Successful investors usually have keen eyes that spot good opportunities from afar before the crowd usually finds out that seems to be the case at the Montego Bay based Caribbean Producers (CPJ).

Caribbean Producers back in TOP 10

We have cut staffing from 450 to 315 and we did a lot of cost containment and some amount of restructuring of the operations, which Mark Hart, chairman of the company, puts at US$600,000 per annum. According to Hart, they believe that the manning levels will be adequate for the immediate future.
CPJ chalked up losses following the closure of the hotels last year and while the company lost money up to the March quarter this year, the stock price has more than doubled since the end of June last year, moving from $2.06 to $4.74 on Thursday. Most investors missed the train on this one.
The first thing investors ought to have observed was the reopening of the tourist sector with increasing visitor arrivals since travel restrictions were lifted in June last year. The second was a reduction in cost at the company and the strong cash flow since the closure in March last year.
One of the best signals, pointing to improvement, was trading in the stock by insiders and connected parties since the latter part of 2020. Last month, the company advised the Jamaica Stock Exchange that a connected party purchased 470,707 units of the company’s shares on June 29.
On December 23, last year, a connected party purchased 464,765 shares that followed a connected party purchase of 2,930,211 shares at around $2.63 on December 8. On November 25, last year, another connected party purchase took place for 185,002 shares. The only negative message was to the sale by a connected party of 5,500,500 shares on April 20, this year, at approximately $3.74. A deeper review by ICInsider.com indicates that the sale was a specially arranged deal to someone close to the seller. On February 19, the stocks closed, trading at $2.67 with just 12,000 shares traded but on the next day, 752,023 shares traded with the last traded price of $3.20, and then on the next day, 8,622,338 shares traded at $3.50. The above trades are a big vote of confidence that things were on the mend for the company.
Following the above, it should not be surprising to hear two directors speaking glowingly about developments at the company over the past year and plans for expansion for the future. “We have seen quick recovery for our core business,” said Thomas Tyler.
Hart stated that he thinks that the forecast made by Don Theoc of Mayberry Investments of $6 for the company’s shares in the next twelve months is conservative.
“We have expanded our grocery stores in St Lucia from 3,000 to 8,000 square feet in May and we are building out 9,000 square feet grocery store in the centre of Castries and working on breaking ground and should be ready in six to nine months.  In the north of St Lucia, we are looking at a 19,000 square foot retail store and in Montego Bay, we are expanding a 1,200 square feet retail store to 6,000 square feet.” “We have identified acquisition candidate in Jamaica and we are exploring,” Thomas Tyler stated; he went on to further state that the plan is “for revenues in St Lucia to move from US$15 million per annum now to $50 million in 3 years.”
The company suffered a loss of US$903,258 for the March quarter, up from US$553780 in the similar period last year and for the nine months to March, the loss ballooned to US$3.6 million from a loss of just US$29,609 in the prior year.
Sale revenues dropped 52 percent for the quarter, to US$12.7 million from US$26.5 million but fell 57 percent for the year to date, to US$37 million from US$86 million in 2020.
The company enjoyed an improved profit margin in the March quarter, with gross profit falling at a slower pace of 56.4 compared to the steeper decline in revenues, but gross profit for the nine months period, slipped by 54 percent.
Selling and administrative expenses fell 37 percent to $3.2 million in the quarter and 42 percent in the nine months period to US$9.4 million from US$16.4 million.
Finance cost declined in the quarter, to $442,000 from $581 million in 2020 and $1.83 million to $1.34 million for the nine months period, while depreciation was fall at US$1 million for the quarter and US$3.2 million for the year to date period.
The rationalization resulted in Inventories falling from US$28 million in March 2020 to US$18.7 million receivables fell from US$18 million down to US$10.5 million, while payables fell from US$15.3 million to US$6.33 million. Some of the declines are due to a lower level of business activity. Amounts borrowed to fund the operations remained at a high US$34 million, with shareholders’ equity of just $14 million.