Growth slows for Dolphin

May 16, 2013 by

Dolphin Cove seems to have reached a stage of relative maturity in the Jamaican Market as evidenced by a moderate revenues increase of 9 percent in the March quarter this year compared to the prior year. Management indicates that the level of increase experienced is due largely to their marketing and selling efforts.

This increase in revenue primarily contributed to a 7 percent increase in net profits when compared to Q1 of 2012. In the quarter, profits of $117.5 million was made while the 2012 figure was $110 million. The company delivered total revenues of $395 million in the quarter and in 2012 $363 million.

Expenses increased at a higher rate than the increase in revenues, particularly at the Hanover Park due to the allocation of more of the central administrative and marketing costs to that operation than in the prior period. Overall, team member costs increased by 10 percent as of May 2012 which affected Q1 2013 and not Q1 in 2012. The other parks recorded an increase in profits of 67 percent as the Half Moon Hotel’s new management has delivered better attendance, the company stated in a release with the results.

dolphin150X150Management expects that the reopening of several hotels which have been closed for renovation or expansion and the change of hotel brands such as Breezes Runaway Bay and Hedonism 3 to Jewel and also Ritz Carlton to Playa, (operators of the Secrets and Barcelo brands) should have a very positive effect on park attendance . The planned reopening of the Starfish Hotel in Trelawny and the expansion of RIU in Montego Bay to open later this year should give a further boost.

Financial Finances are in a very healthy state even after funding expansion from internal sources. Cash funds held at $150 million, current assets exceed current liabilities 2 to 1, which means they are in a great position to fund short commitments. Equity is $1.2 billion and debt capital is around $120 million.

Expansion overseas | The company has acquired land overseas for another park, which is where most of the future growth will come from.

The stock is currently priced in the $8 region, a bit pricey based on other stocks in the market but time will allow the valuation of others to catch up with Dolphin.

Filed Under: Company News, Company Results Tagged With: ,

FX rate change hits Kingston Profits

May 16, 2013 by

Kingston Properties is reporting lower profits in the March quarter this year compared to last year. Not only are profits lower, there was a significant hit from financing costs, caused by foreign exchange losses on loans denominated in US dollars due to slippage of the Jamaican dollar during the quarter. The company reported a loss of $10.8 million before foreign exchange loss and after a tax credit, the loss was down to $7.2 million. In the similar quarter last year the company reported a profit of $3.2 million before tax and $2.45 million after tax.  Other Comprehensive amounting to $22.5 million resulting from translation gain on the operations resulted in a positive picture at the end of the day ,with Comprehensive Income being $15.44 million. In 2012, the company reported Comprehensive Income of $6.2 million.

Income | Rental revenue for the quarter was $21.86 million, a 14 percent move from $19.1 million in 2012 but operating expenses climbed by 44 percent, much faster than income to $14.8 million. Management states that indirect property expenses accounted for approximately $2.9 million of the $4.5 million increase in overall operating expenses, with the major contributors being repairs and maintenance, home owners’ association fees and property taxes.

Group finance costs were $19.6 million for the quarter compared with $7.4 Million for the similar period in 2012.These amounts include unrealized losses of $14.3 million and $2.5 million respectively, due to foreign currency translation losses resulting from the devaluation of the Jamaican dollar.

KingstonProperitesREIT_logo130X140At the end of the quarter, Investment Properties were $850 million, an increase of $641.4 million over the 2012 first quarter. Fair value gains of $166.3 million on the Red Hills Road property and positive currency impact of $30.3 million on the Miami residential condominiums, accounted for the increase in property values. 

Cash and equivalent amounted to $200 million of which $168.1 million is restricted amounts.

Assets & Loans Concerns | Group liabilities were $350.3 million at the end of March, including current and long term loans payable of $325 million of which $186 million in payable within twelve months. Although the company has enough cash to meet this year’s pay out, the real concern is that the amounts to be paid over the life of all the loans is, in the short run, not being supported by cash flow. The quarterly report did not address this issue.

Funding options | In its annual report to shareholders, the company stated that they have a number of options to raise funds, these include:

  • Convertible bond, with incentives for holders to convert to equity
  • Secured bond with first claim on the property
  • Equity capital; preferred, common
  • Other types of instruments based on investor preferences and objectives

Property holdings | Kingston Properties holds a portfolio of 89,957 square feet of property consisting of a fully tenanted office/warehouse building of approximately 26,000 square feet located on Hagley Park Road in Kingston, Jamaica and 19 condominium apartments in downtown Miami.

The company discloses that it has been evaluating doing transactions in the affordable segment of the local residential market with the goal of  providing a housing solution for the large group of buyers with steady income who are looking for units priced below $7 million. Finished homes will be in the range of 800 square feet at a minimum, allowing most home buyers a comfortable unit size without the immediate desire for expansion.

Filed Under: Company News, Company Results Tagged With: ,

Cargo Handlers profits up 38%

May 16, 2013 by

Cargo Handlers enjoyed a boost in revenues and a 38 percent increase in profit for the six months to March this year. The business is an uncomplicated business, it deals in one main area providing stevedoring services on the wharf in Montego Bay. The company has plant and equipment of with a book value of $11.5 million, an indication of its size. Current assets on books at March this year was $134.6 million and current liabilities $36.2 million. Included in current assets is cash of $102 million. There is no interest bearing debt, another indicator of simplicity.

What the company may lack in sophistication is more than made up in its ability to earn positive and quite robust profits. For the March quarter, the company bettered the earnings of 2012 by netting $18.9 million this year compared to $15.98 million in the 2012 first quarter from revenues of $40.6 million and in the 2012 March quarter $27.7 million. For the six months to March, revenues are up 35 percent to $82.3 million. Earnings per share for the quarter came out at 45 cents and 98 cents for the six months.

The results were achieved despite a $10 million increase in operating expenses compared to what was incurred in 2012 when $9.7 million was incurred in this area. On a year to date basis, $37.7 million was incurred for this cost item versus $28 million in 2012.

The stock is an income play with a high pay out rate. In the last twelve months it paid dividends of $70 million.

Filed Under: Company News, Company Results Tagged With: ,

JSE to redeem preference shares

May 16, 2013 by

Friday, 17th May UPDATE | The Jamaica Stock Exchange Limited has advised of its intention to redeem its preference shares which mature on May 31, 2013. Principal and interest payments will be made on May 31, 2013 to shareholders on record as at May 24, 2013. The shares will be suspended on May 24 to facilitate the process of redemption. The total amount of shares involved is 33 million units.

Thursday, 16th May | The Jamaica Stock Exchange (JSE) which is now listed in the preference shares segment of the market, will be offering ordinary shares to the public before the end of May, a reliable source tells IC Insider, subject to an early sign-off of the prospectus by the FSC.

The Stock Exchange has already announced the redemption of the preference shares which under the terms of the shares are redeemable at the end of May and the Board has signed off on the decision to take the ordinary shares to the public. IC Insider gathers that the issue will most likely be in the region of the redemption which will amount to around $66 million. With issue costs of the ordinary shares to be factored in, it could come to market at around $100 million. The prospectus is at an advanced stage and could be signed off by the stock exchange early next week for approval by the FSC. If all goes well, the prospectus could be in the public hands by late next week or the first week in June and the issue should be closed before the end of June. The lead brokers are Stocks & Securities who recently launched the IPO of Caribbean Cream issue.

How does the JSE stack up?

jse_logo150x150Revenues  | For the quarter ended March, the JSE’s income rose 8% to reach $69.5m compared to $64.4m in 2012. Other Operating Income increased by $5.5m or 32% over the same period, primarily due to an increase of $5.3 million in revenue from the JSE regional conference. Investment income of $22 million jumped $14 million over 2012 due largely to the gains on US dollar investments as a result of devaluation of the Jamaican dollar.

Profit after tax amounted to $5.8 million compared to a loss of $6.1 million in 2012. For the twelve months to December last year profit of $93 million was reported but that figure included the revenue from the sale of a board seat to Proven Wealth Management as well large fee income that flowed form the purchase of Lascelles’ shares that were acquired by Campari last year.

Total assets at March this year is $720 million and equity capital of $505 million. There are currently, 28 million ordinary shares in issue. With an equity base of $505 million these shares would have a book value of $18 per share. It is quite likely that the number of shares now issued could be increased to existing shareholders thus allowing for a smaller sum per share for the IPO.

Based on earnings to date, it is and the current number of shares outstanding could be priced around $10 each which is much lower than the net asset value. The prospectus will disclose the full extent of the pricing and then investors can get a clear picture of its worth as an IPO.

IPO outlook | Of course the stock exchange has no direct competition, nevertheless it has to compete with other forms of investments both local and overseas, that are available to investors. It also noted that the JSE has not been customer friendly with the investing public and there are other signs of management weaknesses that could prevent an investment in the stock to optimize investors’ returns. It is the view of IC Insider that the stock market should pick up over the next several years as interest rates remain low making stock market investing more attractive than in the past few years. If so, then the JSE will benefit from increasing fees and possibility more listings.

Filed Under: Initial Public Offers, JSE Main Market, Stock Market Tagged With:

Big jump in H&L profits but small sum

May 16, 2013 by

Hardware & Lumber enjoyed moderate increase is sales for the March quarter of this year. Revenue amounted to $1,547.8 million, a mere 2.4% more than the $1,511.8 million reported in the same quarter in 2012. At the same time, net result for the quarter was a profit after tax of $9.9 million compared to a loss of $5.2 million in 2012. This translated to earnings per stock unit of $0.12.

Gross profit increased by 6.2% to $408.3 million, achieving an average margin of 26.4%, a full one percentage points higher than the comparative quarter.  Management attributes the improved performance to increased sales, greater focus on margin management and the integration of the wholesale segment into the Rapid True Value operations. Effective January 1, 2013, the company re-organised its operations into two operating divisions, down from the previous three, which saw the wholesale segment subsumed into the retail segment.

HardwareLumber_Bldg150x150While there was improvement in gross margin, operating expenses increased at a much faster pace than sales by increasing 8.5 percent to $394.3 million. Gains made from operational cost-saving initiatives and ongoing control of discretionary spending were not enough to offset the significant increase in the charges associated with the company’s pension scheme and other retirement benefits. In a release to shareholders, management stated that the revision of the accounting rules governing such benefits, which became effective January 2013 triggered a restatement of the expense recorded in 2012 and a significant increase in the carrying value of the liability in the Statement of Financial Position as at December 2012.

Working capital management continued to receive management’s focus. At March, inventory balances were $1,158.4 million or 13.9% lower than the balance at March 2012. Over the same period, improved credit management resulted in a 4.9% reduction in trade and other receivables balance to $459.9 million. At the end of the period, the amount owed to trade and other creditors was $913.2 million, being 3.1% lower than the balance at March 2012. Total cash generated from operating activities was $209 million with $57 million used to service loan commitments and pay dividends, leaving cash balance of $357.8 million at the end of the period.

Stock outlook | Earnings should pick up as the year progresses and IC Insider.com expects to see much higher earnings for the full year than in 2012.

Filed Under: Company News, Company Results Tagged With: ,

JSE: Wednesday, 15th May 2013

May 16, 2013 by

Bullish, will it last? | Corporates are coming to the market (meaning companies are buying) says our source when asked what was happening and why the significant move today. They want all the top company shares that everyone else wants.  He indicated that other brokers are doing the same thing but the supply is not coming out to meet demand at these prices. These sentiments were confirmed by another source. Whatever the true situation, what is known is that the advance/decline ratio has been strongly positive from at last week which is a bullish indicator.

Trading today on the Jamaican Stock Exchange was at its most bullish for the entire year with the All Jamaican Composite advanced by 1,132.95 points (1.35%) to close at 85,058.31. The JSE Market Index advanced by 643.54 points (0.76%) to close at 85,273.15 and the JSE Junior Market Index leaped by 34.36 points (5.47%) to close at 662.80, this as 15 advancing stocks overshadowed the 3 falling.

Bull150X150Market volume amounted to 2,350,794 units valued at over $16,641,657. Caribbean Producers traded 1,178,552 units with Jamaica Money Market Brokers with 333,000 units (31.28%) and Scotia Group Jamaica with 224,446 units (21.08%).

Big movers for the day are Access Financial Services up $1 to an all-time high of $8 while trading 17,861 shares, Desnoes & Geddes put on 50 cents to close at $5 but the stock closed with an offer of $4.85 with a small volume being offered for sale. The company traded 163,074 units between $4.60 and $5. Dolphin Cove traded to close at $8.40, up 48 cents on the day, Jamaica Producers fresh from reporting improved first quarter results, gained 41 to close at $16.50 as the stock saw trading taking place in 10,000 units. Lasco Manufacturing gained 30 cents to close at $11.30 off 101,178 units trading, Scotia Investments is up all of $3.40 for a $26.50 close as the stock traded 7,000 units. The losing stocks shed 49 cents in the case of Carreras as it traded 9.821 units, NCB lost 57 cents in closing at $18.22 while trading 26,685 units.

Technically the market is approaching its first resistance which is around 86,000-87,000 points. A break sharply over this level will expose the market to a potential big rally taking it to the 100,000 points level.

JSEINdicesMay15

Filed Under: JSE Main Market, Stock Market Tagged With: , ,

Caribbean Cream trading on Friday

May 16, 2013 by

Caribbean Cream will commence trading of Friday under the ticker symbol Kremi. This confirms IC Insider report last week that the listing was set for this week. The company is the latest to be listed on the Jamaica Stock Exchange.

Stock outlook | The company which went to the market in April to raise $75.7 million was just oversubscribed on May 1, well ahead of the closing date of May 10. Not much is expected in terms of price movements when trading starts since there was not the usual demand and heavy subscription for the shares as has been the norm for majority of the junior listing stocks.

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With:

Honey Bun not so sweet in Q1

May 15, 2013 by

Junior market listing Honey Bun reported revenue growth of 18 percent in the first quarter of this year but that is slower growth than the near 25 percent growth for the first six months of its financial year. The company generated 189.6 million in sales in the quarter, up from $160 million in 2012 and for the six months $381.5 million versus $305.8 in the prior year. Growth in revenues lagged the increased direct costs in the quarter. Management attributed the shrinking margin in the quarter to rising prices for flour and other inputs which could not be passed on to consumers at the same pace as the cost hikes.

Profit for the quarter was $23.2 million which was marginally lower than the $23.8 million garnered in 2012, and for the six months $38.4 million was generated versus $33.64 million to June 2012, or 14 percent.

A major part of the flat results in the quarter is a one third jump in administrative and other expenses to $41.6 million, up from $31.3 million a year ago. The increase is in line with the costs in this area for the December quarter.

Healthy finances | The company remains in a healthy financial state with working capital at a ratio of 3 to 1 inclusive of cash amounting to $70 million. This cash is up from $24 million at the end of September last year.

Receivables grew at the end of the quarter to $85 million compared to $57 million in 2012. However, with Easter coming towards the end of March, this would have resulted in most sales taking place towards month end, thus leading to a buildup in this item.

Management indicated that the receivables increase is due to the growth by over $10 million in monthly sales when compared to the prior year and also due to $16 million prepayments made on equipment and property. Payables also increased mainly as a result of the general increase in purchases to meet higher sales and the higher cost of goods year over year. Management went on the further state that sales improvement was as a result of increased sales to new markets and exports, which increased by over 150 percent, year over year for the 3 months.

Equity was $294 million and loan borrowing at a low of $14 million. The stock last traded at $4 each. This year’s earnings could end up at between 50-60 cents. The September’s quarter’s results are difficult to predict as that is the worse quarter of the year for them.

Filed Under: Company News, Company Results Tagged With: ,

Profits up at Jamaica Producers

May 15, 2013 by

Jamaica Producers (JP) recorded improved profits for the quarter ended March this year, with after tax profits up 30 percent, hitting $85.5 million for the company’s shareholders. The 2013 performance compares to $65.8 million reported in 2012. The improvement is in spite of finance cost rising by $22 million and taxation by $42 million. The group’s directly managed operations did not fare as well as in the prior year as a $43 million profit made in 2012 was turned into a loss of $12.6 million. Damage to the agricultural segment by hurricane Sandy resulted in a loss in that division of $55 million which compares unfavourably to a profit of $38 million last year, as revenue declined $89 million to $450 million. The group is reporting improvement in its European operations with a profit of $60 million, which is up from just $7.4 million in 2012.

Revenues | Overall, revenues moved up from $1.74 billion in 2012 to $1.86 this year. Profits were helped by gain on sale of fixed assets and investments amounting to $98.7 million. In 2012, gains were $40 million and the 2013 gain was offset by a one-off charge of $36 million. Share of associated company’s profits contributed $99.6 million versus a small loss in 2012.

Dom Rep operations fully-owned | JP acquired ownership of all the shares in the Dominican Republic operations where banana chips are produced for the Latin American market. The company says it benefited from growth in exports of juice to northern Europe from its Holland juice operations, cost cutting and increased efficiency from a new packaging plant.

Financially strong | The group has equity of $5.2 billion and loans of $1.2 billion of which just $68 million is due within twelve months. Short-term liquid funds amount to $485 million at the end of the quarter. The challenge for JP is to build on the performance of the first quarter and show satisfactory improvement in its core business to justify the investments in those areas.

Stock outlook | The 2013 performance so far could help the stock price recover some of its former sparkle. How much is uncertain.

Filed Under: Company News, Company Results Tagged With: ,

JSE: Tuesday, 14th May 2013

May 15, 2013 by

Indices rise but decliners outnumber advancers

In Tuesday’s trading on the Jamaica Stock Exchange 3 stocks advanced and 7 declined. It’s been some time since the advance/decline ratio was negative, nevertheless the main market indices actually registered advances. The level of trading was moderate with just over 2 million units trading for a value of $9.3 million.

At the end of trading there were 8 stocks with bids above the last selling price and only two with offers below the last sale price.

JSEINdicesMay14

Filed Under: JSE Main Market, Stock Market Tagged With: , ,