In Thursday’s trading on the Jamaica Stock Exchange, the market was directionless with advancing stocks numbering just below declining ones and the IC market indicator showing investors in a tussle over the immediate future direction of the market. Prices of 6 stocks rose and 8 declined as 20 securities traded resulting in 3,602,192 shares changing hands valued at $19,621,158 in another lacklustre session.
Main Market| All advancing shares in the market was in the main market and all but one stock that declined was also in this market, but the indices moved up slightly, with the JSE Market Index inching up by just 1.23 points to 74,599.03 and the JSE All Jamaican Composite index edging up by only 1.38 points to close at 82,123.43.
Gains| Stocks recording gains at the end of trading in the main market are Berger Paints trading 89,657 unitss to close with a gain of a cent at $1.68, Caribbean Cement gained 21 cents to close at $3.91 with 20,500 units changing hands, Carreras traded 443 shares to close 6 cents higher at $33.56, Ciboney with 50,000 shares by increasing by a cent to close at 12 cents for a new 52 weeks high, Grace Kennedy 7,439 shares with a gain of $1 to close at $58 and Jamaica Money Market Brokers with 451,214 ordinary shares to close up by 4 cents at $7.24.
Firm| There were only 5 stocks in the main market to close without a change in price as Gleaner with 228,484 shares closed at $1.10, Hardware & Lumber traded 3,300 units and closed at $11.70, Mayberry Investments with 3,060 units closed at $1.70, Scotia Group had 59,888 units changing hands to close at $20.62 and Seprod traded 685 shares in closing at $10.84.
Declines| The number of stocks that declined in the main market are Cable & Wireless with 1,500,888 units while losing a cent to end at 40 cents, Desnoes & Geddes with 76,472 shares to end at $4.30 as the price lost 30 cents, Jamaica Broilers with 450,872 shares to close at $4.86, down 4 cents, Jamaica Producers that traded 6,600 units to close at $18.26 while losing 4 cents, National Commercial Bank 571,665 shares as the price closed with a 10 cents lost, at $18, Sagicor Group had 50,529 units changing hands to close with a fall of 71 cents to $9.50 and Salada Foods 2,400 shares to close 45 cents lower, to end at $7.50
Junior Market| The JSE Junior Market Index declined by 0.59 points to close at 743.20 as only 2 junior market stocks traded at the end of the trading session.
Gains| No stock gained at the end of trading in the junior market.
Firm Trades| Lasco Manufacturing was the only stock in the junior market that traded to close at the same price as the previous trading day with 27,096 units to end at $1.20.
Declines| Caribbean Producers was the only stock declining in the junior market at the end of trading as the price fell 9 cents to close at $2.91 as it traded a mere 1,000 units.
IC bid-offer Indicator| At the end of trading the Investor’s Choice bid-offer indicator had 5 stocks with the bid higher than the last selling price and 6 stocks with offers that were lower.
Market directionless
Profit up 22% at Jamaica Broilers
Profit after tax due to the Jamaica Broiler’s shareholders, which was up 10 percent in the first quarter to August, is up 22 percent in the October quarter.
Profit was flat in the first quarter, before taking out losses due to outside shareholders of a subsidiary, and was 15 percent ahead of the 2012 second quarter period. The improved results flowed from increased revenues of 20 and 21 percent respectively in each quarter. For the half year, profit hit $324 million or 27 cents per share and in the October quarter, the company reported $184 million versus $151 million in 2012 or 15 cents per share in profits. With the Christmas period ahead, they are now into the best period for revenues and profit. IC Insider’s forecast is now at $1.50 earnings per share for the year, down from an earlier forecast, but cost savings are expecting from the acquisitions, particularly the US based one. Earnings should exceed $2 by 2015 fisscal year. The stock still remains Buy Rated.
The group enjoyed improved gross margins in the second quarter to 29 percent versus 23.4 percent in the first quarter and 26 percent for 2013 fiscal year that ended in April.
The group completed the acquisition of Hamilton Smokehouse and England Farms Inc. during the latest quarter, which resulted in increased income as well as increased cost. Administrative cost rose by 33.5 percent in the October quarter to $923 million and 23 percent for the year to October to $1.43 billion; distribution cost jumped in the last quarter by 39 percent to $335.7 million and 33 percent for the two quarters to $615.6 million. Those were not the only costs to rise, finance cost jumped by 20 percent in the last quarter to $88 million and by 35 percent in the year to date to hit $167 million.
Segments | Poultry sales rose 15 percent to $7.2 billion over 2012; Hi Pro sales which includes feeds was down 1 percent for the half year but ethanol fell 39 percent to $445 million; other operation category is up 75 percent while US operations show a 221 percent jump to $2.15 billion, partially reflecting the new acquisition in the quarter. Other income rose from $68 million to $86 million. Segment results came out at $436 million for poultry, up from $350 million in 2012; Hi Pro recorded $310 million down from $501 million in 2012; ethanol recorded $27 million, in 2012 a loss of $7.5 million was recorded; and the US operations recorded an impressive $202 million compared to only $19 million in 2012.
Balance Sheet | Fixed assets increased by $700 million net of depreciation charge over April due mainly to the acquisitions noted above; intangible assets increased by $455 million and goodwill by $133 million all due to the US and the Hamilton Smokehouse acquisitions. Inventories rose $300 million over the position as of April this year; biological assets moved up by $640 million and receivables and prepayments by $560 million. Cash funds are down $1.1 million at the end of October to $1.1 billion; loans however climbed by $400 million to $5.8 billion, this compares with equity of $10.3 billion. Current assets amounted to $9.2 billion and is well ahead of current liabilities of $5.3 billion, which is a slight deterioration from the level of $8.8 billion in April to $4.2 billion in current liabilities.
Jamaica Broilers Group is an IC Insider Buy Rated Stock.
Related posts | JBG profit held back | New additions to Buy Rated stocks | Jamaica Broilers dividend
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Jamaica Broilers dividend
Jamaica Broilers Group declared an unchanged interim dividend of 8 cents per share payable on December 2, 2013 to shareholders on record as at November 5, 2013. The ex-dividend date is November 1.
Last year December, the company paid 8 cents per share as a dividend and they made an interim payment of 6 cents per share on March 28, this year.
Jamaica Broilers Group is an IC Insider’s Buy Rated stock.
Related posts | JBG profit held back | Buy Rated: TTSE stocks climbing, JSE falters | Jamaica Broilers is buy rated
JBG profit held back
A drop in Hi Pro profit from flat sales, increased corporate taxes provision and increased finance cost held back profit for the first quarter of the new fiscal year for Jamaica Broilers Group, one of Jamaica’s leading agro product company. This is despite a big jump in revenues and profit from the US operations, as well as a turnaround from a big loss in the ethanol operations in 2012 into a profit in this latest quarter.
Jamaica Broilers’ financial results for the quarter to July, 2013 show profits attributable to stockholders increasing by 10 percent to $140 million or earnings per share of 11.68 cents against $127 million or 10.60 cents per share last year. The moderate improvement in profit flows from revenues of $7 billion, a 17 percent increase over the $6 billion generated in the corresponding period last year. Gross profits for the quarter amounted to $1.32 billion, a 17 percent increase over the $1.13 billion of the corresponding period last year.
Expenses up | Distribution and selling expenses grew by a strong 26.5 percent to $280 million while administrative costs increased 13.4 percent to $838 million. Management states that the increases essentially reflect the impact of inflation along with costs related to organizational strengthening. Finance cost rose from $51 million to $79 million in the quarter reflecting increased borrowing from $4.5 billion in 2012 to $5.3 billion at the end of the quarter.
Segments | The US operations climbed sharply in sales to $805 million, a 176 percent increase to external parties, contributing to a rise in segment profit to $76 million from $7 million in 2012. The broiler segment sales rose by 14 percent to $3.5 billion as segment profit moved to $234 million versus $189 million in 2012. At Hi Pro division, sales, which include feed and retailing of non-feed products, were flat at $2.56 billion but profit slipped from $230 million to $149 million. Ethanol sales at $248 million in 2013 was lower than for 2012 at $289 million, as profit from the operation ended up at $16 million, a turnaround from a $49 million loss. Other operations, which delivered sales of $200 million and profit of $36 million in 2012, reported a 154 percent sales jump to $309 million in 2013 but profit inched up to only $39 million. Other operations include the sale of feed ingredients, beef products, fish, cattle rearing, processing and co-generation energy supply.
The recent expansion in fertile egg production in Georgia and increased procurement activities is beginning to show positive results as stated by management in their release to shareholders.
Acquisitions | The quarterly results do not include revenue and profit from the just concluded acquisition of England Farms Company, a well-established fertile egg operation based in Arkansas. While this company operates in a different state than the current Georgia one economies of scale can be achieved by merging most of the administrative activities into one thus cutting cost. Specialisation may also be possible as well as savings in shipping cost where each unit can deliver supplies closer to the individual plants. In the release announcing the acquisition of this entity, management stated that it will double existing sales.
The purchase of Hamilton’s Smokehouse will result in an expansion in the volume of products available under the Hamilton Smokehouse brand and will provide opportunities for greater utilization of the Best Dressed Further Processing facilities at Spring Village, St Catherine, management stated. With the processing of Hamilton products to be done in JB existing facilities will mean higher profit margins as most of the former overhead cost of a stand-a-lone operation will no longer exits.
The build out in the 68 percent owned Haiti operations is continuing with increased sales of Haitian produced baby chicks, feed, layer birds, table eggs, and processed chicken.
The group has been spending on capital improvement apart from acquisitions, nevertheless they still had $1.4 billion in investments and cash at bank at end of July.
Insider Call | Jamaica Broilers is still on track to report between $1.50 – $1.80 earnings for the year notwithstanding the almost flat first quarter results and is an IC Insider Buy Rated stock.
Related posts |Jamaica Broilers is buy rated | Another acquisition for Jamaica Broilers | Jamaica Broilers buy US egg company | Jamaica Broilers major profit gains
Another acquisition for Jamaica Broilers
Jamaica Broilers Group entered into an agreement on August 20, 2013, to acquire Hamilton’s Smoke House Limited, a leading local producer and processor of premium quality smoked meats, poultry and pork products. The acquisition will strengthen the Company`s presence in the further processed meats segment and complement the Company`s existing product lines. Completion of the acquisition, which is subject to certain conditions, is expected to be within forty-five (45) days. Under the terms of the transaction, the purchase price is to remain confidential.
This is the second acquisition the company has entered into in just over a month. In July, Jamaica Broilers advised that it has entered into an agreement on July 17, 2013, to acquire a leading producer and broker of broiler hatching eggs in the United States of America. “This acquisition, if concluded, is expected to result in the doubling of JBG`s fertile egg production output in the United States.
The group should benefit from economies of scale from both of these acquisitions when fully integrated. Jamaica Broilers reported a 17 percent improvement in after-tax results for the year to April 2013 with profits of $1.1 billion from a 12.5 percent increase in revenues to $26.7 billion. The group has equity capital of $9.7 billion and total assets of $18 billion at the end of April this year.
Insider call | Jamaica Broilers Group is an IC Insider Buy Rated Stock
Jamaica Broilers buy US egg company
Jamaica Broilers Group Limited announced that they entered into an agreement on July 17, 2013, to acquire a leading producer and broker of broiler hatching eggs in the United States of America. This acquisition, if concluded, is expected to result in the doubling of the company’s fertile egg production output in the United States.
Completion of the acquisition, which is subject to certain conditions, is expected to be within forty-five (45) days. Under the terms of the transaction, the purchase price is to remain confidential until completion a release from the company said.
Jamaica Broilers, which is a Jamaican company, stated in its 2013 annual report that revenues from its external customers in other countries was J$2.23 billion and in 2012 just over J$1 billion. All of this income would not be related to eggs and this provides some information as to the likely contributions to revenue from the acquisition candidate. It is likely to bring about economies of scale as certain activities can be merged thus leading to cost reduction.
Jamaica Boilers is one of our Buy Rated stock.
Jamaica Broilers is buy rated
IC Insider is projecting a doubling of earnings for the current year ending in April 2014 for Jamaica Broilers. We project profits to hit $2.22 billion, which translates to $1.85 per share, up from the $1.1 billion reported in its latest audited results.
The improvement is expected from restoration of the gross margin for the broiler and feed business to levels that preceded the 2013 fiscal year, as well as increased sales and margin in the ethanol segment from full production compared to only partial production for most of last year. The ethanol operation generated the bulk of the profit in the April quarter of $260 million on revenue of $500 million compared to only $74 million on revenues of $1.36 billion for the nine months to January this year. Just maintaining the profitability in this segment, assuming that the other areas hold up as well as they did in the last year, earnings would likely grow by about $750 million or a little more than 60 cents per share.
The 2013 profit resulted in earnings per share of 91 cents based on 1.2 billion shares issued and arose from a 12.5 percent increase in revenues to $26.7 billion. IC Insider is projecting revenues of $29.8 billion for 2014, representing 11.6 percent more than in 2013.
While the increased results for the full year may not seem impressive as seen by the lack of reaction in the stock market to the results, the final numbers reflect a major recovery from the end of January as profit was down for the nine months from $687 million to $562 million. The last quarter profit jumped by 114 percent suggesting that this trend could continue well into the new fiscal year and is in keeping with the above forecast.
Management’s Comments | In releasing the January results, the company management stated, “Gross profits were negatively impacted by increased US$ costs for corn and soya bean residue — our main feed ingredients. This, in addition to the depreciation in the value of the Jamaican currency, has resulted in continuing cost increases. Management felt constrained during this quarter from fully passing on these cost increases in selling price adjustments.
“Distribution and administrative costs reflect increases when compared to this quarter last year due to a number of unexpected items of expenditure. For much of this quarter our Co-Generation electricity operation was out of service. During this time over $50million in fixed costs were carried in administrative expenses while Jamaica Public Service invoices were charged to the Best Dressed Chicken Processing Plant. The Co-generation plant came back into service in mid-January. In addition, costs were incurred in relation to organizational strengthening and an assessment by the Tax Authorities, related to GCT deferred on imports.
The Ethanol Division maintained production under tolling contracts at 100% of capacity during this quarter. The segment result for this Division reflects a positive $81 million for the quarter; with the year-to-date result now showing $74million versus the negative $7 million at the end of the second quarter. Also, the build out in the Haiti operations is continuing with ever increasing sales of Haitian produced baby chicks, feed, layer birds, table eggs and processed chicken.”
Balance sheet | JBG was able to reduce the levels of inventories carried from sales to inventories of 7 times to 9 times, but it did not stop there, as inventories actually fell by $400 million, while at the same time, receivables climbed by $500 million at year end. The group took on more debt to fund asset acquisitions during the year as net debt climbed $1.38 billion to reach $5.49 billion but equity is up by $1.3 billion.
To read the full report Jamaica Broilers major profit gains, click here
Jamaica Broilers major profit gains
Jamaica Broilers (JBG) is reporting 17 percent improvement in after tax results for the year to April 2013 with profits of $1.1 billion versus $936 million in 2012. Earnings per share is 91 cents for the latest year based on 1.2 billion shares issued.
These results arise from a 12.5 percent increase in revenues to $26.7 billion, a record in nominal terms. Profit growth did not come from the company’s traditional business but from ethanol production and other operations. The increase may not seem impressive when looked at for the full year but it represents a major recovery from the results at the end of January when profit was down for the nine months from $687 million to $562 million, resulting in a comeback in the last quarter with profits jumping by 114 percent. Profit before tax was up less impressively, by 70 percent from $307 million to $521 million.
Most of the profit growth came from the ethanol and other operations according to the segment data. Poultry contributed $82 million less than in 2012 and feeds contribution was $215 million less. Ethanol delivered $273 million and others $385 million more than 2012. The ethanol operations made the bulk of the profit in the April quarter. Up to January, only $74 million was generated from this operation but it jumped considerably in the last quarter.
Cost pressures hit the operations with segment profits lower to December for poultry and feeds as well as in the last quarter compared with the same period in 2012. In the last quarter, things were coming back for the poultry with segment profit of $296 million versus 300 million in 2012 and for the feeds segment, it was still off badly as just $161 million was generated in April quarter compared to $271 million in 2012. For the nine months to January, the poultry had a segment profit of $633 million versus $713 million in 2012 and for the feeds segment it was $749 million compared with $854 million.
The company took on more debt to fund assets acquisitions during the year as net debt climbed $1.38 billion to reach $5.49 billion but equity is up by $1.3 billion.
