MailPac Group IPO gains IC buy rating

Mail Pac Group and shareholders are selling 500 million shares at $1 each to raise $500 million with the offer opening on November 22. Applications from the general public must be for a minimum of 10,000 shares.  
The general public will be allowed to purchase just 6 percent or 150 million of the total issued share capital of 2.5 billion units that will be issued, following the close of the issue.
MailPac Group was formed late in 2019 and acquired Mailpac Services Limited and Mailpac Local Limited from Norbrook Equity Partners, majority shareholders, to amalgamate both logistics platforms into one operating business.
Profit is expected to reach $282 million in the 12 months to December this year based on results of the business operations for 2019 and will result in 14 cents earnings per share and a PE ratio of just seven times 2019 earnings and compares favourable with the average for the Junior Market of over 12 .5.
The company projects a profit of $317 million in 2020, but IC is forecasting $356 and 14 cents per share. The stock receives the coveted IC Buy Rated grading, with the price doubling by 2020.
The company enjoyed growth in revenues of 12.2 percent in 2017 and 25.7 percent in 2018 and 28.8 percent for the first half of 2019.
Before the acquisition mentioned above, the businesses in 2018 grew revenues to $969 million and $851 for the first three-quarters of 2019. Net income for the same periods was $213 million and $203 million, respectively. Mailpac Local Limited operated for seven months in 2018.
The Company intends to apply to the JSE for listing on the Junior Market subject raising at least $495 million. Proceeds are for general corporate purposes, including working capital and capital expenditure re and to settle existing debt obligations the selling shareholder assumed on behalf of the Company.
According to the company, Mailpac Services offers over 20 years of expertise in e-commerce fulfillment. With a rapidly growing client base of over 50,000 consumers in Jamaica, the business, a technological fulfillment platform for anyone shopping online. MGL’s core offering provides clients with physical addresses in Miami, Florida, where they can receive all goods purchased from international providers. Deliveries to the 55,000 square foot Florida warehouse are flown to Jamaica by a third-party cargo plane. MGL clears all items and delivers them to the customers at their homes or businesses or customers may collect packages at any of the company’s eleven stores islandwide.
The directors of the company are Khary Robinson, Executive Chairman, Mark Gonzales Executive Director & CEO, Garth Pearce Director, William Craig Independent, Non-Executive Director Tracy-Ann Spence Independent, Non-Executive Director. In the interest of good corporate governance, the board would do well to appoint an independent non-executive director as the chairman.

QWI IPO opens next week Monday

QWI Investments, a recent start-up investment company’s initial public offer of shares opens on Monday, September 16, with the sale of 600 million units.
The company has the option subject to the Financial Services Commission, to upsize the amount to 900 million shares if demands warrant it. Shares are being offered to the general public, at $1.35 each.
The amount expected to be raised is $787 million from the 600 million shares but could rise to just under $1.2 billion if the company upsize the issue to the maximum permissible.
The investment objectives of the Company is to invest primarily in securities of companies listed on the Jamaica Stock Exchange and on other recognised overseas stock exchanges with a medium to long term investment horizon to provide attractive risk-adjusted returns, with diversification across industries and regions. The portfolio will be actively managed on an ongoing basis guided by the investments team.
The company, currently a subsidiary of Jamaican Teas, really started operations towards the end of March when it acquired the quoted shares, from KIW international and Jamaican Teas amounting to $465 million. Since then it has grown the net assets by 52 percent to $705 million after accounting for operating expenses, well ahead of growth in the JSE composite Index over the same period. The performance equates to earnings per share in the period of 51 cents. At the end of July unaudited placed the net asset value at $1.52 per share.
Of the 600 million shares on offer, 270 million units are set aside for the general public. 115 million shares each are earmarked for NCB Insurance Company and NCB Capital Markets. Shareholders of Jamaican Teas and KIW International on record on 16 September 2019 can buy up 45 million shares at $1.25 each per share. Directors of the group and customers have 55 million units set aside at varying prices.
QWI had quoted shares amounting to $899 million at the end of July and current liabilities of $188 million. The closing date for the issue is set for 30 September but could be extended if market conditions demand it.
The QWI board is chaired John Jackson, John Mahfood, Cameron Burnet, all Chartered Accountants, Carl Carby, Management Accountant, David Stephens, Investor and business owner and Malcolm McDonald, Attorney at Law.
The shares are to be listed on the main market of the Jamaica Stock Exchange. NCB Capital Markets are the brokers to the issue and will be using their electronic portal to process all applications, which should allow for speedy processing of applications.
Persons involved in preparing this story, are connected to QWI investments.

New IPO coming in days

The Jamaica Stock Exchange should be welcoming another new main market listing, before too long as the latest new entrant to come with an initial public offer, is expected to present their case to the investment public in the coming week.
The issue hopes to raise just over $1 billion that would see shareholders’ equity moving from $700 million to nearly $2 billion if the maximum target is reached. The pricing of the issue is expected to be less than $1.40 per share.

iCreate IPO oversubscribed

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The ordinary shares of iCreate is set to be the next Junior Market listing that will bring the total companies to listed to 38 and the total securities to 40.
Sagicor Investments advised the Jamaica Stock Exchange that the public issue of shares in the one-year old company was oversubscribed with the issue closing on February 1 at 1:00 pm a little less than two days after it opened.
ICreate initial public offer of shares, sought to raise $70 million from 74,062,500 ordinary shares offered to the public at $1.01 each to help fund expansion. The offer opened on Thursday, January 31 and was originally scheduled to close on February 14.
Financial statements for the company showed that they were close to a break even in 2018.
The company is a creative learning institute developed with the aim of providing skills training and development of creatives in the Caribbean and North America.

ICreate ipo opens January 31

The ICreate initial public offer of shares will open on Thursday, January 31.
The issue is scheduled to close on February 14, with the prospectus set to be released this week, word reaching IC reveals.
The issue is a sale of 74,062,500 ordinary shares to the public at $1.01 each. The shares will be listed on the Junior Market of the Jamaica Stock Exchange, if the issue is successful. Revenue is said to be running in the region of just under $50 million per annum with prospects for strong growth going forward. Already the company is making a small profit, IC gathers. The business is the training of students in graphic designs and animation.
The majority shares are owned by EMedia Limited, with Sagicor Investments, holding a minority position. Broker to the deal is Sagicor Investments.

Record new JSE listings for 2019

This year could be a busy one for Initial public offers (IPOS) and record new listings on The Jamaica Stock Exchange (JSE), giving investors many more choices for placing their money.  
Nine IPOs came to the market in 2018 with three in December, giving investors more investment choices than in 2017. For 2019, ICreate will be the first IPO out of the block. The government owned Wigton Wind Farm’s IPO will be launched early 2019, probably by March, but it is not one for all investors, in spite of what some politicians would want to see happening. IC gathers others to come include, a central Jamaica Manufacturing entity with strong export base, a large paint company and one in the BPO sector. In addition, IC gathers that there are at least another three IPOs, should definitely make it to the market this year.
The JSE is projecting for 21 new listing in the current year, Marlene Street Forrest, General Managing Director, informed IC recently.
“The main market expects 10 of the total and the Junior Market 11. The list includes both ordinary and preference shares”, Street Forrest stated.

Fontana corrects & explains Q1 figures

Fontana senior management team

Following IC article, pointing to errors in the Fontana prospectus issued to the public on Thursday, December 6, the company subsequently corrected the errors and uploaded the corrected prospectus on the Jamaica Stock Exchange website.
“Please note that Fontana Limited attaches hereto its unaudited financial information for the period ended 30 September 2018. This information is updated from the financial information that is presented in the prospectus of the Company dated Thursday, 6 December 2018. The effect of the update is a revision to the Statement of Cash Flows where the profit before taxation and depreciation charges were inadvertently omitted. The Company also updated a typo to the Share Price of the Company from $2 to $1.88 on page 14 of the prospectus”, the company stated in a release on the JSE website.
The directors and management advised that the pricing error arose from a change in the original planned price of $2 that to $1.88 but the price, the price stated in the body of the document was overlooked. The error in the cash flow arose from the links to the cash flow from the work sheet did not copy over the figures for profit and depreciation when the final document was completed and no one picked up the omission prior to the publication of the error.
The directors at their investors briefing on Monday also addressed the matter of the sharp jump in inventories and the increase in the company’s first quarter profit over the prior year as well as the pace at which they will commence further expansion after the opening of the Waterloo Road branch in 2019. Inventories for the Christmas season were imported earlier than in 2017 the directors stated. Apparently, the movement in the exchange rate of the Jamaica dollar played a role as well as some concerns regarding the pricing of supplies out of China. The financial controller, Judale Smith indicated that the gross profit margins are usually 36 percent but it had fallen in the 2017 first quarter as they had to source some goods at higher prices that affected the margins, as such the 2018 figures better reflect what the out turn should be like.

I Create another IPO coming soon

iCreate, a fairly new company that is involved in the creative industry is at an advanced stage of planning to raise funds publicly by way of an IPO, ahead of a potential listing on the Junior Market of the Jamaica Stock Exchange.
According to the company’s website, they are a Creative Institute, developed with the aim of filling the gap in skills training and development of creatives in Jamaica and the wider Caribbean. As a part of the creative eco-system, students are provided with a wide range of career opportunities in the Creative Economy, while being a key partner of the Advertising Industry, Film Production Companies, Animation and Gaming Companies, and Creative Outsourcing initiatives.
iCreate partners with the University of the Commonwealth Caribbean (UCC) as its Creative Training arm for courses offered in Jamaica and the Caribbean. iCreate is also partnered with the Digital Marketing Institute, to become the only institution in the Caribbean licensed to deliver their Digital Marketing Diploma programme.
The majority shares are currently owned by eMedia Interactive Group with Sagicor Investment said to hold 19 percent of the shares. The total of just over 123.5 million shares issued are issued currently that will go to 196 million if the IPO is fully taken up. The issue should be coming to the market place soon, by the end of the year or early in 2019. Tyrone Wilson is the Managing Director of the Group.

Also expected to list in 2019 are Wigton Wind Farm which will provide an investment more for income than growth. Also exploring listing are a paint company and a manufacturing company from central Jamaica.

Why is Fontana IPO priced so low?

Owners and directors along with their advisors ought to know the value of their company. But this publication must ask the question if Fontana has really done so well and will continue to expand, why is it priced so low?
At a premium over net book value of 88 percent, the stock is one of the cheapest of Junior Market listings, with the vast majority selling at a premium of 3 to 4 net book and an average PE of around 13 excluding the extreme highs and lows. One would expect the stock to be priced closer to 10 times earnings before tax, that would put the price closer to $3 than $1.88 and that would place price to net asset value at a premium of 200 percent, still below the market average. The fact that the company is setting up a new branch and looking for more expansion, makes the case for a higher price more compelling as investors are most likely going to rake in much profit from this stock. The only problem the general public will not get many shares  to buy up front as it is set tobe heavily oversubscribed. Investors can expect this one to at least double shortly after listing.From where we sit we think the brokers did the owners out of several million dollars on this issue but then the owners may want Jamaicans to party with them on the 50th anniversary.

Fontana another IPO another set of errors

Fontana operators of a series of Pharmacies in Jamaica has now released the Prospectus for their initial public offer but like Elite Diagnostic last year, there are errors in this document that needs correction and explanation.
This is an unfortunate development for yet another issue, that seems very attractively priced. The directors have all signed off on the document that has gone through the Financial Services Commission, the Jamaica Stock Exchange and the Company Office of Jamaica, so why the errors and important ommission.
The introduction in the prospectus speaks to a price of $1.88 except for reserved shares at $1.69 but later on in the body of the document it speaks to a price of $2 for each share, making it unclear exactly what the price really should be? In the interim results to September, there are two issues, one is an error and the other, information that really needs clarification. The interim cash flow has no profit, nor depreciation and it therefore is not balanced and needs correcting.
The gross profit in the interim results jumped sharply,even as revenues grew just 5.5 percent with inventories are up 19 percent at the end of the quarter over 2017 and 15.5 percent over June this year. Why the big jump in inventories with sales are just rising moderately? Importantly, this raises questions about the accuracy of the inventory levels and the gross profit margin for 2018. Management should explain the sharp changes in this area so that investors can better understand why there is such a sharp jump in the quarterly profit.
This publication finds it difficult to once more raising issues relating to a prospectus. We are concerned that enough care is not going into them. The breach of GWest Corporation relating to the non-disclosure of information relating to an extraordinary meeting that was said to approve the issue of preference shares that was never brought to investors’ attention is fresh and has not been properly dealt by the regulators or the company. The regulators seem to have turned a blind eye to it. We need to raise the standards if the capital market integrity is the be enhanced.