Jamaica’s Berger Paints reported big improvement in profit flowing from a near 14 percent increase in sales revenue to $440.6 million up from $387.3 million, in the 2014 first quarter, with profit ended at $17 million after tax well up on the reported a loss of $372,000 in 2014.
Earnings per share ended at 8 cents and for the year earnings should be in the 55 cents per share region, if the present trend continues which should be helped by the low price of oil on the world market as a major input into the production of paints is fuel oil based.
For 2015 fiscal year to March, Berger reported profit of $67 million after tax and earnings per share of 31 cents from sales revenues of $1.85 billion.
Gross profit was slightly up on 2014 with $1.286 billion realized in the March 2015 quarter and $1.257 billion in 2014. ”The company continues to yield benefits from process improvements, energy cost savings and its plant and Machinery upgrade, these along with growth in sales contributed to the profit performance” Mustafa Turra, General Manager reported in a short report to shareholders.
Berger last traded on the Jamaica Stock Exchange at $2.55 but that is before the above results were disclosed on Friday.
Berger Jamaica in big profit upturn
More gains for JSE Friday morning
The Jamaica Stock market made moderate gains in the morning session, after 90 minutes of trading, in the process the All Jamaica Index trades at 113,267.30 to rise 111.29 points, JSE Market Index rose 99.57 points to 102,371.63. The combined index gained 96.81 points to be at 105,839.17 and the junior market index was at 1,037.47 rising 0.33 points.
Gleaner Company traded at 99,000 shares at $2.73 in the morning session while the Jamaica Stock Exchange traded 14,875 units at a new all-time high of $8.30, for an increase of $1.29.
A total of 15 securities with a volume of only 365,925 units have traded with 5 stocks declining versus 6 that rose. There is trading of 2 securities in the junior market.
$6.95 much for Sagicor X fund rights
The stock closed at $8.50 on the Jamaica Stock Exchange on Friday August 7th with 34,000 shares changing hands. The closing date for the issue is September 2, 2015, with the opening on August 19. The gross funds expected to be raised is J$4,157,036,165 and are intended to be used to assist Fund to acquire a convention hotel in Orlando, Florida, which is affiliated with a major hotel chain. The rights issue document states that the “resort has 742 rooms with over 62,800 square feet of meeting and convention space. It is located in Orlando at the entrance to the Universal Theme Park. The balance of the purchase price is expected to be funded by way of a loan”.
Sagicor Pooled Diversified Investment Fund and other connected Sagicor entities which together own approximately 80% of the stock units of the Company have stated that they intend to take up all their Rights. Shareholders who do not take up any of their Rights will be diluted by 28.57% assuming that all the Rights Shares are taken up and the Rights Issue is not up-sized.
The Fund reserves the right, in the event of over-subscription for shares from the Un-allocated Pool to upsize the Rights Issue by releasing up to maximum of 149,533,675 shares into the Un-allocated Pool to meet demand from its shareholders. X Fund does not intend to up-size the Rights Issue beyond the aforesaid maximum. If the Rights Issue is up-sized to the maximum the issued share capital of the Company would be increased by 50% over the current amount of shares in issue of 1,495,336,750 stock units and a shareholder who did not take up any of his Rights Shares would be diluted by 33⅓%.
Buoyed by an abnormal first quarter results, earnings ended at 46 cents per share to June versus 27 cents for the six months to June last year. Unfortunately, the rights issue document fails to indicate what income and profit is expected from the property being acquired nor what the forecast is for the rest of 2015 for the overall operations, to allow investors an insight into what is to be expected.
The stock which is overvalued is unlikely to enjoy the generation of profits in the short run from ongoing operations to justify the price being asked. In a market where few stocks are selling at a premium to net asset value, it is difficult to see why rational investors would want to pay a premium to the market for such an investment and suffer later the prospects of disappointing earnings that will justify the price either. One only has to look at Proven Investments shares, where investors gobbled up the stock at inflated prices as high as 22 US cents only to see few buyers for it now at 18 US cents to realise that hype will often will out in the short run but reality sets in after.
Investors should know what they are buying but that is not clear from the offer document but Sagicor Group selling at a PE of 6-7 times this year’s earnings with a book value of $12.17 versus last traded price of $13 is a far better buy. The issue is taking place in a bull market so who knows what will happen?
Big new income stream for JSE
The Jamaica Stock Exchange is to receive another big shot in the arm, with a totally new source of income flowing from the decision of the Financial Services Commission that all retail repurchase agreements, must migrate to the Jamaica Central Securities Depository Trustees Services (JCSD) effective 31st of August.The total book of repurchase agreements amounts to approximately $500 billion as of March this year, the amount to be transferred may be lower has the FSC new regulations require that the minimum amount for a retail repo that is now J$500,000 and US$5,000 and is scheduled to be increased on a phased basis to $1 million and US$10,000 by December 31, this year.
Based on the fee structure the JCSD should earn around $50 million a year in fees from the securities supporting the repos. There will also be fees to be paid for each repo transaction, such transactions will be evidenced by an account held in the purchasers name at the JCSD. According to Robin Levy, Manager of the JCSD they will be trustees for the assets that back the repos, as such the dealers will no longer hold them directly in their name thus legally separating the ownership from the repo issuer during the duration of the repo agreement.
The stock exchange group will earn an annual fee for each dealer who is registered to deal in Repo securities by the JCSD. The fee structure listed on the Jamaica Stock Exchange has the annual fee at $100,000 with 20 dealers in the country the income from this source will be small only around $2 million per year if all of them sign on. The repo registration fee is likely to be the big income generator as each transaction will incur a fee based on its value.
The JSE enjoyed a very good first quarter this year with huge increase in income, a fare bit coming from one off type transactions but in addition increased trading activities flowing from increase trading levels on the JSE this year contributed to improved profits for the year to date. The JSE stock last traded at $6.23 on the JSE on Friday to gain over 300 percent for the year to date, but with earnings per share now looking like heading towards $1.50 level there is room for another surge forward for the stock. The company’s 2015 second quarter numbers should be out this week based on the released of the June 2014 quarter results on the July 23, last year.
17 stocks rose 6 declined
Activity on the Jamaica Stock Exchange ended with 17 stocks rising, 6 declining as 28 securities changed hands and ending in 1,670,491 units trading, valued at $31,272,240 and 4 stocks closed at 52 weeks’ high in all market segments. The main market closed with 12 stocks advancing to 4 falling.
The JSE Market Index gained 616.53 points to 97,666.95, the JSE All Jamaican Composite index rose 689.12 points to close at 108,104.34 but the JSE combined index added 631.68 points to end at 100,236.87.
IC bid-offer Indicator| At the end of trading, in the main and junior markets, the Investor’s Choice bid-offer indicator was showing a worse reading than Thursday’s close of 12 to 5. The reading at the end of Friday’s trading is 7 stocks with bids higher than their last selling prices and 6 with offers that were lower as the market continues to swing between ups and down.
In trading, Carreras put on $2.23 while trading 1,000 shares to close at $50.50, Gleaner ended with 13,000 shares changing hands to gain 12 cents for a 52 weeks’ high of $1.19, Jamaica Broilers gained 50 cents in trading 7,605 units to end at $6, JMMB Group added 10 cents in trading 219,702 shares and ended at $7.50. Kingston Wharves climbed 15 cents to $7.15 with 14,071 shares, Montego Bay Ice has not traded in more than two years finally traded today but lost $2.95 to end at $15 while 1,560 shares traded to end at a 52 weeks low. National Commercial Bank rose 40 cents while trading 137,540 shares to close at $29.40, Proven Investments traded 132,278 share to close at 19 US cents, Sagicor Group inched up 9 cents with 105,691 units trading, to end at $12.70, Sagicor Real Estate Fund saw trading in 101,000 units but lost 30 cents in closing at $7.70 and Scotia Investments climbed $1 to $28.50 with 677,500 units, most of the stock traded at $2.
Scotia Group tops trading on Thursday
The JSE Market Index lost 264.93 points to 97,050.42, the JSE All Jamaican Composite index declining by 296.12 points to close at 107,415.22 but the JSE combined index declined 377.15 points to end at 99,605.19.
IC bid-offer Indicator| At the end of trading, in the main and junior markets, the Investor’s Choice bid-offer indicator was showing a better reading than Wednesday’s close of 9 to 8, with Thursday’s reading of 12 stocks with bids higher than their last selling prices and 5 with offers that were lower.
In trading, Caribbean Cement closed with 48,780 shares changing hands at $5.45 after slipping 5 cents, Carreras put on 2 cents while trading 26,534 shares at $48.37, Gleaner ended with 30,000 shares changing hands but lost 1 cent to close at $1.07, Grace Kennedy gained 45 cents with only 2,040 units changing hands at $63.95. Hardware and Lumber fell 50 cents to $17.50 with 1,500 shares changing hands, Jamaica Broilers lost 50 cents in trading 1,497 units to end at $5.50, Jamaica Stock Exchange dropped 46 cents in trading 5,400 shares and ended at $6.35. At the close Stocks and Securities offered 982,465 units for sale at $6.80, Kingston Properties climbed $1 to $8 with 2,705 shares, National Commercial Bank rose 10 cents in trading 25,224 shares to close at $29.10, Sagicor Group fell 24 cents with 28,533 units trading to end at $12.61, Scotia Group had 1,419,099 units trading at $23.50, Scotia Investments fell by $2.35 to $27.50 with only 4,217 units. Jamaica Money Market Brokers 8.75% preference share traded 56,983 units at a loss of 1 cent at $2.98 and Proven Investments 8% preference share ended with 42,500 units trading unchanged at $5.