JSE main market slips on Monday
The market closed with activity in 41 securities, leading to 9,839,984 units valued at $50,044,573 changing hands, in all market segments. A total of 15 securities rose and 12 declined with 4 stocks ending at 52 weeks’ closing high and 2 at intraday high.
The JSE Market Index fell 140.31 points to 138,302.07 the all Jamaica Composite Index declined 156.81 points to end at 153,516.65 and the JSE combined index eased by 20.44 points to end at 145,188.76.
IC bid-offer Indicator| At the end of trading, in the main and junior markets, the Investor’s Choice bid-offer indicator had a reading of 9 stocks with bids higher than their last selling prices and 2 with lower offers.
In trading, Barita Investments closed with a gain of 15 cents to $3.80 with 1,000 shares trading, Cable and Wireless close with 1,304,419 shares changing hands to close at $1.40 after rising to $1.49 in early trading. With the company’s parent having announced today that it has agreed to accept an offer from Liberty Global for the shares of CWC Plc interest could well build again in the local stock. Carreras rose $1 to end at $57 with 17,200 units trading, Ciboney gained 2 cents in closing at a 52 weeks’ high of 12 cents, Desnoes & Geddes ended with 269,196 shares trading at $30.02, Gleaner Company traded at 562,609 shares and gained 1 cent to end at $1.91. Jamaica Broilers traded 12,290 shares to close at $8.79 with a gain of 4 cents, JMMB Group lost 90 cents while trading 1,028,832 shares to close at $9.90. Mayberry Investments lost 4 cents and closed with 369,000 units trading with a loss of 5 cents at $4.30, National Commercial Bank close with 118,880 shares changing hands to end with a rise of $1 at $36 after trading at an intraday high of $37. Pulse Investments traded 229,058 shares with a decline of 20 cents for a close of $1.80, Sagicor Group lost 2 cents in trading 482,103 units at $16.43 at the close, Scotia Group ended with 8,029 shares changing hands, closed with a rise of 39 cents at $26.50. Supreme Ventures ended at a 52 weeks’ high $4.80 after adding 15 cents with 47,709 shares changing hands and Proven Investments ordinary share gained 2 US cents and ended at 23 US cents with 18,934 units changing hands. Jamaica Money Market Brokers 7.50% preference share traded 220,500 units at $2, Jamaica Money Market Brokers 8.50% preference share traded 1,313,000 units and ended at $3.49 with a gain of 4 cents.
Eppley’s stock scarce & undervalued
Eppley’s profit after tax increased 5 percent for the first nine months of the year to $41.7 million compared to $39.7 million in 2014. For the September quarter, profit jumped sharply by 91 percent to $19.3 million versus $10 million in 2014.
Earnings per share of $52.47 was achieved for the nine months and $24.17 for the quarter. A dividend of $9 per share will be paid on November 30 to ordinary shareholders on record at November 20.
Revenues grew 93 percent for the quarter to $63 million and 60 percent for the nine months period, to $171 million. Net interest income increased from 39.56 percent in the nine months to 43.9 percent in the quarter. Operating expenses climbed 16 percent for the quarter and 15 percent for the nine months.
As of September, Eppley had a $1.38 billion portfolio consisting mainly of loans, leases and receivables. The average income yield of the portfolio was 14 percent, the company stated.
Equity capital at the end of the quarter stood at $341 million and borrowing at $1 billion with average cost of debt being 10 percent. We ended the quarter with $237 million of cash and short-term investments, the company also stated.
Eppley provides loan and insurance premium financing. At the end of the quarter, the stock that is listed on the junior market of the Jamaica Stock Exchange last traded at $380 much lower than the net asset value was $429 per share.
Revenue growth pushes down C&W loss
The company posted losses of $485 million after exceptional expenses in the September quarter, or 11 percent less than the $548 million loss for the six months in 2014.
EBITDA earnings grew to $1.2 billion compared to $971 million a year ago and for the half year $2.58 billion versus $1.78 billion, an increase of 45 percent.
“Each line of business showed improved results leading to growth in total revenues and EBITDA. Our mobile business was again the leading performer with our pre-paid subscriber base growing by 23 percent and our post-paid subscriber base growing by 6 percent when compared to the prior year first half,” stated Garfield Sinclair who heads C&WJ, in the financial report.
During the quarter, revenues grew 9 percent to $5.63 billion. This growth was filliped by mobile subscriber base and revenues up 22 percent and 16 percent respectively; and broadband subscribers and revenue up 8 percent and 11 percent respectively. Revenues for the half year grew 10 percent to $11 billion as revenues for the September quarter exceeded that of the June quarter by $179 million or 3.3 percent.
Interest cost declined in the quarter to $934 million from $1 billion last year and should fall in the coming quarters as the interest rates reset downwards in November, to 7.2 percent from 7.787 percent with the fall in local Treasury bill rates. For the half-year interest cost amounts $2 billion. Staff costs are down by $300 million in the six months period from that of 2014 to be at $1.246 billion but out payments and direct cost rose $226 million with the September quarter by $149 million over the June quarter.
The company generated operating cash flow of $520 million compared with negative cash flows of $133 million in six months to September 2014.
The financials does not show any indication of a merger between the local operations of Flow and C&W but the latter wrote large amounts of assets and made staff redundant but no mention is made in the report as to how the two entities will be operating going forward. There are questions to be answered here.
The company’s shares are listed on the Jamaica Stock Exchange last traded at $1.45.
Profit results help rally Jamaican stocks
The Jamaica stock market made further gains on Thursday as investors continue to respond positively to the release of company results. The market closed with activity in 41 securities, leading to 16,060,816 units valued at $115,028,197 changing hands, in all market segments. A total of 14 securities rose and 11 declined with 5 stocks ending at 52 weeks’ closing high and 1 at intraday high.
The JSE Market Index rose 466.62 points to 138,363.46, the all Jamaica Composite Index gained 521.47 points to end at 153,585.26 and the JSE combined index increased by 704.78 points to end at 145,062.08.
IC bid-offer Indicator| At the end of trading, in the main and junior markets, the Investor’s Choice bid-offer indicator had a reading of 11 stocks with bids higher than their last selling prices and none with lower offers.
In trading, Berger Paints closed at $3.80 with 36,600 shares trading, Cable and Wireless lost 5 cents, with 1,954,862 shares changing hands to close at $1.45. On offer were 4,120,449 shares at $1.50 with bid in at $1.45 to buy just 1,972 units. Caribbean Cement fell 20 cents to end at $17.80 with 339,495 shares changing hands. Carreras dropped 1 cent to end at $55.50 with 45,965 units trading, Gleaner traded 58,700 units at $1.90, Grace Kennedy closed at $74.97 after shedding by 3 cents with 162,604 shares changing hands, Jamaica Broilers traded 516,635 shares to close at $9.25. Jamaica Producers traded 20,776 shares as the price dropped $4 to end at $25, Jamaica Stock Exchange traded 10,500 shares at $14, JMMB Group closed 26,000 shares trading at $11. Mayberry Investments closed with 675,799 units trading at $4.39 with a loss of 1 cent, National Commercial Bank close with 357,912 shares changing hands to end with a rise of 50 cents at $34.50, Pan Jamaican rose 5 cents in trading 70,486 shares to end at $88.10. Pulse Investments traded 44,369 shares with a rise of 22 cents for new 52 weeks’ closing high of $1.72, Radio Jamaica closed 10 cents higher with 117,214 units at $5, Sagicor Group traded at $16.26 with 541,857 shares changing hands and lost 25 cents. Scotia Group ended with 196,030 shares changing hands and closed with a gain of 85 cents at $27.75, Supreme Ventures ended with 8,006,732 shares changing hands at $4.70 and Proven Investments ordinary share rose 1.2 US cents and ended at 23 US cents with 65,812 units changing hands.
Jamaica Producers’ profit jumps
Revenues for the year to September declined from $6.44 billion to $6.15 billion. Net profit nine months to September amounts to $807 million, an increase of 194 percent over $275 for the year to September 2014. The year to date profit includes gain on sales of property of $319 million recorded in the June quarter.
Gross profit inched up to $440 million in the third quarter from $421 million in 2014 and for the nine months, from $1.4 billion to $1.45 billion. Share of profit in associated companies and joint ventures contributed $217 million for the 2015 quarter up from only $61 million in 2014 and for the nine months to $491 million versus $228 million.
Cash flow from operations amounts to $186 million compared to $267 million in 2014, leading to cash and equivalent of $471 million at the end of the 2015 period. Administrative and other cost rose moderately by $12 million for the quarter to $485 million and $43 million for the nine months to $1.45 billion. Jamaica Producer is headquartered in Jamaica, is listed on the country’s stock exchange, last traded at $23.80 with earnings per share including gains on property of $4.17 for the nine months to September this year and $1.02 for the quarter, for the full year earnings from ongoing operations should end around $3 per share, the stock now trades at around 8 times 2015 earnings from ongoing operations. The main activities of the company and its subsidiaries are juice and food manufacturing, the cultivation, marketing and distribution of fresh produce, logistics, land management and the holding of investments.
Total equity capital amounts to $6.5 billion, borrowed funds amount to $2.1 billion, while current assets stood at $2.49 billion and current liabilities at $1.76 billion.
Strong Buy Rated growth more to come
While Jamaican stocks have jumped sharply those in Trinidad are just marking time which a number of prices retreating as interest rates were pushed up by the central bank on a number of occasions and the country faced falling oil revenues with the fall in world oil prices.
In the Jamaican market, stocks that were selling around 5 times earnings or less at the start of the year, have seen a sharp revaluation of many, with an average now around 9 times earnings based on this year’s estimated earnings. A total of 22 companies or 41 percent of the ordinary listings are selling above the average. Indications suggest that the rally in Jamaica will continue, with expectation for interest rates to decline going into 2016. A sharp 32 percent fall in interest rates from March last year to October this year, is one of the main driver of the market. Company results have been mostly strong with many enjoying large increases over the results of last year as well as over the 2013 period. A fall in the cost of energy and fuel and expanded sales in some cases are major drivers of profit gains this year as well.
It is partly against the above developments, that IC Insider BUY RATED listing of stocks should be viewed. Some of the stocks have been placed on hold based on the gains to date and much higher valuation as a result of this year’s growth.
Four junior market stocks should be held at this moment rather than buys, unless investors are looking at a two to three year’s investment period. Lasco Distributors, Lasco Financial, Lasco Manufacturer and Medical Disposables have reached rich valuations and should be held at this stage of the market. Profit growth for 2017 fiscal year for the Lasco companies should be very strong and will make them attractive buys again, the task is when should these be bought again to take advantage of the strong growth ahead? The problem now is that supply for these stocks is low, currently. Dolphin Cove growth has slowed for this year and remains a hold for now until 2016, the rest of the junior market selections are still attractive buys, with potential gains of 50 to 130 percent for a number of them.
Desnoes and Geddes should be sold now with the price at $30 rather than to await a payout from the proposed buyout proceeds. The Jamaica Stock Exchange share has gained 450 percent since we placed a BUY RATED status on it. The price has room to grow but investors will need to be cautious about buying at current price levels until the release of the September quarterly report in a few days. A hold is placed on the two Scotia shares with both now valued around 10 time 2015 earnings. Carreras is priced close to 10 times this fiscal year’s earnings but high dividend yield well in excess of current Treasury bill rate of 6.2 percent will make the stock an attractive income earner and will continue to drive the price upwards. Mayberry Investments should be a hold at this stage, with reporting earnings not in strong support of the present stock price, the company has the assets that will aid in a large increase in net asset value.
In Trinidad, companies are having a tough time growing profits in a meaningful way but there are still a few stocks that are worthwhile holding, with Trinidad Cement being a very compelling buy now selling at a PE of 4 times this year’s earnings. National Flour is undervalued and has room for growth with increased profits in 2015. Most of the rest will have to await 2016 for increased profits and growth.