More expansion coming for Dolla Financial

Dolla Financial reported record profit for the 2023 first quarter that jumped 90 percent to $125 million before tax, from just $66 million last year, with aftertax profit coming in at $123 million, 128 percent higher than the $59 million reported for 2022, but the company is not satisfied, with that and plans increased borrowing to on lend and acquisition while having eyes on branch expansion.
The company borrowed $1.17 million in 2022 but used most of the available funds on hand at the start of the year, with loans granted to borrowers absorbing $550 million in the March quarter, leaving the company with just $117 million in cash funds. In order to maintain the current profit momentum the company will need to add new loans from lenders to keep funding the expansion.
In an investor briefing, the CEO Kadeem Mairs indicated that they are in the process of negotiating a US$7 million loan that will be used to fund loan expansion and acquisition that they are currently looking at. Such acquisitions will be subject to regulatory approval before they will be able to complete such transactions.
The company is also seeking to establish an 800 square foot branch in May Pen in the complex that houses the supermarket operated by Derrimon Trading.
Importantly, Mairs pointed out that 80 percent of loans granted are secured and therefore result in a low credit default.
IC Insider.com forecast is for the 2023 earnings per share to be 40 cents and is partially predicated on timely loan funding.

10 JSE Main Market stocks + 1 for 10 years

Some investors have time and inclination to monitor their investments regularly, but the vast majority do not. In the latter case, investors want to invest for the long haul, expecting that their investment will grow appreciably over time.
There are many factors to consider; these include continued growth of companies, inflation, possible shifts in government policies, and social and economic policy changes that can affect investment returns in the short and long term.
Junior Market stocks have some features that investors should pay observe. Most Main Market stocks have controlling interest that is likely to ensure continuity of ownership for years to come. The same is not so for Junior Market companies where there are few companies where controlling ownership is assured long-term.

Barita public stock offer pulled money away from other JSE stocks.

Barita Investments – Bankers are not supposed to be bright; they must be careful; this is an adage within the financial community worldwide. Tell that to the new management at Barita. Maybe if they were told, they might have avoided the negative comments they had to face in 2021. The directors can take comfort that JMMB Group suffered years of rumours about imminent failure, but they persevered and have prospered regardless and are now highly regarded. Barita stands an excellent chance of doing just that.
The recent focus on Barita is partially due to the current management taking a sleepy company and aggressively expanding into new and profitable areas and seems to be disrupting the status quo. They are aggressive and disruptive and are willing to go into areas with good growth potential when others take a more conservative posture. This approach is not risk free, to date, they seem to have prospered and their shareholders love it, having a rich stock price and healthy dividend payments. Additionally, Jamaica’s financial landscape is changing and providing increasing opportunities for growth of newer financial products. Barita has grown based on an increased capital base that stands them in good stead to prosper if management handles the resources at its disposal well. The company could be a significant player in financial services in the next ten years. They have taken a posture of paying out most profits and then going back to the market for added capital. That formula has worked well so far and has rewarded shareholders positively.

GraceKennedy has diversity in products, services, and geographic locations, making them one for the future, with a relatively significant presence in the USA and UK markets. They can enjoy good annual growth for years to come. The diversified product line put them in good stead to benefit from what seems set to be a reasonable period of economic growth for Jamaica. The Group has been acquiring new entities to expand the operations and geometric growth; this will give them increased bargaining power that can lower costs and drive revenues. Investors should not ignore the value of the Grace Brand will continue to be more valuable as the Group continues to make inroads into the international market. Currently, the stock is undervalued. Investors who can wait for the payoff could benefit from unlocking value down the road.

Jamaica Broilers’ product demand and global diversity will see them making money and providing good investment returns. Expected growth in the local tourism sector and the company’s efforts to expand its reach in the US market should augur well for investors from a company that is well managed and produces products that are in high demand in the local market. The negative is the politically sensitive nature of the main product. Management has been able to navigate such challenges and prospered over the years and should be able to do that in the future with their strong links to the farming community.

JMMG Group stock is severely undervalued currently. In addition, regional diversification, the variety of products and services it offers the public, and technology will drive revenues for the next ten years. The company has operations in the Dominican Republic, which is an excellent base for them to continue strong growth in that market with a population of 11 million, nearly four times the size of Jamaica. There is room for remarkable growth in that market that is not a financially developed market like Jamaica. Their banking arm in Jamaica and Trinidad is relatively small and they could enjoy above average growth that would be good for increased profit in the future.

Kingston Wharves has been around for decades and is highly profitable. It controls a significant portion of the logistics and distribution chain for imports and transhipment business, making them one to watch with growth expected in the Jamaican economy and growth in the transhipment. They should grow even faster as they cater to the local market and the expanding transhipment of goods within the region.

NCB Group stumbled in 2020, with the advent of the COVID 19 pandemic that saw major dislocations in businesses in Jamaica and worldwide, including the closure of the tourism industry. The Group suffered from a high degree of nonperforming loans, which is provided against and losses in the investment portfolio. The fourth quarter results for the just concluded year to September show that the worse is behind them and they should see growth in earnings for 2022. The Group is spread throughout the Caribbean and is involved in commercial and investment banking and insurance. Strong growth going forward will be dependent on a buoyant Jamaican economy and, to a lesser degree, that of Trinidad, where Guardian Holding is headquartered. Along the way, investors can expect a good level of dividends as compensation for waiting. The stock is currently in demand, but now could be the best time to start accumulating it.

Stephen Facey Chairman & Paul Hanworth Chief Operating Officer

PanJam Investment spans an array of activities from property development and ownership, many of them in prime areas in Jamaica, Investments, a significant owner in Sagicor Group and hotels. They are currently pushing into property investments in downtown Kingston and Montego Bay, the latter to be a hotel in the Montego Freeport area geared to business visitors. Buying into PanJam gives investors a strong involvement in Sagior Group, with the company owning around 30 percent of the shares. The Group has a long history of good performance and the suite of assets and quality management place them in an excellent position to grow at an attractive pace over the next ten years. While at it, don’t forget the heightened level of inflation that is currently afoot worldwide. PanJam, with its real estate and stock market portfolio, is well positioned to generate positive returns form as a result and protect investors against losing value in their investment in the company.

Radio Jamaica has lots of scope to grow revenues that will increase as the economy grows and swell profits as most of the revenues will fall to the bottom-line as operating costs are partly fixed. Most investors continue to focus on the old RJR but fail to recognize the Group’s invaluable assets, including the highly watched and profitable television station. The digital footprint is not to be ignored, with the Gleaner’s website being a big winner in the future, with the RJR site following. There are many developments taking place within the Group that will add to revenues and profit in the future. The digitization of television will create more flexibility in targeting markets with the signals and allow for expansion and increased income from the offerings it currently owns. Investors can look forward to reasonable dividend payments as profits grow in the future.

Sagicor Group & PanJam hit new closing highs.

Sagicor Jamaica is historically a strong performer that will benefit from continued growth in the Jamaican economy and buoyancy in the financial products that provide high returns. Apart from life insurance, they are involved in Health insurance and general insurance, investments, investment brokerage and banking. They control a sizeable portion of the local market and have a presence outside of Jamaica.

Scotia Group has had a long history of growing profits and dividends, with the stock price delivering attractive gains to investors over the years. In more recent years, things have not all gone well for the Group, with significant shifts in the financial market as new players and products came into the market and increased aggressiveness from the market leader NCB. The Group is now focusing on restructuring its branch network that will lead to lower costs while loans will be growing and driving interest income to help add to profits. The recent increase in interest rates will be highly beneficial to the Group. They will be generating more revenue from the government bonds as interest rates get some elevation from the Bank of Jamaica’s recent moves.

Wisynco Group is one of Jamaica’s larger manufacturing and distribution companies. The company has accumulated a wad of cash and will continue to do so with a very profitable operation that generates positive free cash flows. The growing buildup of cash places them in a healthy position to expand the group. The Group is involved in the manufacturing and distribution of products mainly for the local consumer market. It is a significant supplier to the tourism industry, with around 15 percent of the company’s goods. The sector continues to see growth with new hotel rooms being built and plans for more to come on stream in the future. It does not hurt with the company having a good management team, one of the most important elements in ensuring continued success in the business into the future.

Huge blast at Carib Cement

Caribbean Cement is reporting another quarter of blow profits with revenues of $6.3 billion, up 32.6 percent over the $4.78 billion in the 2020 June quarter. Revenues blasted 32 percent to $12.3 billion for the half year compared to $9.3 billion.

The second quarter revenues growth beats the 31 percent rise in the first quarter as well as exceeding by 6.4 percent the $5.97 billion in the first quarter.
Profit after tax surged 200 percent higher to $1.56 billion in the second quarter from $521 million in 2020. And more than tripled the 2020 half year results of $1 billion to $3.09 billion.
Similar to 2020, gross profit was 47 percent in the second quarter to $3 billion versus $2.25 billion in 2020, while year to date it rose to 48 percent to $5.88 billion.
The company generated earnings per share of $1.84 for the latest quarter versus just 61 cents in 2020 and made $3.63 per share for the half year, up from $1.18 in 2020 and is well on the way the reach ICInsider.com forecast of $8.50 for the year, with the company stating “we expect continued buoyancy in the construction sector driven by both government-initiated infrastructure projects and many private developments.”
Foreign exchange losses are down to $50 million in the June quarter versus $376 million in 2020 and, for the six months, $258 million compared to $657 million.
Cash flows from operations amounted to $1.7 billion for the quarter and $4 billion year to date. $3.9 billion was repaid in loans for the six months period and will result in reduced interest cost in the second half of the year. The repayment of loans reduced borrowed funds to $3 billion. Shareholders’ equity stands at $14.7 billion, with accumulated profit at $5 billion.

RJR profit explodes

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Revenues at Radio Jamaica fell for the year to March 2021, by 7 percent to $5.2 billion, from $5.6 billion, but there ends the bad news for the group that comprises television, radio and newsprint as their main products. On the revenue front, the good news starts emerging with the final quarter climbing 11.6 percent to $1.4 billion from $1.25 billion in 2020.

Media house, RJR traded most shares on friday

Full year profit surged 351 percent over 2020 to hit $171 million and just 7 cents per share, from $38 million in 2020. The March quarter, which is usually one of the worse for the group, with mostly ends losses, generated $44 million profit after tax.
The profit for the fourth quarter in 2021 compares exceptionally well with a loss of $156 million in the final quarter of 2019 and a loss of $96 million in 2020, March quarter. The sharp turnaround is directly attributed to the cost surgery the group underwent last year.
The year’s performance comes against the backdrop of $366 million in what can be considered one off costs in a year when revenues fell 7 percent, redundancy payment amounting to $183 million and provisions for bad debt $158 million. In addition, included in operating cost is $164 million for web development, an item that appears to be more of a capital nature than an expense, but it has been reported as an expense for some years. Importantly, redundancy costs will not repeat, at least for the same workers but critically, it will result in an annual staff cost savings of a similar amount in the future. For the past year, those workers who were made redundant would have been employed for approximately half the year, so the reduction in wages in 2021 onwards would be around $90 million. In line with the above, salaries and wages fell $365 million to $1.5 billion for the 2021 fiscal year. Some of the reductions relate to a period when staff members were on reduced pay. Inventories expensed to direct production expenses during the year amounted to $213 million, well down on the $393 million for the Group in 2020.
Segment results show television revenues growing 7 percent for the year to $2.36 billion, with the March quarter surging an attractive 23 percent to $626 million. The segment had the worse period in the fiscal year with a 2.7 percent decline in revenues for the June quarter. Operating profit from this segment blasted off from $132 million to $479 million.

RJR shareholders at the 2019 AGM at the Jamaica Pegasus

Radio suffered just a 4 percent reduction in revenues, with most of that coming in the June quarter, with a fall of 20 percent and the segment delivered an operating profit of $95 million for the year from a small loss of $4 million in 2020. For the final quarter, revenues for radio were up one percent over 2020 to $184 million.
The print division took the brunt of the hit to revenues last year, with a fall of 40 percent in the June quarter, 20 percent in the September quarter and 19 percent in the December quarter. Revenues fell 19 percent to $2.3 billion for the year but enjoyed a six percent bounce in the March quarter, putting it ahead of the 2019 revenues, but ended 2021 with an operating loss of $267 million from a small loss of $14 million in 2020. The bulk of the redundancy of 106 workers came from the print division, with a redundancy cost of $157 million. The March quarter results mark a major about turn for that division, with increased revenues, but the segment results show an increased loss in 2021 of $64 million versus $28 million in 2020; this could be due to bad debt provisions that may have been made in the final quarter.
Cash inflows for the quarter were $600 million versus $403 million in 2020, but after working capital changes, inflows slipped to $540 million, after paying $176 million on the acquisition of property and receiving loan proceeds of $132 million resulted in cash on hand growing by $426 million.
The group ended with cash and equivalent of $725 million at the end of March, up from $282 million, while borrowings stood at $528 million, up from $425 million at the end of the 2020 fiscal year. Receivables climbed to $1.2 billion from $1 billion at the end of March 2020, but allowance for impairment grew from $288 million to $395 million.
Current assets stood at $2.1 billion and current liabilities at $1 billion, resulting in net current assets of $1.1 billion. Shareholders’ equity grew to $2.5 billion from $2.3 billion as of March 2020.
ICInsider.com projects a profit of just over $970 million or 40 cents per share for the 2022 fiscal year and 55 cents per share for 2023. The stock last traded at $1.67 on the Main Market of the Jamaica Stock Exchange on Friday and trades at a PE ratio of 4, well below the average of 16 currently for the Main Market. The stock is ICInsider.com BUY RATED.

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