The junior market will have two new listings when trading commences on Thursday, with the technology based tTech and the air conditioners – CAC 2000 being added to the fledgling market for up and coming small companies, following successful IPO offerings. The listings were approved today by the Jamaica Stock Exchange.
IC Insider expects tTech to trade at an attractive premium to the IPO price of $2.50 based on the level of oversubscription and the low valuation of the IPO price, while CAC should trade close to its offer price of $4.85, based on the high valuation placed on the IPO price.
Both companies went to the market on December 16 to raise additional capital and obtained all they went for. tTech which went for $50 million with 25.65 million shares but the issue attracted 289 applications, valued at approximately $172.395 million and CAC was over by 10 percent in excess of the 29,032,258 ordinary shares on offer to bring in $120,545,327 that was targeted.
The listings will lift the junior market to 29 securities with 25 of them being ordinary shares.
2 new listings for JSE on Thursday
JSE starts 2016 on a new high
NCB closed at new high of $40.50 on Monday.
At the close, 5,096,460 units valued at $149,875,337 changed hands in all markets with the junior market accounting for of 1,707,388 units, valued at $6,741,784. A total of 35 securities traded in all market segments, 17 of which in the combined markets gained and 8 declined. Five stocks traded at 52 weeks’ closing high and 2 at intraday 52 weeks’ high as investors continue to push prices higher.
The main market was facing resistance around the 165,000 points level, the on the all Jamaica composite index, now that it has crossed it and seems to be moving away. This level appears to be moving towards support for the market.
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 2 with lower offers.In trading, Berger Paints ended with 85,100 shares trading at $3.15 for a loss of 5 cents, Cable and Wireless rose 8 cents with 212,690 units changing hands to close at $1.38, Caribbean Cement climbed 54 cents to end at $20.44, with 10,000 shares trading. Carreras closed at $60, with 2,261,300 units changing hands for 82 cents fall but not until after it traded at a new 52 weeks’ intraday high of $62, Gleaner Company traded 52,000 shares at $1.70 with a 40 cents increase. Grace Kennedy with 2,483 units changing hands finished $2.75 higher at $84, Jamaica Broilers rose 25 cents and closed at $10.50 with 124,677 shares changing hands, Jamaica Producers traded 1,000 shares to end at $32, after rising $1.32,
Jamaica Stock Exchange gained 39 cents in trading 1,400 shares at $18.99, National Commercial Bank gained 50 cents to end at a 52 weeks’ high of $40.50, with 12,145 units changing hands. 138 Student Living had 260,933 units trading at a 52 weeks’ high of $4.60 after rising by 10 cents, Radio Jamaica had 51,000 shares trading with a gain of 42 cents to end at $4.08, Sagicor Group closed at $20 with 24,426 units changing hands, Scotia Group had 36,809 shares changing hands at $30.01. Seprod closed with a loss of 44 cents at $20.56 with 2,938 shares trading, Supreme Ventures ended at $4.66 with 208,363 units changing hands and Jamaica Money Market Brokers 7.25% preference share traded 26,000 units to gain 4 cents and ended at $2.06.
BUY RATED top Carib markets with 830%
The JSE stock racked up huge gains in 2015
IC BUY RATED stocks were top of the Caribbean markets in Jamaica and Trinidad and Tobago for 2015, with Jamaica Stock Exchange share, chalking up a massive gain of 830 percent since IC Insider elevated it to BUY RATED status.Caribbean Cement followed with gains of 640 percent, Caribbean Cream with 444 percent and Trinidad Cement with a 299 percent increase on the Trinidad market.
While it was easy to make money in Jamaica, with profits rising and interest rates falling, developments in Trinidad went in the opposite direction, with interest rates rising and profits under pressure with the economy ended in recession.
At the beginning of 2015 of the 14 junior market selections, few recorded gains and only Knutsford Express with a 17 percent increase reflecting any meaningful positive movement. Losses were large, with AMG Packaging down 39 percent, Blue Power 31 percent, Caribbean Cream 23 percent, Jamaica Teas 28 percent, Lasco Financial 37 percent and Lasco Manufacturing 32 percent. What a difference a year can make? By the end of 2015, gains were all over the place with the list having 17 companies with two being dropped. There were no losing stocks in the list that had a new addition, tTech which could be listed this week. Honey Bun was added to the listing in November and gained 9 percent since. Eight stocks have more than doubled, four gained 40 percent to 91 percent. Caribbean Cream jumped 292 percent to be the top selection in this market, followed by Lasco Distributors up 274 percent. Blue Power was removed from the list in July with a small gain.
In the JSE main market, at the start of 2015, Hardware and Lumber was the best performing stock with gains of 62 percent followed by Cable & Wireless with 47 percent and Jamaica Broilers had the worst performance with a loss of 24 percent. In all, 7 of the 15 selections were lower than at the time they were BUY RATED.
By year-end, all selections in the JSE main market were up, with Scotia Investments having a mere 15 percent increase, being the poorest performer. This stock is being moved to Market Watch as the 2015 profit performance was far too disappointing to warrant buying now, while Hardware and Lumber remains a hold. The rest, present opportunities for continuing profit making. 
JMMB Group ended with just 28 percent gain, but seems undervalued at the current price. While the list had a few lousy performers, the same can’t be said about a 640 percent gain in Caribbean Cement and 830 percent increase for Jamaica Stock Exchange share. In all, 9 stocks posted gains in excess of 100 percent and 4 below 100 percent but with a 50 percent increase and more.
There were 13 selections in the Trinidad market with Trinidad Cement being the best performer with gains of 150 percent, the next was Point Lisas with 11 percent at the start of 2015. Five stocks suffered losses with the highest being 22 percent and the next 18 percent. For 2015 the price of Trinidad Cement is up 299 percent followed by National Flour with a 59 percent gain.
Looking ahead, the junior stocks should continue to grow, with several of the companies actively expanding resulting in profits climbing at a fast pace. There are a few stocks to be cautious of just now. Lasco Distributors selling at almost 16 times 2016 March earnings. Growth should be strong but unless investors have a long term objective they should be careful buying at current price level, the same applies to Lasco Financial that is selling at 15 times earnings. Dolphin Cove remains a hold at this time.
The Trinidad market needs to be watched at this stage, with the country needing to adjust to the lower price of oil and the recession now being endured.
Dividend triples for H&L owners
Shareholders of Hardware Lumber (HL) will be paid an interim dividend for the year 2015 of One Dollar and Nine cents per stock unit on January 29, this year, to shareholders on record as at the close of business on January 15.
The ex-dividend date for the payment is the January 13. The company paid 32 cents per share in dividends in 2014 and 30 cents in 2013.
The payment comes against the background of lower profits in the year to September and acquisition of the majority shares by a group of investors.
Total revenue for the nine months to September 2015 was $5.37 billion or 2.3 percent more than the comparative period in 2014. Profit after tax for the nine-month to September 2015 was $64 million, 43 percent less than the $113 million for the same period in 2014 and earnings per share of 79 cents, compared to $1.40 for the similar period in 2014.
On Thursday December 30, Grace Kennedy’s 58.15 percent interest amounting to 47,013,417 shares in Hardware & Lumber, were traded over the Jamaica Stock Exchange at $18.50 each.
The shares were bought by Argyle Industries Inc. (“Argyle”) a St. Lucian Company special purpose vehicle incorporated for the purpose of acquiring and holding the Investor’s equity interests in Hardware & Lumber.
26 stocks rose over 100%
The Jamaica stock market ended a momentous 2015 with the overall market doubling, aided by a 160 percent in the junior market to land the Jamaican market as the leader in the world in 2015. At the close, all three main market indices made huge gains to reach new record highs.
The JSE combined market index recorded gains of 102 percent for the year, the all Jamaica composite up 99 percent with the JSE Market Index climbing 97 percent.
In a year when just about anyone could use a dart to pick winning stocks out of the 51 securities that rose with gains ranging from a low of 1 percent to a high of 1,086 percent. Five stocks fell up to 17 percent and one ended with the price unchanged. A total of 25 securities rose by 103% or more and 16 between 50% and 95 percent.
After nearly 11 years passed, with the market not rising above the record set in 2005, the record was finally broken in the second half of 2015 as an announced takeover offer for the shares of Desnoes and Geddes helped push the market to new highs, but it was more than that. Treasury bill rates peaked at 9 percent in March 2014, falling to 6 percent by the end of 2015 was a major catalyst in igniting prices higher, aided by some strong increases in profit of a wide range of companies. The top 15 performing stocks for 2015 are those in the table. The Jamaica Stock Exchange delivered a stunning 1,085 percent gain for investors that were invested in the stock from the start of the year, followed by Pulse Investments with 757 percent and Caribbean Cement with 726 percent.
JSE stock gained 1,085% in 2015
With the level of gains in 2015, the PE ratio of the market rose sharply to an average around 10 times 2015 earnings. Some stocks are selling above the average. Interest rates on Treasury bills are around 6 percent but that should fall in 2016 and will result in higher PE ratios as stocks become more attractive as an investment means than before. The local economy grew 1.5 percent in the September quarter, much higher than the previous two quarters, suggesting potential for higher growth levels in 2016, if so corporate profits should continue to grow, hence 2016 should be seeing continuation of the market growing.
With data going back to the start of the Jamaica stock market, indicating that on average only 2 out of the top 10 stocks in a year repeat that performance in the subsequent year, investors should be looking outside the top 10 performing stocks for big winners in 2016. Of the top ten ones that could do very well are Pulse, Caribbean Flavour, Honey Bun. Jamaica Stock Exchange should continue to see attractive gains, with increased stock market activities in 2016. That should mean more revenues and profits, but it will be difficult to see them in the top 10. With the company paying a high level of dividends, investors could see the stock as very attractive for income and thus drive the price higher than profits may suggest is possible.
JSE closes 2015 on a new high
Sagicor Group HQ – its stock traded at a new high of $20 on the JSE
At the close, 6,627,296 units valued at $58,113,757 changed hands in all markets with the junior market accounting for 4,049,568 units, valued at $15,799,898. A total of 36 securities traded in all market segments, 19 of which in the combined markets gained and 8 declined. Four stocks traded at 52 weeks’ closing high and 1 at intraday 52 weeks’ high as investors continue to push prices higher.
At the close the JSE Market Index climbed 874.37 points to 150,692.13, the all Jamaica Composite Index rose 977.16 points to end at 167,363.25 and the JSE combined index gained 815.65 points to close at 158,269.14. The main market was facing resistance around the 165,000 points level, the on the all Jamaica composite index, now that it has crossed it,
the first week in 2016 will show if that level will now provide strong support for launch higher.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 15 stocks with bids higher than their last selling prices and 4 with lower offers.
In trading, Cable and Wireless fell 4 cents with 91,865 units changing hands to close at $1.30 after trading as high as $1.45, Caribbean Cement fell 10 cents to end at $19.90, with 288,060 shares trading, Carreras closed at $60.82, with 8,378 units changing hands for 3 cents fall. Gleaner Company traded 2,661 shares at $1.30 with a 10 cents decline but had a bid at $1.49 to buy 10,240 shares. Grace Kennedy with 1,728 units changing hands finished higher by $1.15 at $81.25, Jamaica Broilers rose 25 cents and closed at $10.25 with 477,964 shares changing hands, Jamaica Producers traded 4,891 shares to end at $30.68, after falling 32 cents.
Jamaica Stock Exchange shed 39 cents in trading 100,000 shares at $18.60, Kingston Wharves closed at $11.35 with 41,990 shares changing hands, 5 cents higher. National Commercial Bank gained 99 cents to end at a 52 weeks’ high of $40, with 170,396 units changing hands, the stock traded as high as $40.02 for a 52 weeks’ intraday high. Pan Jamaican Investment had 4,140 shares trading with a gain of $1 to $94, Sagicor Group gained $1.50 and closed at $20 for 52 weeks’ high with 37,610 units changing hands, Scotia Group had 163,055 shares changing hands at $30.01 after falling by $1.48. Scotia Investments closed at $30 with only 5,000 shares trading and Supreme Ventures rose 4 cents and ended at $4.66 with 509,719 units changing hands.
Strong profit gains at Broilers
Chicken meat and feed processors, Jamaica Broilers recorded an impressive 297 percent increase in net profits attributable to shareholders for the quarter ending October 2015 amounting to $408 million and earnings per share of 33.8 cents according to the interim financial results.
For the six months, profit rose a very strong 242 percent to hit $740 million with earnings per share of 61 cents. IC Insider forecast earnings for the full year at $1.30 and $1.70 for the 2017 fiscal year. Broilers generated $1.76 billion in gross cash flows from operating activities during the half year.
The stock last traded on The Jamaica Stock Exchange at $10 for a PE of 7.7 times this year’s earnings, leaving room for moderate growth based on 2015/16 results and current valuation of stocks.
Sales revenue for the October quarter rose 6 percent to $9.17 billion, compared to $8.68 billion in 2014 and by 9 percent for the half year to $18.1 billion. Gross profit for the quarter increased 30 percent to $2.28 billion, from $1.75 billion of the corresponding quarter last year and grew by 31 percent for the six months to $4.56 billion.
The “US Operations performed as expected with respect to the sale of our main product –fertile eggs for the broiler industry. The year to date segment results amounted to $538 million. Our presence in the markets remains strong, with a broad customer base and we are seeing the benefits of the US dollar hard currency earnings. We expect steady growth in other product lines in this segment. We are recording increased sale volumes in poultry and feed products, consequent on targeted marketing strategies,” the company’s management stated in their report to shareholders.
“In the Other Caribbean Operations, Haiti Broilers SA has increased production and sale of table eggs to 14% of the market, compared to 12% at the end of the second quarter last year. The positive effect of this volume growth has however been neutralized by significant increases in operating costs due to the continuing depreciation of the Haitian Gourde against the US dollars”, the management report went on to state.
Cost overall climbed with some increasing much faster than revenues. Distribution and selling cost rose in line with revenues with an increase of 9 percent in the quarter and year to date with cost of $260 million in the quarter and $508 million for the half year. Administrative costs, tripled the growth in revenues in the October quarter to be up by 19 percent to $$1.4 billion and increased by 18 percent for the six months to $2.9 billion. Finance cost fell in the quarter and grew slightly or the half year while interest income rose strongly.
Cash and short-term investments totalled $2.36 billion, Current Assets amounted to $11.4 billion and current liabilities at $6.8 billion, shareholders’ equity stands at $12 billion and borrowings at $6.3 billion, down from $7 million in 2014.
JSE up 101% to Wednesday
JSE Combined index is up 101% for 2015 to December 30.
At the close, 52,944,749 units valued at $911,064,403 changed hands in all markets with the junior market accounting for 886,844 units, valued at $4,712,436.
Trading was swollen by the sale of Grace Kennedy’s 58.15 percent interest it held in Hardware & Lumber (H&L), with the shares traded over the Jamaica Stock Exchange floor today by GK Capital Management amounting to 47,013,417 at $18.50 per share. A total of 47,076,054 shares were traded amounting to $870,892,021.
At the close 33 securities traded in all market segments. A total 15 securities in the combined markets gained and 6 declined. Five stocks traded at 52 weeks’ closing high and 1 at intraday 52 weeks’ high as investors continue to push prices higher.
At the close the JSE Market Index climbed 1,322.30 points to 149,817.76, the all Jamaica Composite Index rose 1,477.75 points to end at 166,386.09 and the JSE combined index gained 1,838.65 points to close at 157,453.49. The main market was facing resistance around the 165,000 points level, the on the all Jamaica composite index, now that it has crossed it, there needs to more movement upwards for this level to become a strong support.
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 14 stocks with bids higher than their last selling prices and 5 with lower offers.In trading, Cable and Wireless gained 4 cents with 129,025 units changing hands to close at $1.34, Caribbean Cement rose $1.80 to end at $20, with 15,250 shares trading, Carreras closed at $60.85, with 4,100 units changing hands for 10 cents more to end at a 52 weeks’ high. Gleaner Company traded 2,775,068 shares at $1.40 with a rise of 10 cents, on the morning that the meeting was called to vote on the merger of the company’s media business with Radio Jamaica. Grace Kennedy with 2,700 units changing hands finished at $80.10, Jamaica Broilers lost 50 cents to close at $10 with 163,150 shares changing hands, Jamaica Producers traded 2,169 shares to end at $31, after shedding $1. JMMB Group closed at $10.25 with 771,900 units changing hands, Jamaica Stock Exchange traded 21,518 shares at $18.99, Kingston Wharves closed at $11.30 with 1,496 shares changing hands for 5 cents lower.
National Commercial Bank lost 49 cents to end at $39.01, with 141,836 units changing hands, Sagicor Group gained 90 cents and closed with 462,258 units changing hands at $18.50, Sagicor Real Estate Fund traded 173,400 shares to close at $11. Scotia Group had 96,895 shares changing hands at a new 52 weeks’ high of $31.49 after rising by $1.49 but had an offer at $29.50 to sell 1,000 shares at the close. Seprod closed at a new 52 weeks’ high of $21 after rising by 44 cents with only 4,000 shares trading, Sterling Investments had 17,049 units trading at $13, Supreme Ventures ended at $4.66 with 179,175 units changing hands and Proven Investments ordinary share traded 28,400 units at 22.99 US cents.
Grace Kennedy sells H&L interest
Grace Kennedy has sold its 58.15 percent interest in Hardware & Lumber (H&L) with the shares traded over the Jamaica Stock Exchange floor today by broker – GK Capital Management in the amount of 47,013,417 shares at $18.50 each.
The shares are sold to, Argyle Industries Inc. (“Argyle”) a St. Lucian Company special purpose vehicle incorporated for the purposes of acquiring and holding the Investor’s equity interests in Hardware & Lumber. The investors in Argyle include a group of investors led by, ABBECO INVEST S.A. ( a Bahamian investment company), Sterling Asset Management along with its affiliates and associates and Greystone Equity Partners Inc. along with its affiliates and associates a release from Grace Kennedy said.
Grace Kennedy Group CEO, Don Wehby, stated “As previously indicated GraceKennedy’s decision to sell our shares in H&L was not an easy one, however, this divestment is consistent with our present strategy of concentrating on the food business locally and internationally and financial services in the region.” He added, “I feel very positive about the continued growth of H&L under the prospective new owners, Argyle, who are excited about the possibilities for the future.”
Rapid True Value owned by Hardware & Lumber an associate of Pan Jam
H&L comprises the Rapid True Value and the Agro Grace business. There are currently 10 Rapid True Value outlets across Jamaica, along with six Agro Grace Retail Centres. The company is headquartered at in Kingston.
The buyers will be required to make an offer to buy the remaining shares at the same price of $18.50.
Cargo Handlers growth slows
Cargo Handlers profit for the year to September was barely higher than for that of 2014 at $136 million versus $132 million but the company had some one-off expenses amounting to $16 million. Revenues climbed to $252 million from $236 million in 2014.
The final quarter of the year saw lower revenues of $67 million, down from $79 million in the September 2014 quarter while profit fell 40 percent to $29 million from $48 million in 2014. Cargo Handlers recorded earnings per share of $3.63 versus $3.52 in 2014.
Going forward, the tax free holiday the company enjoyed from December 2010, ends in November this year and moves to 12.5 percent for the next 5 years. This will dent profits a bit, added to that, the company made $6 million in foreign exchange gains in 2015, that looks uncertain going forward with the adjustment in the value of the Jamaican dollar that now seems appropriately valued, but for likely moderate movements in 2016.
Unless there is a dramatic change in revenues, profit after tax for 2016 should grow marginally to around $145 million or $3.87 per share.
The company ended the year with $151 million in cash included in current assets of $203 million and only $15 million in current liabilities. Equity is $245 million with virtually no interest bearing debt. The stock which is listed on the junior market of the Jamaica Stock Exchange last traded at $37.50. Two dividends amounting to $2.35 per share were paid during the year.
