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.
Profit results help rally Jamaican stocks
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.
Profit gains 12% at Medical Disposables
Profit after tax for the six months of the financial year to September for Medical Disposables of $42.7 million rose 11.5 percent over the similar period last year. For the September quarter, profit after tax came in at $23.4 million, an increase of only $1.9 million or 9.2 percent.
“The increase in profit was as a direct result of the improved performance in sales revenue for the period ended September, 2015”, Kurt Boothe, General Manager stated in the report to shareholders accompanying the interim financials.
Operating profit rose more impressively than net profit, with a rise to $30 million from $22.5 million, an increase of 33.6 percent and for the half year, 29.6 percent to $53.8 million from $41.5 million in 2014. Increases in finance cost, foreign exchange loss and provision for taxation helped to reduce the final numbers to a moderate increase. Cash flows for the six months before interest cost rose to $57 million from $45 million in 2014.
Earnings per share rose to 9 cents per share in the quarter and 16 cents for the six months and should end around 35 cents for the year ending March 2015.
Sales revenue rose to $599 million, increasing by $59 million or 10.9 percent for the six months to September compared to the same period last year. Revenue for the six months rose 8.9 percent to $308 million from $283 million.
Gross profit for the six months ended at $166.7 million and increased by $30.6 million or 22.5 percent compared to last 2015. “This improvement was due to increased sales in all product categories, changes in the product mix and maintaining gross margin efficiency the company said,” Boothe stated. For the quarter gross profit rose 17 percent to $82.6 million from $70.46. Gross profit margin increased to 26.8 percent in the September quarter from 24.9 percent last year for the similar quarter and for the six months period 27.8 percent versus 25.2 percent.
“Total operating expenses of $113 million reflected an increase of $18.4 million or 19.4 percent over the same period last year. The increase in expenses was driven mainly by staff related costs, insurance, utilities, professional fees, information technology services and expenses related to the new property purchased earlier in the year. Staff related expenses, in particular, increased because of the strategic decision to realign the staff complement and compensation to sustain the current growth, development and expansion of the business,” Boothe further stated in his report.
Current assets amounts $587 million inclusive cash funds of $77 million and current liabilities of $253 million, including short term borrowings of $74 million. Shareholders’ equity increased to $435 million with total borrowings of $324 million.
The main activity of the company is the sale of medical disposables and supplies. The company’s shares are listed on the junior market of the Jamaica Stock Exchange since December 2013. The stock last traded at $3.50 and is up 43 percent for the year to date. it is now priced at a PE of 10, based on IC Insider full year estimated earnings.
Another day of records for JSE
The Jamaica stock Exchange closed at yet another high at the end of trading on Tuesday. All three main indices representing the main market, rose at the end of trading. The market closed with 34 securities trading, leading to 6,392,200 units valued at $68,464,086 changing hands, in all market segments. A total of 20 securities rose and 8 declined, with 8 stocks ending at 52 weeks’ closing highs and 5 at an intraday 52 weeks’ high.
The JSE Market Index shot up 500.20 points to 132,690.16, the all Jamaica Composite Index gained 559.00 points to end at 147,245.03. JSE combined index climbed 906.22 points to end at 137,748.32. All Three indices are at new closing highs.
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 6 with offers that are lower.
In trading, Cable and Wireless continued under selling pressure and closed with a loss of 11 cents, with 771,778 shares changing hands to end at 83 cents. Trading in the stock was between 83 and 90 cents, closing with a bid at 83 cents, to buy 246,781 shares. On the offer were 69,365 shares at 90 cents. By the close the number of serious offers increased dramatically and now total 44, ranging up to $3.10, for a total of 11 million units. The offers at $1.20 and below covers 2.1 million units. Caribbean Cement fell back 12 cents to end at $17.88, with 16,595 shares changing hands. Desnoes & Geddes had 98,677 units changing hands, to close at $30, Gleaner Company traded 72,840 shares to end at $1.92, after rising 2 cents, Grace Kennedy traded at $68 while gaining 30 cents with 4,695 shares changing hands. Jamaica Broilers traded 7,384 shares to close at $8.50 as the price gained shed 50 cents. Jamaica Producers traded 10,000 and gained $2 to end at a 52 weeks’ high of $23, Jamaica Stock Exchange closed with 27,272 shares trading to end at $11, JMMB Group traded 1,030,443 shares to close at $9.86, Kingston Wharves gained 40 cents in trading 6,000 units to close at $11, for a new 52 weeks’ high. Mayberry Investment rose 8 cents to end at $4.10 by trading 83,731 shares. National Commercial Bank with 257,400 shares changing hands dropped back by $3 to end at $33. Pan Jamaican traded 14,700 shares to end $3.49 lower at $85, Radio Jamaica closed at a new 52 weeks’ high of $5 to gain 50 cents in trading 13,896 shares, but ended with the offer at $4.44 by the end of trading. Sagicor Group rose 19 cents with 78,700 shares trading, to close at $14.70, Sagicor Real Estate Fund traded 23,000 units, the price closed at $11, Scotia Group ended with 1,059,827 shares changing hands and closed at $26.20, after rising 21 cents. The stock traded up to $28.50 for an intraday high, Scotia Investments fell $1.50 to close at $26.50 as 10,000 units traded and Supreme Ventures ended with a rise of 32 cents to $4.47 with 50,000 units changing hands.