group will get a further boost from this acquisition. IC has updated the earnings per share for 2019 to $14 from continuing operations and with the stock price at $145, the PE is just over 10 times earning making the stock BUY RATED with a 2019 target price of $225.