ICInsider BUY RATED

Why Scotia Group should be on your buy list

December 17, 2023 by IC Insider.com

Scotia Group recently reported record profits for the year to October, surging 67 percent to $17.23 billion with earnings of $5.54 per share, from revenues that jumped 29 percent to $59.64 billion but based on the reaction of investors the results seem to hardly matter with the stock valued a mere 6.5 times historical earnings compared with a market average of 13, nevertheless, the price hit a yearly high of $36.69 this past Friday as selling has eased considerably, with a few open offers to sell.
The group declared a dividend payable in January of 40 cents for a second consecutive quarter putting it at $1.60 annualised, for a 4.6 percent yield based on the current price. Traditionally the group was committed to paying 40 to 50 percent of profits, this seems to have temporarily changed with the fallout from the Covid-19 pandemic but could return in the near future.
The October quarter saw profit popping a robust 49 percent to $4.4 billion from $2.98 billion in 2022 with revenues rising 24 percent to $15.79 billion from 12.8 billion.
The good news does not end there. ICinsider.com is forecasting earnings of $7.50 for the 2024 fiscal year, with the PE ratio at just 4.8 times earnings making it a stunning buy at the current price of $36, the stock closed at on Friday. The group has many of the qualities for an excellent investment, good management, quality products and services that are in demand, a growing business and increasing profitability and best of all the stock price is well below the market average, with the potential for a major rise in the near term.
While the 2023 performance looks dramatic compared with the pre-Covid period it is more one of recovery as opposed to rapid growth as the increase over 2019 is just 31 percent, representing a 6 percent increase per annum as loans grew 31 percent as well since the end of 2019.
Highlights of the good performance came from interest income, with the quarter jumping 22 percent to $11.6 billion from $9.5 billion in 2022 and by 31 percent for the full year to $40.8 billion with loans disbursed growing a robust 15 percent to $269 billion from $234.7 billion in 2022, after loan loss provisions. Non-accrual loans stood at $4.5 billion compared to $4 billion at the end of October 2022 and represent 1.6 percent of gross loans compared to October 2022 at 1.7 percent.
Also contributing to the growth in interest income was an increase in funds held in cash resources and investments of $343 billion up from $316 billion in 2022.
Insurance revenues fell 5 percent from $1 billion to $961 million in the quarter and surged 49 percent from $1.87 billion to $2.79 billion for the year.

Audrey Tugwell Henry Scotia group’s CEO

Deposits grew 12.7 percent from $399 billion to $449 billion, but the cost of funds grew 138 percent from $580 million in 2022 to $1.38 billion and 207 percent from $152 million in the final quarter to $466 million as interest rates rose sharply following Bank of Jamaica’s increase in the overnight rate in during late 2021 into 2022 and the maintenance of tight liquidity in the system by the country’s central bank.
Amounts set aside for expected credit losses fell 16 percent to $741 million in the quarter from the 2022 quarter’s $880 million and from $3.06 billion for the year in 2022 to $2.4 billion in 2023.
Other Income delivered $3.23 billion in the final quarter of the year versus $2.26 billion in 2022 and for the 2023 year ending October an increase of 22 percent to $16 billion from $13 billion in 2022, with foreign exchange trading and fees and commission dominating.
Operating expenses rose 6 percent in the final quarter to $6.8 billion from $6.39 billion in 2022 and for the twelve months to $27.6 billion up 11.7 percent from $24.7 billion.
The group’s Shareholders’ equity ended the fiscal year at $126.5 billion, increasing by $20 billion, compared to the previous fiscal year, due primarily to re-measurement of defined benefit pension plan assets, lower fair value losses on the investment portfolio, recognition of the insurance finance reserve on the adoption of IFRS 17 and profit generated for the year, partially offset by dividends paid. Total assets grew by $70 billion to $665 billion at October 2023.
ICInsider.com rates the stock a strong buy, with the potential to deliver attractive dividend yields going forward and a huge increase in the stock price in the months ahead. The future appears bright with continued growth in the local economy that sets the stage for more lending. 2024 could well deliver some negatives as the Bank of Jamaica holds interest rates at excessively high levels and ushers in a recession. Additionally, interest rates could start to decline and negatively affect net interest income. Regardless the stock is priced so low currently that most bad news to come if any is more than taken into consideration by the current pricing.

Filed Under: Buy Rated, Company News, Company Results, Feature Stories Tagged With: Bank Of Jamaica, Emerging markets, Emerging Stock, ICInsider BUY RATED, Jamaica Stock Exchange, Jamaican stocks, Scotia Group

Profit climbs 16% at Jamaica Broilers

October 1, 2023 by IC Insider.com

Profit rose a cool 16 percent at Jamaica Broilers Group for the quarter to July 2023, to $1.2 billion over the $1.1 billion in the July 2022 quarter from a mere two percent increase in revenues to $23.4 billion from $23 billion in 2022.

Jamaica Broilers

Gross profit grew faster than revenues, with an increase of 8 percent to $5.7 billion from $5.3 billion in the prior year. The Jamaica Operations had segment results of $1.75 billion, down 7 percent below last year’s result of $1.88 billion. “The reduction was mainly driven by increased pressure from high levels of imports, affecting baby chick sales to our small farmers,” Robert Levy, Chairman and Christopher Levy, Group President & CEO advised investors in their comments on the quarter’s performance.
“The Jamaica Operations showed an increase of 5 percent over the corresponding quarter, which was mainly driven by poultry sales. Our US Operations reported a b segment result of $1.2 billion for the first quarter, 44 percent above last year’s results,” the directors went on to state. The group earned $815 million in segment results in 2022 from segment revenues of $9.2 billion which slipped to $9.1 billion in 2023 from external business in the US Operations.
“We did have a 3 percent decline in total revenue due primarily to falling prices in most of our product lines. However, a 56 percent year over year increase in poultry volumes assisted in offsetting the negative market pressures. Our South Carolina plant which produces the Best Dressed Chicken line of products has gained impressive market acceptance in the United States,” the directors reported.
The Caribbean operations segment that had positive results of $106 million in 2022 recorded a loss of $480 million in 2023.
Administrative costs declined marginally from $2.98 billion to $2.92 billion in the current period, distribution costs rose four percent from $690 million to $720 million, finance costs almost doubled, moving from $320 million to $633 million, taxation moved up from $332 million to $393 million during the 2023 quarter.
Total comprehensive income ended the quarter at $1.45 billion up from $920 million in 2022.
The group reported earnings per share of $1.24 versus $1.07 in 2022. ICInsider.com projects earnings of $7 for the current fiscal year and $9 for the following one. The stock last traded at $32.50, with a price earnings ratio of just under 5, compared to the average of the market of 12.4 based on current year’s earnings.
The group continues to fund expansion with $952 million invested in fixed assets during the quarter, down from $1.2 billion in the similar quarter in 2022, with net fixed assets climbing almost $7 billion from $15.4 billion to $22.2 billion at the end of the quarter. Funds were borrowed to finance the investment in fixed assets, with new loan funding of $2.44 billion during the quarter compared to $3.7 billion in the previous year. Loans repaid amounted to just $664 million versus $1.6 Billion in the previous year. The increased borrowing is the major factor in the climb in interest costs during the quarter, in addition to movement in interest rates internationally.
Cash inflows before working capital requirements for $3.4 billion and is up from $2.6 billion in the previous year after working capital funding rose, the group ended up with a negative cash flow of $2 billion that is up from $1 billion in the previous year.
After the investment in fixed assets, loan payments and receipts, the group was left with negative cash flows for the quarter of $1.9 billion which reduced cash from $4.6 billion at the beginning of the year to $2.8 billion.
The statement of financial position shows a healthy financial status with equity capital of $34 billion net current assets of $17 billion, total current assets amounting to $51 billion and total current liabilities of $34 billion which includes short term borrowings of $21 billion.

Filed Under: Buy Rated, Company News, Company Results Tagged With: Emerging market stock, Emerging markets, Emerging Stock, ICInsider BUY RATED, Jamaica Broilers, Jamaica Stock Exchange

Huge gains for TransJamaican directors

July 8, 2023 by IC Insider.com

Directors and management at TransJamaican Highway (TJH) are enjoying a bountiful period of a fistful of dollars from their recent investment in the company’s shares fueled by a sharp cut in cost with the acquisition of the Subsidiary that was costing them around US$12 million per year and placing them in a position to enjoy a potential of more than tripling of profits over that generated in 2022 from ongoing operations.
Trades by directors and connected parties in listed companies may speak volumes about what is currently occurring in their operations and can be a short term signal to follow. Not all trades have immediate significance, as they may be for reasons unrelated to the company’s performance, like the need for cash or reallocation of investments; regardless, investors would be well advised to take a keen interest in such actions.
The latest announcement of worth is the sale of director TJH that sold 10,457,450 of the company’s shares on June 29, when the average price was $2.45 but traded as high as $2.50, this trade looks like profit taking and seems as if it connected with a big purchase by Steven Gooden who bought 20 million units on March 21, 2023 at a time when the stock was trading at an average of $1.35 with a total of 30.87 million being traded for the day, that included a 2.2 million purchase by a member of the Audit Committee and follows an 800,000 share purchase by a member of the Audit Committee on May 19, 2023. According to the financial report for March this year, John Bell, who previously owned 1.8 million shares, ended with 4.2 million shares, and Ian Dear owned 693,459 shares at the end of the quarter, with none in December. Susan Garriques moved her holdings from 5.042 million to 6.042 million.

Steven Gooden bought 20 million TJH shares in March 2023.

Gooden could have sold around 10.5 million units at $2.50 and fully paid for the 20 million he bought.
A senior manager bought 1,000,000 TJH shares on March 23 and March 24, a director bought 693,459 shares, this seems to be Ian Dear, and a member of the Audit Committee bought 200,000 TJH shares; the other previous trades took place between December 21 and 23, last year when the Chairman of the Audit Committee traded 1,091,164. Bell is the Chairman of the Audit Committee.
TJH released first quarter results with profit before tax of US$6.7 million, an increase of US$5.5 million compared to US$1.2 million for the first quarter of 2022. This increase in profitability mainly resulted from savings realized on the cost to operate the motorway following the acquisition of the Operator and now Subsidiary, plus higher revenues earned for the quarter. Net profit ended at US$5 million, up from just US$0.7 million for the 2022 quarter. ICInsider.com has projected earnings to 0.02 US cents per share or 31 Jamaican cents, indicating much more room for the price to run. At a price that is now less than ten times 2023 earnings, the stock is ICInsider.com Buy Rated.

Filed Under: Breaking News, Company News, Insider Trades Tagged With: Emerging markets, ICInsider BUY RATED, Jamaica Stock Exchange, Jamaican stocks, Trading Activity, Transjamaican Highway

Profit climbs at Caribbean Assurance Brokers

June 14, 2023 by IC Insider.com

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Caribbean Assurance Brokers (CAB) is not one of the more popular Junior Market stocks, coming to the market just when the Covid-19 pandemic broke out in Jamaica, and got little post-IPO bounce and has never won the support of the wider market. The company reported record full year and 2023 first quarter profits, yet the stock continues to struggle although currently trading up from the price before the release of both results.
Operating Revenues rose 11 percent from $423 million to $469 million for the year ending December 2022, while Other Operating Income generated $37 million which was down 7 percent from $40 million in 2021, resulting in total income rising 7 percent to $506 million from $463 million in 2021. Profit for the year rose 32 percent to $75 million from $57 million in the prior year, with earnings per share of 30 cents up from 21 cents in 2021.
Selling Expenses were virtually flat for the year at $146 million compared with $145 million in 2021, Administrative Costs rose 10 percent to $281 million from $255, depreciation charge fell 10 per cent to $16 million and finance costs fell 32 percent to $4 from $6 million in 2022.
For the 2023 March quarter, revenues climbed 12 percent to $101.9 million from $90.6 million for the 2022 March quarter. Other Operating Income fell from $14 million to $12 million resulting in total revenues of $114 million rising 9 percent above $105 in 2021. The company earns the bulk of its income and profit in the September quarter. Profit jumped 840 percent to $17 million after tax from just $2 million in 2021, with earnings per share of 7 cents.
Selling Expenses fell by 30 percent to $25 million from $36 million in 2022, Administrative Cost rose 7 percent to $70 million from $66 million, depreciation charge rose 21 percent to $5 million from $4 million in 2021 and finance costs fell 45 percent to $593,176 from $1 million in 2021.

Caribbean Assurance Brokers selling at a PE of just 8 based on historical earnings & 5 times 2023.

Cash inflows from operations delivered $24 million, up from just $7 million in 2022, but cash funds climbed by $132 million by the end of March after spending $37 million on addition to fixed assets with a reduction in receivables and an increase in payables contributed $146 million in positive flows during the three months period.
At the end of March, shareholders’ equity stood at $480 million up from $390 million at the end of March 2022 and $463 million at the end of December 2022. The company continues to be lightly leveraged with borrowings of $59 million of which $53 million is short term and due to be repaid within twelve months.
Current assets stood at $536 million at the end of March versus $418 million in 2022. Cash and equivalent was $385 million up from $286 million at the end of March 2022, with receivables at $148 million, up from $127 million in 2022.
Current liabilities ended the 2023 quarter at $345 million at the end of March, up from $229 million at the end of March 2022.
ICInsider.com projects EPS of 50 cents for the current year, with the stock priced at $2.53 it last traded on the Junior Market and sits at the number 2 spot on ICInsider.com TOP10. The PE is a mere 5 times 2023 earnings and 8 times 2022 earnings and is one of the most undervalued stocks on the market currently.
The directors approved a modest dividend of 2.67 cents per share, well below the target stated in the prospectus of up to 25 percent of profits. The payment will be on October 26, with the ex-dividend date of September 14.

Filed Under: Buy Rated, Company News, Company Results Tagged With: Caribbean Assurance Brokers, ICInsider BUY RATED, IPO, Jamaica Stock Exchange, junior market

Guardian finishing strongly in 2022

November 18, 2022 by IC Insider.com

Guardian Holdings generated a 131 percent surge in profit attributable to shareholders of $1.06 billion for the nine months to September 2022, up from $457 million in the 2021 period, profit jumped 210 percent in the third quarter to $620 million from $201 million in 2021.

Earnings per share amounted to $2.67 for the September quarter and $4.55 for the nine months to September, that should end the year around $7 per share, with a PE of 3.5 times current year’s earnings and a stock price at J$530.
The vastly improved 2022 results follow a 5.3 percent increase in net premium income to $3.57 billion in the nine months to September, from $3.39 billion in the previous year and a 5.5 percent rise for the quarter to $1.2 billion versus $1.14 billion in 2021. Net income from all activities ended at $2.4 billion in 2022 for the nine months, up 26 percent from $1.89 billion in 2021 and for the September quarter $1.06 billion with a 67 percent increase over $634 million in 2021.
Net income from investment activity slipped 18 percent from $1.15 billion in the nine months to September 2021 to $942 million for the 2022 period. However, the quarterly figures reflect a marginal decline from $383 million in 2021 to 372 million this year.
Operating expenses of $1.15 billion for the nine months of September 2022 rose 6.9 percent from $1.07 billion and increased 33 percent for the quarter to $405 million from $305 million in 2021. Finance charges of $155 million for the nine months to September 2022 popped marginally from $150 million in 2021 and for the quarter $51 million versus $47 million in 2021.
Provision for taxation was $113 million for the year to September 2022, a reduction from the $136 million for the same period in the previous year and $68 million for the quarter in 2022 versus $59 million in 2021.
According to chairman, Patrick Hilton, “the group has been on a transformation journey centred on technology, people and processes. We have invested heavily in technology to bring world class customer service to our markets, leverage of scale of our group and reduce our operating costs. While in recent years, we have reaped some of the benefits, we are now at a resultant juncture where the payback on this investment is rapidly accelerating. In 2022 the group implemented many of these initiatives for our life, health and pension segment, with the alignment of our Trinidad and Jamaican operations bringing to reality operational synergies, cost savings and centres of excellence. These activities result in long-term cost savings which have the effect of creating favourable reserve movements contributing to the exceptional performance recorded in the year to date.”

The group has two primary areas of operation. The life health and pension business generated underwriting revenues of $2.97 billion in 2022 and delivered net income from operations of $1.2 billion compared to underrating revenues of $2.77 billion in 2021, with an operating profit of $621 million. The other major segment of property and casualty business generated underwriting revenues of $999 million with an operating profit of $162 million in 2022 versus revenues of $961 million in 2021 with an operating profit of $121 million.
The group has total assets of $34.46 billion as of September compared to three $34.43 billion at the end of September 2021 with shareholders’ equity of $5.4 billion up from $4.87 billion at the end of 2021. The main assets include investment securities at $21 billion, loans and receivables at $2.4 billion, cash and cash equivalent at $3.8 billion dollars and investment property amounting to $1.67 billion. The main liability comprises insurance contracts of $19 billion and financial liability of three-point infant investment contract liabilities and third party mutual funds of $4.1 billion.
Cash flow brought in $1.44 billion to September. After investment activities, the group ended with $375 million before funds were used in financing and other activities and ended with negative flows of $103 million.

Filed Under: Company News, Company Results Tagged With: Emerging market stock, Emerging markets, Guardian Holdings, ICInsider BUY RATED, Jamaica Stock Exchange, TTSE

Wisynco spending $5B on plant expansion

August 30, 2022 by IC Insider.com

Wisynco is moving to expand the production capacity during Fiscal 2023 and has deposited $600 million for new equipment, Andrew and William Mahfood advised investors in the director report accompanying the 2022 audited accounts. The expansion will cost around $5 billion and is likely to come on stream in the fourth quarter of the current fiscal year, the chairman William Mahfood states in response to ICInsider.com question.

Wisynco Group

Following a year of strong revenue growth, the company saw an acceleration of revenue growth in the final quarter of Fiscal 22 rising 30 percent over the June quarter of 2021 as it helped to deliver a 22.7 percent increase in revenues for the year to $39.1 billion from $31.8 billion of the prior year. the rebound in the economy with the removal of restrictions and the strong rebound in tourist arrivals, a sector to which it sells around 15 percent of its products would have been positive development for the group.
The company states that “during the final quarter we encountered supply chain issues in selected key raw materials some which require special transportation equipment which impacted our production and consequently dampened our revenue levels.”
Profit before Taxation for the year was $4.9 billion or 31.4 percent more than $3.8 billion in 2021. Net profit after taxes for the year rose 31.6 percent to $4.1 billion from $3.1 billion in the prior year. Earnings per share for the year was $1.08 per share or 31.7 percent greater than the 82c per share for the prior year.
Gross profit for the year was $13.25 billion 19.2 percent greater than the prior year whilst Gross Margin was 33.9 percent compared to 34.9 percent for the 2021 fiscal year. Management cited higher energy costs resulting from downtime at the LNG plant and higher input costs on certain raw materials for the reduction in Gross Margin when compared to the prior year.
Selling and Distribution costs rose 15.4 percent over the 2021 fiscal year to $7.1 billion and Administrative expenses rose 1.5 percent for the year of $1.44 billion up from the $1.42 billion of the prior year.

Wisynco operates at two main locations situated in St. Catherine: White Marl and Lakes Pen. Manufacturing takes
place at White Marl, while Lakes Pen carries out distribution activities. Total square footage with factory, storage and
offices between the two locations is approximately 530,000 square feet.

Finance costs slipped to $149 million from $153 million in 2021 and includes foreign exchange losses for the year of approximately $34.7 million which compares to foreign exchange gains of $70 million recognized in other operating income for the prior year. Interest income improved over the prior year by approximately $108 million due to higher rates being earned on deposits.
Gross cash flow brought in $5.9 billion but growth in work in capital saw it falling to $4 billion and after repaying loans of $800 million and paying dividends of $1.5 million a net flow was just $298 million. At the end of December, shareholders’ equity stood at $17.8 billion with long term borrowings at $746 million and short term at $820 million. Current assets ended the period at $17.8 billion inclusive of trade and other receivables of $4 billion, investments, cash and bank balances of $8 billion. Current liabilities ended the period at $7.3 billion, with net current assets at $10.5 billion
Earnings per share came out at 1.08 cents for the year to date. Investors should accumulate this stock for growth in profit for 2023 and beyond.
ICInsider.com forecasts $1.75 per share for the fiscal year ending June 2023, with a PE of 10 times the current year’s earnings based on the price of $17.45 the stock traded at on the Jamaica Stock Exchange Main Market. Net asset value is $4.78 with the stock trades at 3.6 times book value.
The company paid two dividends amounting to 40 cents per share for the year representing an increase of 33.3 percent over the 30c per share for the 2021 fiscal year.

Filed Under: Buy Rated, Company News, Company Results Tagged With: Emerging markets, ICInsider BUY RATED, Jamaica Stock Exchange, Wisynco Group

RJR Q1 profit hits the roof

August 13, 2021 by IC Insider.com

We boldly predicted that profit at Jamaica’s leading media house – Radio Jamaica, would exceed the full 2021 fiscal years’ earnings of $171 million and stun the market with the full year’s profit on the way to just under $1 billion. We messed up but we were darn close, with the first quarter numbers, but now expect full year’s results to beat the original forecast and end up over $1 billion.
We projected revenues of $1.465 billion and they delivered $1.449 billion in the quarter. Our forecast for TV revenues was $626.344 million, they reported $639.377. Radio revenues came in at $199.605, somewhat higher than ICInsider.com’s projection of $184.05 and the print division delivered $610,217 million versus ICI’s forecast of $635,697. Other income amounts to $29 million versus IC forecast of $19 million.
RJR added approximately $70 million in provision for bad debt that to drive up administrative expenses above the recent trend thus producing a profit to $110 million in the quarter, a level never before done by them in the quarter. In achieving this performance, operating revenues surged 34 percent to $1.42 billion from $1.06 billion in 2020 and beating 2019 June quarter, with revenues of $1.36 billion.
Profit margin in the quarter rose to 65 percent from 64 percent in the 2020 quarter as direct input cost climbed 28 percent to $494 compared to $385 million in 2020 for the year’s quarter. The effect, operating profit rose 37 percent to $926 million from $675 million.
Sales expenses climbed by 6.5 percent to $243 million from $228 million in 2020. Administrative expenses rose 25 percent to $362 million from $290 million. Other operating expenses rose 14.5 percent and ended at $190 million from $166 million in 2020. Finance cost increased to $12 million from $11 million in 2020. Corporation taxes amount to $37 million and just $284,000 in 20.20

TVJ one of RJR’s subsidaries

The chief Executive officer Gary Allen and Chairman Joseph Matalon, in their report, accompanying the quarterly attribute the improved results to “cost cutting and improved income generation with “increased advertising revenues across all divisions, the continued collaboration with the Ministry of Education and the staging of ISSA/GraceKennedy boys and girls championship”.
Gross cash flow brought in $227 million but growth in receivables, inventories and increased payables resulted in an additional increase of funding of $120 million, addition to fixed assets and loan payment used up funds and created an overall net outflow of $119 million thus reducing the opening cash balance of $725 million to reflect the cash on hand at the end of the quarter. At the end of the quarter, Current assets ended at $2.34 billion including cash of $606 million and receivables of $137 billion, Payables amount to $1.29 billion and net current assets at $1.05 billion. Shareholders’ equity stands at $2.6 billion with borrowings at just $399 million.
Earnings per share came out at 4.5 cents. ICInsider.com forecasts earnings of 45 cents per share for the current year and 80 cents per share for 2023. The stock traded at $2.15 on the Main Market of the Jamaica Stock Exchange on Thursday with a PE ratio of 5 times, current earnings well below the average of 16.3 currently for the Main Market. The stock remains ICInsider.com BUY RATED.

Filed Under: Buy Rated, Company News, Company Results Tagged With: Emerging markets, ICInsider BUY RATED, Jamaica Stock Exchange, Jamaican stocks, Radio Jamaica

Profit bounces at Stationery & Office Supplies

June 5, 2021 by IC Insider.com

Many investors miss out on highly profitable investments in the stock market by focusing on the wrong things. Take the case of Stationery and Office Supplies that suffered a major reversal in profits in 2020 with just $33 million versus $135 million in 2019, with earnings per share of a mere 13 cents versus 54 cents in the prior year.

Operating profit at Stationery & Office Supplies grew 33% in 2021 Q1 over 2020.

Some investors see the historical PE Ratio for Junior Market for 2020 to be around 24 cents per share, as such, the company would be worth around $3 per share. Others would prefer to use the trailing four quarters earnings. Based on that, the company’s trailing earnings to March would be just 22 cents and the value would be even less than the full year’s numbers suggest. On the above two bases, at $7.52, the last price the stock traded at would be highly overvalued. The stock price jumped from $6 in trading before the results to trade mostly over $8 suggesting others investors are looking beyond the historical earnings and focusing on the future.
For the March quarter, revenues fell 7 percent to $313 million from $337 million in 2020. Importantly the average monthly sales rose 29 percent over the average for all 2020 to $104,522 but fell 7 percent against the 2020 first quarter. Despite the fall in revenues, profit rose 33 percent before gains on sale of fixed assets and loss of fair value of financial investments. A loss of $22 million was incurred in the June quarter last year, with negative 9 cents per share and profit in the September quarter last year was a mere $6.8 million from a 19 percent fall in revenues to just $240 million or $79,855 per month.
The company enjoys a ten-year tax profit break and will be subject to zero taxation until mid-2022 and 50 percent thereafter for five years.
Gross profit margin rose to 54 percent for the quarter, from 49 percent in 2020, as gross profit rose just four percent to $170 million. Administrative and other costs fell six percent to $81 million from $86 million in 2020. Selling and promotion expenses fell 10 percent from $23 million in 2020 to $21 million. Finance costs dipped from $3.3 million to $2.5 million as the company continues to use limited debt financing to grow its business.
The principal activities of the company are the sale and distribution of stationery and office furniture.
Shareholder’s equity stood at $665 million at the end of March 2021 and loans amounts to $163 million, with $36 million earmarked to be repaid to March 2022. Current assets totaled $522 million and current liabilities $140 million. Inventories rose to $245 million from $226 million in 2020 and receivables dropped from $172 million to $124 million representing around a month of sales.
Cash funds and investments amount to $121 million after the company generated cash funds of $69 million before working capital and capital financing needs. ICInsider.com projects earnings of $1 for the financial year to December 2021 and $1.60 for 2022.
The stock last traded at $8.20, with a PE ratio of 8 based on the reported earnings and 5 based on the 2022 projected earnings.
Contributors to this article own shares in the company.

Filed Under: Buy Rated, Company News, Company Results Tagged With: Emerging markets, ICInsider BUY RATED, Jamaica Stock Exchange, junior market, Stationery and Office Supplies

Record Carib Cement profit up 70%

February 28, 2021 by IC Insider.com

Caribbean Cement reported record profit for the year ending December 2020 from sales that rose 13 percent to $20 billion and up 17.8 percent in the final quarter to $5 billion from $4.3 billion in 2019.
For the year, profit after tax surged 70 percent to $3.2 billion after tax provision of $1.2 billion. The tax charge includes deferred tax amounting to $414 million, down from $664 million in 2019. The results would have been far better but for a billion loss in foreign exchange movement, but interest cost fell from $939 million to $812 million, partially cushioning some exchange losses. Interest cost will fall further in 2021 as the debt load recedes with the strong cash flows allowing for the rapid repayment of the $4.4 billion of long term loans.
Gross profit improved rapidly, surging faster than the increase in revenues with a 26.45 percent increase from $7.2 billion to $9.1 billion. The company also benefited from reducing administrative and other expenses that fell from 2.5 billion to $2.35 billion. The company has contracts that hedge diesel fuel to protect it from major increases in one of the largest cost in its operations.
Earnings per share came in at $3.76 for the year, just ahead of ICInsider.com’s forecast of $3.76. ICInsider.com projects earnings of $5.7 billion with EPS of $6.70 in 2021.
Cement generated positive cash flow of $6.5 billion, repaid $4.7 billion in loans and paid $1.5 billion to redeem preference shares due to the Trinidad Cement, its immediate majority shareholder. The amount owing for the TCL preference shares is now down to $2.3 billion with loans outstanding at 4.4 billion, of which $3.1 billion is in Jamaican dollars owing to National Commercial Bank and $1.34 billion due to Cemex Espana in US dollars. The reduction in overseas debt has significantly reduced the foreign exchange exposure, with 2021 set to benefit from a sharp reduction in exchange losses.
At the end of the year, shareholders’ equity moved to $11.5 billion from $8.3 billion at the end of 2019. The stock is one of the original IC TOP 15 stocks for 2021 in the main market of the Jamaica Stock Exchange and remains in the list but now at 13^th position with a target price of $135 in the next twelve months. The company is set to benefit from an improving economy, with low interest rates encouraging real estate development and ownership as well as expansion and rehabilitation of the country’s infrastructure that will consume an increasing amount of cement.
The stock closed at $65 on Friday with eth PE ratio at 17 times 2020 earnings and just 10 times 2021 projected earnings. The company has a strong balance sheet that is getting stronger each year and is moving into a phase where the payment of a dividend cannot be far away. Based on the above, Caribbean Cement enjoys ICInsider.com coveted BUY RATED investment approval.

Filed Under: Buy Rated, Company News, Company Results Tagged With: Caribbean Cement, Cemex SAB, ICInsider BUY RATED, Jamaica Stock Exchange, Jamaican stocks, National Commercial Bank

2020 a great year for Grace Kennedy

February 26, 2021 by IC Insider.com

The year just past may have been a terrible one for many, for at Grace Kennedy, they have much to be thankful for and management wish must be for another repeat performance like 2020.
Grace reports record profit of $6.2 billion attributable to shareholders for 2020, jumping 39 percent from $4.49 billion in 2019 after taxation more than doubled to hit $2.85 billion for an increase of 178 percent.
Profit before tax rose a strong 58 percent compared to 2019 to end at $9.7 billion. Importantly profit before other income jumped a stunning 82 percent to $6.8 billion while other income rose 20 percent to $3 billion. In what was a spectacular year for the 100 years old company, revenues grew 12 percent to $115 billion, surpassing the $99 billion generated in 2019. Direct and operating expenses rose 9 percent to $109 billion. Other comprehensive income brought total profits to $9.2 billion versus $9.26 billion in 2019.
The groups’ segments had a mixed performance, with Food trading profit almost doubling from 11 percent rise in sales while Insurance and Money transfer contributed 21 percent and 26 percent in profit but banking and Investments fell.
“GK’s Food Trading segment saw improved revenue and profitability primarily due to the outstanding performance of its international food businesses. GraceKennedy Foods (USA) LLC showed triple digit increase in gross profit and marked growth in revenue, with the Grace and La Fe brands recording growth and improved margins; and GK’s Jamaican food distribution business recorded strong growth in both revenue and pre-tax profit, coupled with improved operating margins,” a release from the company stated.
The group earned 6.26 per share for the year versus $4.51 in 2019 and the stock price closed on Friday with a last traded price of $84.50 for a PE ratio of 13, well below the market average of 20. ICInsider.com projects 2021 earnings of $11 per share and see the stock heading close to $200 for the year and receives the coveted IC BUY RATED stamp of approval.
Total shareholders’ equity stood at $29 billion at the end of December, up from $27 billion in 2019. the group paid $1.59 billion in dividend during the year, up slightly from $1.54 billion in 2019.