$1.22 billion chased 71M Elite shares

Elite Diagnostics could be in the Junior Market TOP 10 by the end of 2018.

Elite Diagnostic initial public offer of 70,680,000 ordinary shares were aggressively taken up by the General Public and place the issue as the one to have attracted the largest number of subscribers.
Applications for 614,190,600 units were received from 3,346 investors value of J$1,228,381,200.
The public offer was oversubscribed by more than 10.5 times and only one category of reserved shares was fully subscribed to, with 6,160,000 shares reserved for Medical Practitioners, receiving 54 applications. Applications from this group covered 19.046 million shares valued at $38,092,600, the first 70,000 units were allotted in full with balance getting 10.062 percent.
A total of 3,257 applications for shares were received from the general public who will receive the first 15,000 units with the balance in excess, receiving 3.383 percent.
A total of 12 applications for shares valued at approximately 1.555 million shares were received from Directors and Employees of the Company for the 4,060,000 shares reserved.
Five Affiliated Doctors applied for 142,000 out of the 700,000 shares reserved for them, two Affiliated Entities applied for just 56,000 of 420,000 shares reserved for them. Eight Referring Doctors Tier 1 applied for 2,240,000 of the 6,160,000 shares reserved. Applications from Referring Doctors Tier 2 applied for 1.011 million shares from the 1,900,000 shares reserved for them.
Sagicor Investments and NCB Capital Markets were the brokers to the issue.

Elite IPO put off for now

The initial public offer of 71 million shares in Elite Diagnostic that was to have opened to the public on Monday January 22 but put back to Wednesday January 24 has been put off once again.
The prospectus that was originally planned for release in early December included results for the first quarter of the current fiscal year to September with errors that lead to an understating of expenses and over stating of profit as well as errors in the amounts relating to fixed assets in the cash flow and balance sheet.
According to a recent release from the company, “Elite, after consulting with its Financial Advisors, has decided to update certain statements made in its prospectus dated December 11, 2017 and Addendum dated January 17, 2018. The revised statements and the new Opening and Closing Dates will be published on the JSE’s website as soon as possible.”
IC Insider.com who first brought the errors in the report to the public had written after the addendum was released that the company needed to withdraw the prospectus and have the figures properly checked and audited before releasing it again to the public.

Elite interim figures lack credibility

Elite Diagnostics interim figures are wrong and need auditing.

Elite Diagnostic issued an addendum to the prospectus for the public issue of shares. They should withdraw the issue, until they have the interim figures audited and fixed. For even after they amended them to correct for errors, $15 million is still unaccounted for.
The interim results, initially included in the prospectus and in the addendum to them, send a shocking picture of the amateurish approach to the company’s financial stewardship.
The company reported first quarter numbers without the significant cost of depreciation, which when included, reduced the profit by approximately 40 percent. To compound the matter, the figures are presented in cents which is shown is no other place in the prospectus, no experienced accountant would provide public results with cents included. The presentation tells a sorry story as to the errors that are in the report and are still there.
In a report of a missing $11 million, IC Insider.com pointed out the error re depreciation and fixed assets. In the addendum, fixed assets are up by $3 million but the figure is still short of what the data in the report suggests it to  be.
At the end of June last year, fixed assets amounted to $187 million, with the cash flow to September showing $74 million being added and would bring the total amount to $262 million, before depreciation of $9 million for the first quarter and would result in net fixed assets of $253 million. The interim results have the figure at $238 million, a huge difference of $15 million.
Deferred tax liability of $9.5 million reported in the June year end audited report disappears in the interim figures and may actually be a part of the error in the report. Without a proper checking of the data along with documentations of large transaction is difficult to say where the error may be and that is why the figures should audited at this stage to ensure integrity of the numbers.

$11M missing from elite figures

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$11 million are missing from the first quarter figures included in Elite Diagnostic prospectus to raise $141 million in an IPO.
While the 2017 audited accounts show depreciation and amortization of $28 million and administrative expenses of $81 million,the interim figures show no amount for depreciation, with administrative cost of $24 million which is just over 25 percent of the full years cost to June. Direct cost is $87 million for the fiscal year or just under $22 million per quarter, in line with $21.7 million in the September quarter. The conclusion is that the cost of depreciation is not included and would result in profits falling from $23 million reported to $14 million and would reduce the expected full year earnings below the annualized figure of $92 million down to a much lower amount, assuming that the new location at Old Hope Road just break even.

Elite Diagnostics is the first 2018 IPO out of 9, that is expected this year.

The intrigue does not end there. The movements in fixed assets show a missing $11 million, with fixed assets at June being $187 million and the cash flow statement showing additions of $71 million, that should result in a total of $257 million which would be reduced by approximately $9 million for depreciation for the quarter, bringing the net figure to $249 million but the interim figures have fixed assets at $238 million. For short, a material amount of $11 million is missing and it is unclear what items are under or over stated.
On the face of it, the reported profit for both years appear overstated, on that basis, IC Insider.com reduced earnings per share for the full year to 20 cents, with the stock being priced at 10 times earnings, but that still leaves the stock a buy.

Wisynco should list by year-end

NCB Capital Markets Manager, Origination and Structuring Stanley Thompson (left) exchanges laughs with Wisynco Group Limited Chairman William Mahfood during a signing ceremony commemorating a partnership with the local manufacturing and distribution giants. Sharing in the moment, too, are Wisynco Chief Executive Officer Andrew Mahfood and PriceWaterhouseCoopers Director Fiona Hyman

Investors who subscribed for share Wisynco Group’s Initial Public Offering in the General Public pool have been allocated up to the 25,000 units with any amount in excess is allocated 18.70 percent thereof.
Shares reserved for Employees, Strategic Investors and the Broker were fully taken up. The listing committee of the Jamaica Stock Exchange meets today to consider the listing of the shares and it is expected that trading in the stock should commence sometimes next week.
The Company offered 149,414,576 shares to raise approximately $1 billion to use in its operations but existing shareholders offered 635,085,424 shares for sale at the same time as a part of the overall offering. Up to 314,700,000 Shares in the Invitation were reserved for priority application from, of which 150,000,000 units for subscription by the Strategic Investors and 52,200,000 Shares for the Broker at the Subscription Price of $7.87 per Share to 112,500,000 Shares for employees and directors at $7.08 per Share.
NCB Capital Markets were the brokers to the offer that was heavily oversubscribed with issue being opened on Wednesday December 6.
Financially, the company is strong, with shareholders’ equity of $7.6 billion and cash of $4.75 billion as of September. Profits for the 3 months to September came out at $656 million versus $591 in 2016 and for the June 2017 fiscal year, $2.24 billion versus $2.3 billion in 2016, from revenues of $19.4 billion while in 2017 revenues were $21.25 billion. For the current fiscal year to June 2018, IC Insider.com is forecasting profit of $2.6 billion, around 70 cents per share, from revenues of $24.8 billion and $3.9 billion or $1.05 per share in 2019, from sales of $29 billion.

General public oversubscribed GWest 100%

GWest complex in Montego Bay,

Montego By based GWest Corporation’s Initial Public Offer of 169,689,500 shares, closed on the opening day, December 7, was oversubscribed by 41.3 percent, but the oversubscription by the general public exceeded 100 percent.
The level of oversubscription by the general public is amazing for company that is its infancy and generating a loss in its current fiscal year, with limited data on which to judge future earnings. Details of the level of subscription for the IPO was released by the broker for the issue, JMMB Securities.
Applications totaling 1334, were received for shares valued at $599,310,000. All the shares that were reserved were fully taken up, while General Public for which 69.7 million shares at $2.50 each, were available to purchase, received the first 10,000 shares applied for and 45.941 percent of the balance.

Dr. Konrad Kirlew, chairman of GWest.

GWest made a loss of $29 million in the six months to September this year and for the full year to March 2018, a loss of $111 million is projected, and is estimated to swing sharply to a profit of $166 million in 2019 and $388 million in 2020 as revenues rise from an estimated $158 million in 2018 to $803 million in 2019 to $1.2 billion in 2020. The shares are slated to be listed on the Junior Market of the Jamaica Stock Exchange.
Elsewhere, IC Insider.com gathers that VM Investments received applications in the range of more than 3,000, but less than 5,000, with the basis of allocation to be considered by the board on Thursday.

VM Investments 2 times over

Yet another Initial Public Offering crossed the line with demand exceeding supply as the latest issue by VM Investments to raise just under $700 million, has been oversubscribed and closed at the end on Tuesday.
“We were heartened by the overwhelming confidence demonstrated by Members of the Victoria Mutual family and the wider public. We closed today with subscriptions in excess of $2 Billion for the $689,261,487 offer” Devon Barrett, Victoria Mutual Group’s Chief Investment Officer said.
Barrett went on to say “we believe this augurs well for Jamaica’s economic growth and look forward to contributing to this growth by providing financing solutions for small and medium-sized entities in Jamaica. Details on the basis for allocation will be communicated to the Jamaica Stock Exchange in a subsequent advisory.”

Devon Barrett CEO of VMIL addressing invitees at the formal announcement of the IPO

A total of 225,003,750 Ordinary Shares in the Offer are initially reserved for staff and customers of the VMBS Group at discounts from $2.08 to $2.33 each and 75 million for the general public at $2.45 each. The offer which opens on December 11, was scheduled to close on December 18.
The company reported profit after taxes of $326 million, surpassing the $310 million made in 2015 and up to September profit of $273 million was achieved putting in on track for $360 for the year or 30 cents per share with PE ratio of 8, which is well below the average of the market 14.
Last week, FosRich and GWest closed with the issue oversubscribed and Wisynco closed with over $17 billion chasing a little more than $6 billion that was sought. Reports are that the Wisynco offer was heavily subscribed to by institutional investors.

300M IPO VM Investments shares next week

VM Investments Limited, the immediate parent company of VM Wealth Management (VMWM), will offer just over 300 million shares for sale, on Monday December 11 at $2.45 per share, to raise $689 million.
A total of 225,003,750 Ordinary Shares in the Offer are initially reserved for staff and customers of the VMBS Group, discounted at $2.08 to $2.33 each, and 75 million for the general public, at $2.45 each.
The offer which opens on December 11 is scheduled to close on December 18. It is the intention to list the company on the main market of the Jamaica Stock Exchange, after the issue closes.
The company intents to use the proceeds to build its capital base, to enable it to provide financing solutions and to capitalize on new business opportunities. In this regard the CEO Devon Barrett stated that they intend to allocate $1 billion per year to meet the needs of the small business sector, where data shows that there is an annual demand for $20 billion in financing.
The Directors expect to distribute up to 75 percent of the after-tax earnings as cash dividends, up from 55 percent on average to date.

VM Investments press conference for launch its IPO. from left is Michael McMorris – Chairman of VMBS, Courtney Campbell Group CEO, Devon Barrett CEO of VMIL and Janice McKenley – Group Chief Financial Offer.

Over the last five years, the revenue stream has evolved from predominantly, fixed income and securities trading, with approximately 70 percent of its total revenues coming from net interest income. Since 2011, VM Wealth has diversified its revenue streams, becoming active in the asset management and capital market space, with a comprehensive range of products and services. This has resulted in VM Wealth earning approximately 70 percent of its revenue from non-interest income sources.
The company reported after taxes profit of $326 million, surpassing $310 million in 2015. Up to September this year, profit of $273 million was achieved, putting in on track for $360 for the year or 30 cents per share. VMWM’s total operating revenue for 2016 was $1.28 billion, down from $1.37 billion in 2015. To September this year, $1.1 billion in revenue was generated. Revenues in 2016, comprised mainly of Net Interest Income of $251 million, gain from investment activities of $279 million and net fees and commissions of $280 million. Up to September, Net Interest Income came in at $191 million, gain from investment activities of $171 million and net fees and commissions of $370 million.

Devon Barrett CEO of VMIL addressing invitees at the formal announcement of the IPO, Beside him is Janice McKenley.

Shareholders’ equity stands at $2.12 billion as of September this year, with 1.2 billion shares issued and assets that include mostly investment securities. Third party assets under management increased by $4.4 billion or 55 percent, from $8 billion in 2015 to $15 billion in 2016 and assets under custodian arrangements amounts to $23 billion up from $20 billion in 2015. This was due mainly to increased promotion and the introduction of new unit trust product with 6 new portfolios – three US$ bond portfolios, one J$ bond portfolio, one local equities portfolio and a real estate portfolio.
The strong growth in net fees and commissions is very appealing as it will provide the base for good consistent growth in revenues and profits going forward.
DEVON BARRETT, MBA, is the Group Chief Investment Officer & Chief Executive Officer, Victoria Mutual Wealth Management.
With the 1.2 billion shares now in issue earnings per share is 30 cents for 2017 giving it a PE of 8. At a price of $2.45 and a PE of just 8 times 2017 earnings, the stock is price to enjoy a decent bounce ahead of 2018 earnings that should be higher than that of the current year’s, making it even more attractive.
The nature of the earnings can result in higher or lower profit from year to year but the longer term trend ought to be up, all things being equal especially as the more predictable fee income is growing at a faster pace that the others.

Big Wisynco payday down the road

Wata produced by Wisynco

Wisynco Group‘s primary activities are bottling and distribution of purified water and beverages and the manufacturing of a range of plastic and foam packing and disposable products mainly used in the retail, food service and tourism industry. At present the Company distributes 110 brands with over 4,000 different products.
The Company is offering 149,414,576 shares to raise approximately $1 billion to use in its operations but existing shareholders are offering 635,085,424 shares for sale at the same time as a part of the overall offering. Up to 314,700,000 Shares in the Invitation are initially reserved for priority application from, and subscription and/or purchase by the following persons: a) up to 150,000,000 Shares are initially available for subscription by the Strategic Investors and up to 52,200,000 Shares are reserved for the Broker at the Subscription Price of J$7.87 per Share and up to 112,500,000 Shares are initially available for subscription for all of the employees of the Company including executives, senior managers and directors at a price of J$7.08 per Share. Reserved Shares in any category not fully subscribed by the persons entitled to them, will be made available for subscription by the Strategic Investors Applicants at the Subscription Price and thereafter, will become available for purchase by the general public.

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

The Invitation will open at 9 am. on Wednesday, 6th December and is scheduled to close at 4 pm on Friday, 15 December, subject to the right to close the Invitation at any time after it opens once Applications for all of the Shares in the Invitation are taken up.
It is the intention of the Company to apply to the JSE to list the Shares on the Main Market of the Jamaica Stock Exchange. The Company offers no guarantee that any of the Shares will be admitted to listing. As per Rule 402 of the JSE Main Market Rules, if the Invitation does not raise 20% of the Issued Share Capital of the Company, by the Closing Date, all monies received will be refunded.
The Directors intend to apply the net Initial Public Offering from the subscription of new Shares in the Company for: • Expansion of its manufacturing capacity to facilitate growth in all current markets for existing and future products; • Investment in more efficient modern internal power generation and utilization • Potential strategic acquisitions – locally, regionally and internationally • New distribution partnerships • Expansion of the Company’s distribution fleet and infrastructure to support the build out of its ‘Route to Market’ system • The establishment of the a western distribution centre and • Increase working capital to expand distribution arrangements through additional or new third-party brands in key categories not currently served by the Company.

True Juice orange juice bottled by Wisynco

Loans from banks increased by 92.5% during 2017, moving from J$1.05 billion at the end of June 2016 to J$2.02 billion at the end of June 2017 and mature between 2018 and 2023 and were obtained for the purpose of funding the expansion of the warehouse and the purchase of machinery and equipment.
Financially, the company is strong, with shareholders’ equity of $7.6 billion and cash of $4.75 billion as of September. Profits for the 3 months to September came out at $656 million versus $591 in 2016 and for the June 2017 fiscal year, $2.24 billion versus $2.3 billion in 2016, from revenues of $19.4 billion while in 2017 revenues were $21.25 billion. For the current fiscal year to June 2018, IC Insider.com is forecasting profit of $2.6 billion, around 70 cents per share, from revenues of $24.8 billion and $3.9 billion or $1.05 per share in 2019, from sales of $29 billion.
Based on the forecasted earnings, the stock is priced at 11 times earnings and should double towards the end of 2018 based on the projected 2019 earnings. The stock is now sixth on IC Insiders.com TOP 10.

Wisynco could be the next big JSE IPO

In 2015, West Indies Synthetics Company Ltd (WISYNCO) celebrated 50 years of operations by early 2018 the company is set to celebrate another milestone, as the third Mahfood majority owned company to be listed on the Jamaican Stock Exchange. 
Wisynco was formed as a result of the amalgamation of the three companies – West Indies Synthetics, Wisynco Trading Limited, and Jamaica Drink Company Limited.
Prior to this, CMP Industries that was primarily a manufacturing company supplying office equipment and material, was listed but suffered declining fortunes with the switch in import policies in the 1980s and 1990 that saw incentives being removed or slashed to protect local manufacturing. CMP still operates but as a property owner and is now controlled by the Trustees in Bankruptcy.
Jamaican Teas, listed on the Junior Market is majority owned by another branch of the family, that includes John Mahfood and his parent.

Wata produced by Wisynco

In 2009, Partner Foods Limited and Wendico Jamaica Limited merged to form one company – Wisynco Foods Limited. Wisynco Foods represents the brands Wendy’s, Domino’s and Haagen Dazs. In 2014, Wisynco purchased fifty percent share in United Estates Ltd & Trade Winds Citrus Ltd.
According to Wisynco website, Saleem Mahfood was married to Evelyn Shammas in Lebanon, following which on his return to Jamaica he opened his own wholesale haberdashery at 132 Harbour Street in downtown Kingston. He named it Mahfood’s Commercial Limited. The store distributed goods to retailers — footwear, including the once popular BATA sneakers, Cebo water boots; along with yard goods, and a range of haberdashery items.
The brothers formed WISYNCO and borrowed £150,000 from Barclays Bank to build and equip a 6,000-square-foot factory at Twickenham Park in St. Catherine and hence the official birth of Wisynco. The new plant started production and manufactured 60 pairs of boots per hour. Soon farmers, casual labourers, factory workers, and anyone needing protection from the elements would be sporting Jamaican-made Iron Man water boots. Initially Wisynco introduced a double-shift system to keep up with growing demand, and when that still was not enough, expanded to three shifts.

True Juice orange juice bottled by Wisynco

Growth continued even during the 1970s when Wisynco required 60,000 square feet of production and warehouse space in order to supply the Jamaican market with its expanding range of products.
Wisynco started production of cups and containers, in the old offices at West Indies Synthetics, Twickenham Park being brought into use as the thermoforming hall. In 1996, the company borrowed US$3 million and set up a 10,000 square-foot carbonated soft drink manufacturing plant and the start of BIGGA Soft Drink. In 2000 Wisynco introduced its own brand of purified artesian well water WATA to the Jamaican market.
in 2006, Wisynco began distributing Coca-Cola products on a non-exclusive basis.
Wisynco, recently opened its new distribution centre after fire gutted its Lakes Pen, St Catherine warehouse last year May. Chief Executive Officer Andrew Mahfood anticipates that the US$2 million ($2.6 billion) investment in the 360,000-square-foot distribution centre will further position the company to move aggressively after the export market. In fact, Wisynco plans to build a new beverage plant valued at US$8 million over the next six months to increase production numbers by 50 per cent as the company seeks to take on the Caribbean market.
IC Insider.com has been reliable advised that the company is estimated to have a market value around $38 billion at approximately the current average PE of the market. At this valuation when listed would rank as one of the largest company c on the exchange several bigger than any Junior Market company and about two thirds the size of Grace Kennedy and several times bigger than Jamaica Producers. NCB Capital Markets is said to be the brokers to the offering.