JFP IPO pulls in 5,062 shareholders

Following a successful initial public offer of 280 million shares that were offered to the public to raise $280 million by JFP Limited a décor and furniture manufacturing company, amassed a total of 5,062 shareholders following the public issue.
The company was listed on the Junior Market of the Jamaica Stock Exchange and Monday brought the total listings on the market to 44, the number of listed companies to 43 and the listing of companies on the exchange to 97 companies.
“The JFP could not be listed without the work of its founder Stephen Sirgany and the staff of JFP, who worked tirelessly to ensure that the Company is what it is today and to achieve the status of being listed on the Board of the Exchange,” Metry Seaga, Chief Executive Officer stated in his address at the listing ceremony.
“I want to encourage SMEs to stay the course, overcome the hurdles and you will be able to achieve great results, such as listing on the Board of the Exchange,” JFP’s CEO advised.
“The markets have been busy creating millionaires and we are happy that the Jamaica Stock Exchange could have provided the facilities for persons in Jamaica to create wealth. Companies are creating wealth through JSE’s facilities. Jamaicans don’t have to sit on the sideline and watch these companies create wealth, but they can now share in the whole process”, Ryan Strachan, VP Investor Relations at GK Capital Management Limited, the Lead Broker, stated in addressing the audience.
The stock that was issued at $1 each traded on Thursday morning at $1.91 for a gain of 91 percent over the issue price.

Edufocal lists on Tuesday

Trading of shares in EduFocal that offered 129,689,219 ordinary shares to the public on March 3, will commence on Tuesday as the company shares will be listed on the Jamaica Stock Exchange Junior Market on that day and will bring the total listings on the market to 45.
The offer was oversubscribed, with Key Strategic Partners in this reserved pool will receive all their predetermined amount.
Applicants who applied for more than their predetermined amount will receive a pro-rata allocation of approximately 59.67 percent of the excess shares for which they applied, with any excess transferred to the General Public Pool.
All applicants from the General Public received 10,000 shares and approximately 16.57 percent of the excess shares.
Although the offer was handily oversubscribed, ICInsider.com gathers there were applications that came in after the close just after the issue opened and closed minutes after opening so there is added demand that should provide a bounce for the stock.

EduFocal IPO closed

EduFocal Limited offer of 129,689,219 Ordinary Shares to the public at $1 each that opened on March 3, 2022, has closed well ahead of the scheduled date of March 17, as was expected word emanating from the company indicates, with the issue attracting almost twice the amount that was on offer when it closed just seconds after the 9 o’clock opening.
The Company intends to apply to the Jamaica Stock Exchange for admission of the shares on the Junior Market and will bring the total listings on that market to 45.
The company experienced rapid growth with revenues of $27 million in 2019 rising to $103 million in 2020 and profit before tax of $15.6 million. For the period to September 2021 revenues rose 39 percent to $107.6 million with a loss of less than a million dollars, from $77.5 million in revenues and a small profit of $7.5 million before tax. Preliminary results to December 2021 saw revenues rising to $168.6 million with a profit of $15 million or 2.8 cents per share, putting the PE ratio around 36 times 2021 earnings.
The company is projecting revenues rising to $322 million in 2022 and $355 million in 2023, with profits of $50 million and $69 million respectively. The projected revenues for 2022 would result in growth of 91 percent, well above the December quarter revenues annualized of around $240 million. The forecasted profit appears reasonable if the performance in the December quarter carries over for the rest of 2022 and would represent earnings per share of 8 cents with a PE of 12.
EduFocal Learn encompasses the Company’s core business offering which is focused on providing a social learning platform that combines study with play, with the primary offering, focused on test preparation for Jamaica’s Primary Exit Profile exams, previously known as the Grade Six Achievement Test (GSAT). In September 2020, the Company launched the EduFocal Academy product which entailed a full-day learning programme.
The proceeds of the offer will be used to pay transaction costs of $12 million, $42 million will be used towards the repayment of short term debt and approximately $62 will be used towards expansion in new markets.
The company is involved in online education, relatively new business activity as such the risk associated with an investment in these shares may be higher than for long established businesses in tried and proven segments of the economy.

EduFocal attractive based on 2022 earnings

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EduFocal Limited is offering 129,689,219 ordinary shares to the public at $1 each with the issue opening on March 3, 2022, with the closing scheduled for March 17, but is expected to close earlier.
Only 80,499,272 Ordinary Shares will be available to the general public as 49,189,947 are reserved for Key Strategic Partners and a Lender who agreed to convert a loan into equity.
The Company intends to apply to the Jamaica Stock Exchange for admission of the shares on the Junior Market and will bring the total listings on that market to 45 if the issue is successful.
The company experienced rapid growth with revenues of $27 million in 2019 rising to $103 million in 2020 and profit before tax of $15.6 million. For the period to September 2021 revenues rose 39 percent to $107.6 million with a loss of less than a million dollars, from $77.5 million in revenues and a small profit of $7.5 million before tax. Preliminary results to December 2021 saw revenues rising to $168.6 million with a profit of $15 million or 2.8 cents per share, putting the PE ratio around 36 times 2021 earnings.
The company is projecting revenues rising to $322 million in 2022 and $355 million in 2023, with profits of $50 million and $69 million respectively. The projected revenues for 2022 would equate to growth of 91 percent, well above the December quarter revenues annualized of around $240 million. The forecasted profit appears reasonable if the performance in the December quarter carries over for the rest of 2022 and would represent earnings per share of 8 cents with a PE of 12.
The company had shareholders’ equity of $71 million, with borrowings of $114 million. Current assets stood at $138 million and includes cash of $17 million and a high degree of receivables of $114 million. Payables amount to $24 million at the same time.
The Company commenced operations in March 2012 and has two divisions, Learn and Business. Under the Learn division, the Company provides educational technology in the Business to Consumer space and more recently via the Business division, it offers Business to Business solutions.
EduFocal Learn encompasses the Company’s core business offering which is focused on providing a social learning platform that combines study with play, with the primary offering, focused on test preparation for Jamaica’s Primary Exit Profile exams, previously known as the Grade Six Achievement Test (GSAT). In September 2020, the Company launched the EduFocal Academy product which entailed a full-day learning programme.
The Company’s content is delivered over its proprietary e-learning platform, for which it charges monthly subscription fees. EduFocal Business division was launched in 2020. It is focused on delivering organisation or industry specific e-learning content using the Company’s platform architecture and know-how.
The proceeds of the offer will be used to pay transaction costs of $12 million, $42 million will be used towards the repayment of short term debt and approximately $62 will be used towards expansion in new markets.
The company is involved in online education, relatively new business activity as such the risk associated with an investment in these shares may be higher than for longer established businesses in tried and proven segments of the economy.
The directors are Peter Levy, chairman, Shauna Fuller Clarke, Lloyd Swaby Gordon Swaby, Grace Lindo and Kevin Donaldson

JFP ipo requires careful thought

Jamaican investors will get another shot of investing in a new initial public offer of shares when JFP Limited issue of 280 million ordinary shares opens on February 21 at a price of $1 each on the Jamaican market as the second such issue for the year to date.
The company, a custom manufacturer of furniture was formerly operated as Jamaica Fibreglass Products Limited, up to December last year. The Company manufactures furniture for offices, hotels, restaurants and laboratories, schools, point-of-sale items and boasts many large companies in Jamaica and internationally as customers. “Historically, the Company’s revenues have been derived from the hotel industry, government agencies and restaurants. Combined, these three (3) industries have been the source of an average of 72 percent of revenues for the past five (5) years with one third of the Company’s revenues being earned from the restaurant industry,” the prospectus states.
The share offer is set to close on February 28, with such a small amount is expected to close earlier. Half of the offering is being sold by one existing shareholder, with the balance of 140 million units is offered by the company, with the proceeds to boost working capital to enable it to mobilize efficiently and take advantage of more opportunities for revenue and profit growth.
The company is slated to list on the Junior Market of the Jamaica Stock Exchange shortly after the offer closes. A total of 111.6 million of the shares are Reserved Shares, not initially available to the wider public. The company currently has 980 million shares issued and after the issue closes will end at 1.12 billion units.
The prospectus states that the directors intend to pursue a liberal dividend policy that projects an annual dividend of between forty percent and eighty percent of net profits available for distribution, subject to the need for reinvestment in the Company from time to time.
Metry Seaga is the Chief Executive officer and Ian Levy is the chairman of the board that comprises seven members in total.
Historical operating performance has not been all perfect with sales declining between 2016 and 2018 from $285 million to $244 million with negligible profit and loss, but sales rose to $503 million in 2019 and slipped to $443 million in 2020, but profit before tax rose to $69 million from a small $2 million loss and climbed further in 2020 to $83 million. While profit to September 2020 amounted to $87 million from revenues of $312 million but profit dropped to a mere $4.8 million from sales of $210 million for the nine months to September last year.
Indications are that revenues could get back to the $400 million region, in 2022 and profit around $75 million for earnings per share of 7 cents. With the company producing to order there are likely to be swings in revenues and profit that could result in big swings in the price of the stock. Of course, results could be better or worse as past results show.
Gross profit for the 2020 financial year was $233 million and was flat compared to the year prior.  Gross margins increased from 46.5 percent in 2019 to 52.5 percent. The prospectus stated that improved margins were due to a reduction in staff complement and streamlining its importation process as well as sourcing material locally where possible. Over the past five years, gross margin averaged 52 percent.
The Company’s revenues from contracted work for the nine (9) months to September last year was said to be delayed as a result of multiple unforeseen contract delays caused by the Covid-19 pandemic and the various COVID– 19 containment measures reduced the number of working hours which slowed the production and completion of work. The expected revenues from these delayed projects were $81 million.
The company reports a pipeline of $255 million in contracts for the nine months to September this year and includes a $153 million contract awarded to the Company to manufacture and outfit the check in counters and baggage scales at Sangster International Airport in Montego Bay, slated to be completed in the September quarter of 2022 and $32 million in revenues remaining to be recognized from a contract to furnish the ROK Hotel to be completed in the second quarter.
Investment in the stock carries added risk, but it is well noted that the last two Junior Market listings are trading well over the market average of 17.5, based on 2021 earnings and 10 times 2022 projected earnings, with Future Energy Source trading at an incredible PE of 40 times last year earnings and 29 times 2022/23 earnings, with Spur Tree Spices at 28 times last year’s earnings and 16 times that of 2022, both having strong medium term growth prospects.
There are distinct differences between the two previous listings and the latter. The former two have a very clear path that suggests fairly consistent growth, the same is not so for JFP as such the latter should trade at a discount to the former in a rational market.

30% gain for Spur Tree Spices

Shares in Spur Tree Spices started trading this morning at $1.30, with a mere 3 shares changing hands as the newly listed Junior Market stock attracts huge demand, with 389 bids posted ahead of the market’s opening, ranging from $1 to a high of $1.30, with demand totaling 6.46 million units at $1.30.
An indication of demand to buy below $1.30, is as follows; 527,000 units at $1.29, a total of 3.9 million shares at $1.25 and 3.6 million at $1.20. Sell orders start at $1.50 with 12,500 followed 1,500 units at $1.70, 26,000 at $1.80 56000 at $1.99 and 107,000 at $2 with other reasonable offers going up $3.20.
Under the stock exchange rules, trading in the stock is now frozen until 10.30 this morning and cannot trade at a higher price than $1.30 today. Following the reopening of the stocks for trading, after trading was frozen, bids have come in for more than 36 million units at $1.32, over 23 million at $1.31 and 38.46 million at $1.30.
The movement in the stock helped push the Junior Market Index over the 3,500 mark for the first time since early October 2019.

Spur Tree Spices lists on Friday on the JSE

Shares of Spur Tree Spices will list on Friday on the Junior Market of the Jamaica Stock Exchange following the successful Initial Public Offering said to have attracted applications from more than 5,000 investors and raised $335.4 million before expenses for the company.
The company indicated that the issue attracted $1.3 billion and was 6 times oversubscribed. Proceeds will be used to pay listing expenses, with the remainder to be used for the repayment of debts of $170 million and to facilitate business expansion.
The listing, the second such listing on the Junior Market since the start of 2021 will bring the total stocks on the exchange to 42. A few others are expected to follow in short order as new offerings are made to the public early in 2022.
Earnings per share for Spur Tree should end the year at 11.5 cents before taxation at a PE of 8.7 times earnings, below the market average of 14.4 currently, with a high degree of oversubscription, the PE ratio will jump on Friday and into next week. IC Insider.com projects 18.5 cents earning for 2022 from a profit of $300 million at a PE of 5.4 times 2022 profit.

12% allotment for Spur Tree shares

The staff at Spur Tree Spices lost a golden opportunity to make money from the company they worked for leaving a portion of the 10 million shares on the table for others to take up at a very low price that will likely double in rice sooner than later.
GK Capital Management released to the public the basis of allotment of the successful Spur Tree Spices Initial Public Offer of 335.4 million shares on Thursday.
Applicants in the staff key partner reserve pools will receive 100 percent of their application with the balance of the shares in these pools that were not applied for will become available for the General Public Pool Applicants, who will receive up to the first 10,000 shares plus a pro-rata allocation of approximately 11.76 percent of the excess shares for which they applied.
The prospectus indicated that allocation and refunds will take place within ten days of closing and trading in the shares no more than five business days after the Jamaica Stock Exchange approves the admission of shares to the Junior Market.
“It is the intention of the Company to apply to the JSE for admission of the Ordinary Shares to the Junior Market and to make such application immediately following the closing of the Invitation,” the prospectus stated.

15% likely allocation for Spur Tree shares

The last initial public of shares in Jamaica for 2021 went off with a bang and preliminary data show that the issue attracted $1.3 billion for the Spur Tree Spices Jamaica’s offer of 335,391,848 ordinary shares at $1 each, with 180 million units offered to the general public it means that the average take will be just over 15 percent.
With 155 million reserved shares fully taken up, the 180 million units available to the public was oversubscribed by more than five and a half times, which would result in each applicant getting around 15 percent of what they applied for based on a proportional level of allocation of the shares offered to the general public. The Company reserves the right to allot shares to applicants on a basis to be determined by it in its sole discretion, including on a pro-rata basis.
Proceeds will be used to pay listing expenses, with the remainder to be used for the repayment of debts of $170 million and to facilitate business expansion.
Revenue in 2020, grew 22 percent over the prior year to $701 million and at a compounded annual growth rate of 25 percent from $290 million in 2016.
Profit before tax in 2020 rose 52 percent to $82 million, from $54 million in the prior year. Results to September 2021 show a profit of $116 million from revenues of $834 million suggesting that the full year should see a pretax profit of $155 million. Gross cash flow amounts to $115 million for 2020 up from $57 in 2019.
The company recently completed the purchase of Exotic Products Jamaica that processes and cans ackees. “Ackee is a highly demanded strategic product in our export markets and the Company plans to rationalize the operations of this newly acquired entity to double production over the next two years. This, combined with our plans to expand and grow the current Spur Tree product range, while expanding current markets both locally and overseas and accessing new markets should significantly improve our sales and profit performance in the coming years”, the company stated.
Total equity capital will rise to around $600 million from $275 million at the end so September. Current assets amounted to $357 million and current liabilities at $221 million and cash on hand of $56 million.
Earnings per share should end the year at 11.5 cents before taxation and puts the PE at an attractive 8.7 times earnings and below the market average of 14.4 currently. IC Insider.com projects 18.5 cents earning for 2022 from a profit of $300 million at a PE of 5.4 times 2022 profit, on this basis, investors who wanted more shares in the public offer could reasonably buy the stock up to the $2 level, with the expectation of a bright future for the company.

IC Buy Rated Spur Tree IPO a big buy

Spur Tree Spices Jamaica’s prospectus for its Initial Public of 335,391,848 ordinary shares at $1 each is now released to the public for subscription with the opening date of December 29, with just about 180 million units available for subscription by the general public.
Overall 335 million shares are being sold in the offer but 135 million are reserved. Proceeds will be used to pay the Invitation and listing expenses and the remainder to go to the Company to be used for the repayment of debts and to facilitate business expansion. The total Invitation and Listing Expenses should not exceed $25 million. The total debt to be repaid from the proceeds raised is $169 million, broken down as a payment of $157 million to GK Investments and $12.5 million to reduce Directors’ Loans.
Shares will be issued on a first come basis. If the Invitation is oversubscribed, the Company reserves the right to allot shares to applicants on a basis to be determined by it in its sole discretion, including on a pro rata basis. In the event the Invitation is oversubscribed, the Company in consultation with the arranger and lead broker reserves the right to make adjustments to the basis of allocation to ensure fair and equitable allocation.
The company is in operation for 15 years in Jamaica and operates out of a 20,000 square feet manufacturing facility at Garmex, on Marcus Garvey Drive in Kingston. The company specialises in production, distribution and the sale of Jamaican seasonings and sauces, for retail and foodservice markets.
Revenue grew 22 percent over the prior year to $701 million and at a compounded annual growth rate of 25 percent from $290 million in 2016. The increase in 2020 came from improved product placement and the expansion to new markets, with approximately 95 percent from the export markets the company stated.
The gross profit margin improved from 25.1 percent in 2019 to 26.7 percent in 2020. For the nine months to September, this year’s gross profit margin ended at 28.8 percent. During the 2016 to 2020 period, gross profit margin exceeded 25 percent, with a range of 25 to 38 percent.
Profit before tax rose 52 percent to $82 million, from $54 million in the prior year. In each of the 5 years under review, the Company increased its profit before tax each year from $21 million in 2016 to $82 million in 2020, a five-year compounded annual growth rate of 40 percent.
Results to September 2021 show a profit of $116 million from revenues of $834 million suggesting that the full year should see a pretax profit of $155 million. Gross cash flow amounts to $115 million for 2020 up from $57 in 2019.
Return on average equity at the end of the 2020 financial year was a rich 47 percent after tax and seem set to rise in 2021.
The company’s products are available in Jamaica, the United States, Canada, the United Kingdom, Cayman Island, Costa Rica and Australia through several distributor outlets. While the Company is active in the local market through its various distribution channels, its major focus from inception has been and continues to be the export market. There are more Jamaicans, and persons of Jamaican descent, residing outside the country, who value that special connection with home whether through music, food, or other forms of cultural authenticity.

“Our export sales and marketing strategies are geared to satisfying the needs of the Jamaican diaspora who now make up our largest customer base. However, in recent years, there has been an expansion of the demand for Spur Tree products in the overseas space to include non Jamaicans of all different races and ethnicities seeking an authentic Caribbean food experience. Our products are sold in supermarket chains such as Shoprite, Food Bazaar, Food World, Western Beef, Presidente and Extra among others in the United States, as well as in the largest foodservice cash and carry store in the United States, Restaurant Depot/Jetro. Our products are also prominently showcased in major chains in Canada such as Loblaw’s and Sobeys,” the company stated in the prospectus.
“Spur Tree recently completed the purchase of Exotic Products Jamaica (Succs.) Limited (“Exotic”), an ackee factory in St. Thomas. Ackee is a highly demanded strategic product in our export markets and the Company plans to rationalize the operations of this newly acquired entity to double production over the next two years. This, combined with our plans to expand and grow the current Spur Tree product range, while expanding current markets both locally and overseas and accessing new markets should significantly improve our sales and profit performance in the coming years”, the company stated.
Issued shares at the date of this Prospectus total 1,341,567,396 and after the IPO the issued shares should climb to 1,676,959,244 and the total equity capital will rise to around $600 million from $275 million at the end of September. Current assets amounted to $357 million and current liabilities at $221 million and cash on hand of $56 million.
Earnings per share should end the year at 11.5 cents before taxation and puts the PE at an attractive 8.7 times earnings and below the market average of 14.4 currently. IC Insider.com projects 18.5 cents earning for 2022 from a profit of $300 million at a PE of 5.4 times 2022 profit, which means lost of profitable trades are baked in barring any major negative development.