Watch Cement and Sagicor

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The past week saw stocks prices moving up and down with the announced initial Public offering of Wigton Windfarm, a pattern is likely to continue for a while.
The release of 2019 first quarter results could change the pattern for some stocks, with a few due for release before the end of April. Last week there was increased buying interest in Caribbean Cement, NCB Financial Group and Sagicor Group on Friday with the release of full year results for 2018. Investors should keep an eye on these, Wisynco, RJR, Seprod that remain attractive buys.
The Junior Market is being shaken up following the release of the prospectus for Wigton, as such there are no clear security to watch in this market during the week.

Profit rises 29% at PanJam

Stephen Facey Chairman & Paul Hanworth Chief Operating Officer

Trading income at PanJam Investment grew a strong 35 percent to $3.26 billion for 2019 while operating expenses rose just 7 percent to $1.7 billion leading to a 66.6 percent increase in operating profit of $1.55 billion, up from $938 million in 2017.
The major contributor to the increase in operating income was a 151 percent increase in investment income to $1 billion, from $423 million in 2017.
Share of results of associated companies contributed $4.7 billion to profit, compared with $3.9 billion in 2017. After taxation of $311 million and finance cost of $624 million, profit ended at $5.3 billion for an increase of 29 percent. Earnings per share rose to $5.06 for the year.
The group saw growth in profit from Sagicor Group and Downing Street Fund 11 and V but suffered a loss at Chukka Caribbean with revenues falling from $4 billion to $3 billion. New Castle saw a reduction in profit even with an increase in revenues while Caribe Hospitality saw profit rising from $242 million to $271 million of which their share is 32 percent.
PanJam holds equity investments worth $6.8 billion up from $2.4 billion at the end of 2017. The value of investment properties moved from $7.9 billion in 2017 to $8.4 billion and investments in associated companies total $26.3 billion. Total assets at the end of the year was $45.9 billion up from $39.4 billion in 2017. The group borrowed $10.6 billion at the end of 2018, up from $7.5 billion in 2017 and has equity of $34 billion.
PanJam is in the process of upgrading the Oceana building in downtown Kingston to a combination of hotel and residential units slated for sale. There also plans for a business hotel in Montego Freeport in Montego Bay.
The group stocks trades at $81 on the Jamaica Stock Exchange at a PE of 12.5 times 2019 estimated earnings of $6.50 and a net book value of $32. PanJam is a stock Investors should consider holding in the long term portfolio to benefit from growth to flow from expansion in the investment field and real estate holdings.

Huge interest in Jamaican stock market

With interest rates now at the lowest on receord in Jamaica and the local stock market now in its fifth year of a bull run, more and more persons are turning to the stock market for investment opportunities.
The increased interest is aptly demonstrated by the more than 1,300 persons who attended the Jamaica Stock Exchange receent staging of the 50th Anniversary Investor Forum. Marlene Street Forrest, Managing Director of the JSE said the record high turnout was historic and affirmation that Jamaicans are warming to the idea of investing in the stock market. “Being the number one performing stock exchange in the world says a lot and this has awakened Jamaicans at home and abroad to the possibilities that exist, when they invest in the market, which has returned over 300 percent over the last five years. This is significant and of course, persons are looking forward to benefit,” she said.
The record turnout comes against a well publized new public share issue by the Government of Jamaica, in the sale of 11 billion shares in Wigton Windfarm, at 50 cents each.
The event was sponsored by Barita Investments, with several of their top managers making presentations, including Vanessa Williams, Manager Mandeville branch and Ferris Jackson, Investment Advisor at Barita’s Kingston Office.

Wigton Windfarm’s profit upgraded

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Wigton IPO propectus is out.

Net profit for the nine months to December 2018 for Wigton ended at J$730 million compared to $1 billion reported in 2017 before taxation.
IC now projects normalized earnings for the 2019 fiscal year between $600-700 million resulting in earnings per share of 6 cents. As earnings for the above periods, include foreign exchange gains and losses. Included in other income is $552 million to December 2018 of foreign exchange gains and in Finance cost, $748 million, in foreign exchange losses. With the company repaying the foreign currency loans, the main source of foreign exchange gains or losses no longer exits, hence the need to normalize results without them.
Based on the updated earnings, with the price of the stock at 50 cents each, the PE ratio is now
8.5, valuing the company at just $5.5 billion. The stock now sits at number 4 on IC TOP 10 main market stocks, making it more attractive than the value based on the projection to March this year, included in the public bodies’ document.
Wigton Windfarm IPO out very soon” an article published last week is running at the number one best read article on IC and represents a clear sign of the popularity of the issue that opens on April 17.
IC Insider has now updated certain aspect of a second article, Wigton Windfarm IPO prospectus is out, carrying a more detailed look at the offer, and is proving to be quite popular but running well behind the first one currently.The lead broker for the IPO is Mayberry Investments.

Wigton Windfarm IPO prospectus is out

The long awaited prospectus for Wigton Windfarm is now available to the public, with an offer of 11 billion shares priced at 50 cents each. The offer will officially open on April 17 and scheduled to close at 4.30 pm on May 1.   
The company’s net energy output can only be sold to Jamaica Public Services Company, the country sole marketing entity, supplying energy to consumers. According to the government’s public bodies accounting records, the company projects profit of $587 million to the end of March this year, down from $826 million earned in 2018, helped by other income of $637 million versus just $52 million in 2018. The company generated sales revenue of $2.5 billion in 2019 and $2.36 in 2018. The annual growth in profit before finance cost is minimal grew just over 11 percent in 2015 and 2016 and a much slower 7 percent in 2017 and 2018, with a 6 percent decline in 2019.

Wigton IPO propectus is out.

In the nine months to December 2018 sales revenue was $1.95 billion compared to J$1.91 billion in the prior comparable period in 2017. Cost of Sales closed at J$544 million compared to J$535 million in the nine-month period for 2017. Gross Profit ended at J$1.4 billion compared to J$1.38 billion in 2017. Net profit for the nine months to December 2018 ended at J$730 million compared to J$1 billion reported in 2017.
Earnings for these periods, include foreign exchange gains and losses. With the company repaying the foreign currency loans, the main source of foreign exchange gains or losses no longer exits, hence the need to normalize results without them. IC projects normalized earnings for the 2019 fiscal year between $600-700 million, resulting in earnings per share of 6 cents.
The company is heavily indebted with $6.3 billion of borrowed funds carrying interest rates of 6.65 percent to 8.4 percent with an average rate of just under 8 percent. Cash funds on hand amounts to $1.4 billion and equity of $2.4 billion. Current assets exclusive cash and payables are minimal. The company had borrowed most of it loans in US dollars, resulted in annual swings in net profit as the

Mayberry Investments is the lead broker.

exchange rate of the Jamaican dollar moved up and down. Loans in US dollars were paid off and the company raised Jamaican dollar funds, in preparation for the initial public offer.
The company’s generating capacity is 63 mega-watts. Wigton I Power Interchange Agreement expires in April 2024 and accounts for up to 20MW, Wigton II Power Purchase Agreement expires, December 2030 to supply up to 18MW and Wigton III Power Purchase Agreement ends in March 2036 for up to 24MW.
The price of the stock results in a PE ratio of just under 8.5, the company would be valued at just under $5.5 billion and sits at number 4 on IC top 10 stocks. The big question that should be on investors minds, when will meaningful growth in revenues and profits come to justify holding the shares beyound what may well be an initial bounce.
The company directors are; Oliver Holmes, B.Sc., M.Sc. (Acct.) Non-Executive Chairman, Nigel B. Davy, B.T., J.P. Non-Executive Director, M. Georgia Gibson-Henlin, Q.C., B.A. LL.B. LL.M., F.C.I. Arb. Non-executive Director Hugh Johnson, Non-executive Director Gregory Shirley, B.A., M.B.A. Non-executive Director, Jacqueline Stewart-Lechler, J.P. Non-executive Director.

Up to $50m loan to buy Wigton shares

NCB Capital Markets will be providing investors up $50m in margin funding to assit with buying of Wigton’s shares in the IPO.

Investors in Wigton Windfarm initial public offer of shares will be able to access up $50 million in loan financing from NCB Capital Markets (NCBCM) to fund up to 50 percent of the purchase, NCBCM’s CEO Steven Gooden informed IC
The Wigton IPO, is generating lots of interest, amongst Jamaicans, residing locally and overseas and should pull in around $6 billion before expenses for the sellers, PetroJam. It will be one of the larger issues, to hit the Jamaican capital market.
In addition to providing margin funding to assist in purchasing the new IPO issue, NCBCM online portal, dubbed ‘GoIPO’ and created in conjunction with the Jamaica Central Securities Depository , will be available for their investors to use in making application for the shares. The application will allow investors with accounts at NCBCM, to easily fill out application forms as the system will automatically populate the form with the other information for persons with login access codes.
The GoIPO was born out of the major challenges that NCB encountered when they brokered the Wisynco IPO.
Investors with login codes can use them to access NCB system and access accounts that will fund the application. The system will be show the Wigton IPO application from which the appropriate application form is to be fill out. The required information will be the sum being invested. The system will compute the number of shares being applied for and the applicant will identify the account that the funds will come from.

Wigton IPO with propectus expected in a day or two.

Persons having no login code will have go online and fill in name, JSCD account number and TRN and enter the sum they are investing and method of payment as well as upload a photo ID to go with the application.
The new system will eliminate the need to visit a locations to deliver applications and significantly reduce errors associated with manual processing.
Of the GoIPO solution, platform is encrypted, providing security and confidentiality to users, who can access the digital portal once they have a JCSD number. Gooden said, too, that as selling agents of the IPO, NCBCM possesses the largest distribution channel within the broker space and clients who do not wish to apply digitally are encouraged to complete and return their forms to NCBCM locations islandwide.
NCBCM say that investors can apply through the NCB system to apply for shares to go into other brokerage accounts.

Wigton Windfarm IPO out very soon

Report reaching IC is that the long awaited prospectus for Wigton Windfarm is due this week. The stock is set to come to the market at 50 cents each.
According to the government’s public bodies accounting records, “the divestment will be by way of listing PCJ’s 100 percent shareholding in WWFL on the Jamaica Stock Exchange.” The company is expected to report profit of $587 million to the end of March this year, down from $826 million earned in 2018. The 2018 earnings were helped by other income of $637 million versus just $52 million in 2018.
The company generated sales revenue of $2.5 billion in 2019 and $2.36 billion in 2018. Depreciation charge is high at nearly $700 million, this will result in a healthy cash flow per annum, allowing to either pay down debt or fund expansion from internally generated resourses and provide a basis of growing profits going forward.
The annual growth in profit before finance cost is minimal, growing just over 11 percent in 2015 and 2016 and a much slower 7 percent in 2017 and 2018, with a 6 percent decline in 2019.
The company is heavily indebted with $7 billion of borrowed funds, $1.4 billion in cash funds on hand and equity of $2.4 billion. Current assets exclusive of cash and payables are minimal. Borrowed funds were mostly in US dollars and resulted in annual swings in net profit, as the exchange rate of the Jamaican dollar moved up and down against the United States dollar. Loans that were previously denominated in US dollars, were swapped for Jamaican dollar funds, in preparation for the initial public offer.
The company’s generating capacity is 63 mega-watts with the output contracted to Jamiaca Public Seervice Company. Assuming a PE ratio of 10, the company would be valued at just under $6 billion.

Watch Junior Market for break higher

Junior Market poised to breakout.

Jamaican stocks are in for an interesting period with Junior Market stocks down nearly 5 percent for the year to date, lagging their main market stocks counterparts that are up 2.2 percent for 2019, but technical indicators now point to a big rally for the Junior Market.
The Junior Market is currently, supported by two major technical indicators, indicating a rising market ahead. One is a triple bottom that it is bouncing off and the other a wedge formation, both indicate a big breakout. The last time the market had a triple bottom was between March and July last year and the market gained more than 500 points.
The Jamaica Stock Exchange main market may be consolidating, but it seems to be making another effort to challenge the record high of 433,307.22 reached by the All Jamaica Composite Index in November last year. With the market closing on Friday at 426,180.60 points, it will require some meaningful price gains to close the more than 7,000 points gap.

Carib Cement traded at $58 on Friday.

For the current week, which stock could contribute to closing of the gap? Buying interest remains good for Carib Cement that moved up by $2 by the close of the week to $58. There is some selling at the last traded price but demand should take this out soon. Radio Jamaica is in demand again with a big increase in the December quarter’s profit that spell positives for the 2020 fiscal year’s results.
Wisynco came in for some selling pressure last week by the close on Friday, the stock ended at $11.95. Going forward the stock is a strong buy with increasing business and improving efficiency in operations and with credible reports that they are in talks with other local producers to distribute some popular local brands. Supreme Ventures continues to make new highs and is worth watching. The price is high more up even higher during the week but supply seems inadequate to meet demand, but an investment in the stock now may only warrant those looking for long-term returns.

NCB Financial traded at $145.05 on the JSE on Friday.

More buying came in for NCB Financial with it closing the week marginally higher at $145.05. The stock may still take some time to break higher but with second quarter results due by end of April increase demand could well develop ahead of the results.
Junior Market stocks to watch this week include, the overhang of Cargo Handlers stock was taken out last week at $11.06 and seem set to pave the way for a bounce in the price, but the stock is a bit overvalued relative to the overall market. Caribbean Cream that closed at $5.55 but traded up to $6.60 in the previous week. Full year results are due towards the end of April and that could help the stock. Caribbean Producers came into buying last week, with a move higher going forward, supported by technical indicator. Sellers of General Accident shares continues to be low, but buyers are trying to get stocks no higher than $4.50 currently at a PE of 15 times 2018 earnings and well below likely 2019 earnings. Investors in the stock at the start of 2018 got a dividend that exceeded 5 percent. If the same were to happen in 2019, the stock would end up at $6 by the end of this year. Investors continue to demand Elite Diagnostic stock at $3.20 or lower with sellers mostly wanting close to $3.50. Trading higher may not occur until closer to the release of nine months results due by mid-May. Honey Bun is showing all the signs of moving higher and traded

Honey Bun traded higher last week.

at $4.24 this past week, up from $3.83 at the end of the previous week. The bid for the stock is now at $4.15. Fontana closed the past week with a slight uptick to end at $4.05, buying continues to be good. With strong potential for growth to flow from expansion of stores now on the way, the stock is to be watched for the inevitable breakout. Express Catering has been enjoying decent buying interest. It is bound to be a big winner from the double digit upsurge in Tourist arrivals so far in 2019. Lasco Manufacturing was in the news with expansion of the storage facilities to accommodate increased production, the stock gained last week and could record further gains this coming week, regardless it one worth watch for longer term gains.

Paramount goes to market for $300M


Junior Market listed, Paramount Trading, goes to market to fetch $300 million at a rate that is set to exceed 12 percent per annum.
The company just issued a prospectus offering 150 million cumulative redeemable preference shares due 2021 priced at $2 each at fixed rate of 8.75% per annum. On the surface that seems a bit reasonable but with other costs, the annual rate will be approximately 12 percent. The prospectus indicates that the issue is to take advantage of opportunities for improvement and expansion of the business, to provide working capital and for general corporate purposes and to pay the expenses of the Invitation, which the Directors believe will not exceed $16.5 million. That cost adds approximately 2.75 percent per annum to the interest rate, bringing it to 11.5 percent. There will also be fees for listing on the Jamaica Stock Exchange, even more than the listing fees will be the monthly fees to be incurred, for making the monthly interest payments and providing annual reports to preference shareholders, for the two years. Mayberry Investments are the brokers to the issue.
Paramount’s profit peaked at $173 million in 2016, fell to $101 million in 2017 and then to $59 million in 2018. For the half year to November last year, profit slipped to $35 million compared to $58 million for the 2017 period. The company only had $62 million in borrowed funds but Inventories and payables climbed sharply over the previous year.

No explosion for Jamaican stocks

Wisynco still one to watch.

Most company results are now in for 2018, a few are now due for periods ending in January and February. Not much is expected from results due shortly, that will make a major impact on the overall market.
A number of stocks that attracted increased buying interest in recent days that are worth watching this week. Wisynco Group traded during last week at $12 but slipped to $11.50 on Friday as nearly 6.4 million units crossed the exchange, but supply continues to be low.
Fontana continues to trade in healthy volumes at $4 but supply is getting limited. Seprod continues to come in for demand with the price rising in the week to close at $44. PanJam Investment continues to flirt with record highs, but is held in check by the late reporting of financials. Radio Jamaica is fluctuating in price but with increase local economic activity investors should be looking ahead for this one. General Accident has been trading around the $4.50 level for weeks with increased interest shown in the stock since it posted increased profit for 2018. Selling seems to be coming mainly from one source.
Scotia Group reported results for the first quarter but with lower profit in the quarter compared to 2018, but they reported healthy growth in loans an important indicator for improved profit going forward. This is one to watch for longer term. Caribbean Cement continues to fluctuate having posted strong 2018 results. With prospects for 2019 looking great, investors will never know when the break out will occur, the same applies partially to NCB Financial that currently have selling overwhelming buying. Honey Bun is displaying signs as if a break out is not far off with sellers mostly in the high $4 level and buyers under $4.