There is a good reason why stock markets require listed companies to report on their performance quarterly.
Quarterly results provide investors with critical information on a timely basis about the fortunes of a company’s operation and allow investors to make better investment decisions.
When a company goes public with financial information that is nearly six months old when a lot may have happened since the last report that is unacceptable. Information, profits and interest rates are three important things that drive stock prices. It is so critical for pertinent information to be make available to the public for rational decision making.
This publication finds it unacceptable that Limners and Bards are going to the market in July to raise capital with the last results included in the prospectus being January this year, nearly 6 months ago. What is worse, there are no projected earnings in the prospectus to guide investors with fresh capital being injected with the IPO proceeds.
The historical records hardly help in making a rational decision on what the 2019 earnings could be. The first quarter figures for 2019 shows that the profit made in the 2018 period was just about half of the full year’s figure but investors have to guess how the 2019 profit out-turn will be. Information gleaned by this publication, is that April’s second quarter numbers are known and are said to be around the same level as that of the first quarter. The big question is why is this information or some indication of post January results not mention in the prospectus for all to see?
The world’s best performing stock market cannot keeping living with the world’s worse investment practices.
The Lab IPO opens July 17
The Limners and Bards (The Lab) will be offering 189,138,050 ordinary shares at the subscription price of $1 each to the public and preferred applicants with only 50 million units of the amount earmarked for the general public.
The stock comes to the market with a PE of 10 times 2018 earnings on a pretax basis and about 8.3 times 2019 estimated earnings, if it is assumed that the increased profit in the first quarter of 2019, continues for the rest of the year. These PE are below the average of the market and is suggesting a bounce when listed.
Profit of $76.5 million was made in the year to October 2018 from revenues of $483 million reflecting a major improvement over a small loss in 2017 of $2 million from revenues of $291 million.
Unfortunately, the company has only reported interim figures, to January. With more than 6 months having elapsed since, there are no guidance on what has happened since and can be expected going forward. There are no forecasted earnings, even with fresh capital injection expected. Investors should not have to do wild guesses as to what the future may hold when management is in a far better position to guide them.
For the first quarter this year, revenues climbed 52 percent to $189 million from $124 million in 2018 while profit before tax grew just 16 percent to $42 million for earnings per share of 5.5 cents. Without any historical quarterly information or guidance of likely earnings, it is impossible to say what the out turn will be for the rest of the year. The 2018 fiscal year numbers, suggest that there are seasonality in its operations as the profit for the full 2018 year is just a little over twice the amount earned in the 2018 first quarter, even as revenues for the full year were 4 times that earned in the 2018 first quarter.
The offer opens July 17 and is scheduled close on July 31. Funds raised will be used for expansion and to finance a targeted acquisition. IC Insider.com will post a fuller report at a later date.
Barita blowout profits
Barita Investments is reporting a huge jump in profits for the third quarter and the nine months to June compared to the similar periods in 2018 as revenues surged to record levels under new management.
For the quarter, profit after tax jumped 594 percent from just $131 million in 2018 to $911 million with the nine months ending with $1.43 billion up 691 percent from just $181 million in 2018.
Revenues net of interest cost, leaped 371 percent to $1.65 billion for the quarter from $352 million a year ago and to $2.8 billion for the nine months, up 234 percent from $842 million in 2018.
For the quarter and year to date, the company record strong improvement in revenues in every major category but gain on investment activities was the most outstanding, with revenues rising to $626 million in the quarter from just $31 million in 2018 and from $112 million for the nine months in 2018, it jumped 1,073 percent to $1.24 billion. While investments brought in a pile, they can be volatile as gains or losses are subject to market gyrations from time to time. Going forward there are no certainty that gains will be at the above levels. The company also recovered $312 million in investments losses incurred earlier in the year, of which $310 million is accounted for in the third quarter.
Expenses rose sharply but at a much slower pace than income, with the quarter seeing cost of $365 million including impairment and expected credit losses of $58 million against $171 million in 2018 while the nine months incurred cost of $829 million versus $542 million in 2018.
The company earned $1.44 per share for the quarter and $2.26 for the period to June and seems on course to record profits closer to $4 for the full year. More importantly, the latest quarter’s earnings suggest 2020 earnings could be in the $6 region all things being equal.
Barita ended the quarter with assets of $31 billion, up from $17 billion in 2018 with shareholders’ equity of $9.3 billion and securities sold under repurchase agreements amounting to $19.5 billion which grew from $12.3 billion at march 2018.
Barita is not satisfied with their outstanding achievement so far. The company will be going back to market to raise around $4 billion by way of a renounceable rights issue to help fund an acquisition.
The stock traded on the Jamaica Stock Exchange at $45 at a PE ratio around 11 times 2019 earnings compared to an average of 15.5 for the overall main market.
Watch Barita Investments
Barita Investments headquarters
Others worth watching this week include Barita Investments with results that could be released by the end of this week or early next week. The results should be showing a big improvement over that of the similar period in 2018. The third quarter results, is rumored to be far better than the second quarter, that will be known in a few days. Importantly, the second quarter earnings posted as 65 cents should be 90 cents per share instead, with earnings equivalent to $3.60 per annum. Caribbean Cement appeared as if it was going to break higher than $80 during the past week, but did not and is worth watching this week as results for the June quarter is due out at the end of July and there is not an abundance of stock offered for sale. Sygnus Credit Investments is coming into its own with limited supply of the stock for sale.
Caribbean Producers fell to $4.50 with buying interest around these levels and limited selling pressure. Fontana jumped to a record $6.50 this past week and that encouraged some selling to take place.
Fontana upcoming Waterloo Road branch
A number of other companies will be releasing 2019 second quarter results between this week and mid August that could move prices.Most of these stocks are in the Junior Market.
Shift in Easter impact Purity
Consolidated Bakeries Miss Birdie Easter bun.
Consolidated Bakeries profit dropped sharply for the March 2019 quarter as the company suffered an estimated $50 million shift in some Easter sales coming in April compared to March in 2018.
Quite a bit of Easter bun sales will show up in the second quarter and should help to boost the quarter and half year the profit.
Unaudited financial statements, showed profit declined sharply by 34 percent to $13.5 million in the March 2019 quarter from $20 million after tax in the 2018 first quarter.
Revenues increased marginally to $273.6 million for the 2019 quarter from $271 million in 2018 but the shift in Easter to mid- April affected sales. Direct operating cost rose 2 percent to $161 million, resulting in gross profit ending at $112 million similar to that of 2018, but gross profit margin slipped slightly, to a still healthy 41 percent compared to 42 percent for the same period last year.
For the quarter, administrative and other expenses moved up 3 percent to $50 million, depreciation was flat at $7.5 million while Finance cost declined 14 percent to $2.8 million compared to the 2018 March quarter.
Earnings per share came out at 6 cents for the March 2019 quarter, down from 9 cents for the corresponding quarter in 2018. IC Insider.com forecast 25 cents in earnings per share for 2019 as sales rise in double digits going forward and that should provide a decent lift for the stock price that has languished around the $2 mark for a long time. The stock traded at $1.80 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 7 times 2019 earnings.
Gross cash flow, brought in $23 million but growth in inventories and receivables, purchase of fixed assets, reduced cash funds of net of overdraft at $46 million at the beginning of the year to $24 million at the end of March. Shareholders’ equity stood at $733 million with borrowings at $167 million. Net current assets ended the period at $114 million inclusive of trade and other receivables of $112 million, as well as cash and equivalents of $79 million. The company ended the quarter with current liabilities of $185 million.
GWest shocking financial status
GWest went to market in 2017, presenting a picture to investors of a prosperous future but within less than two years of listing on the Junior Market of the Jamaica Stock Exchange, the picture is bleak.
The company’s auditors issued a qualified report casting doubts on the ability of the company to continue in business as a going concern. According to the company’s auditors Calvert Gordon and Associates, “the company recorded a net loss of $135.876 million during the year ended March 2019 and a net loss of $88.109 million in the previous year.”
These conditions along with other matters as set out in note 28, indicate the existence of an uncertainty which may cast doubt about the company’s ability to continue as a going concern.
Note 28 of the financial statements reads “The above factors indicate a material uncertainty that may cast doubt on the company’s ability to continue as a going concern and to therefore realise its assets and discharge its liabilities in the ordinary course of business. The continuation of the company as a going concern is dependent on the availability of the third party financing and on future sustained profitable operations.”
“Management is committed to continue operations as a going concern and is pursuing a number of strategies to return to profitability, which include: – sale of investment property units – commencement of operations of planned new surgery centre – increased marketing and promotion of new services being offered – continue rationalisation of expenses – obtaining additional third party financing for improved working capital “
“ At the date of these financial statements, the company was in an advanced stage of negotiations with its bankers regarding the restructuring its current borrowing arrangements and to obtain further financing for its strategic plans.
Dr. Konrad Kirlew, chairman of GWest.
Additionally, subsequent to the year end, the company has signed sale agreements for two units of its investment property.”
“The ability of the company to generate sustained profitable operations is dependent on the successful implementation of the strategies being pursued. Based on these plans and strategies, the directors and management believe that the company will generate adequate cash flows and return to profitability.”
GWest presented a rosy forecast at the time of the IPO, to suggest a highly profitable future with revenues from medical services rising sharply in the 2018 fiscal year. The results to March that year, last year showed revenues well below forecast of $86 million from the new operations with only $17.4 million generated. Admittedly, the company had projected a loss to March of $110 million but came up much lower, with a loss of $88 million. The audited accounts show revenues from patients fess at just $77 million well up on the $17 million generated in the 2018 fiscal year but below the forecast for 2018 and mere 11 percent of the forecast of $710 million for 2019. With losses exceeded revenues for the 2019 fiscal year, the company will need to grow gross income considerably in the current year to prevent another year of losses. GWest reported revenues of $130 million and $66 million in 2018 with expenses of $228 million up from $119 million.
The company has just $465 million in shareholders’ equity owes $980 million in interest bearing debt and virtually has no free cash left on hand. The sale of some units owned by the company will go a far way in easing the crunch but it must generate a lot more income to stem the cash out flow that has plagued it.
The writing was on the wall for this stock from the start, it had no track record in the business it hoped to make most of its profit from, projections had no credible foundation and management exposed there weakness with the manager they handled the conversion of shareholders loans to preference shares. The stock that was sold to the public at $2.50 and rose to a high of $4 after listing but is now down to $1.05 just above the net book value of 95 cents and seems heading lower.
Main Event growing for higher profits
Main Event revenues profit growing nciely.
Growth in revenues while not an exact proxy for increased profits is often a very good indicator of greater gains ahead. That may be exactly what is happening at the Junior Market listed Main Event.
That was the opening comments of IC Insider’s reporting on the nine months results for 2018. Nearly one year on, Main Event is quietly forging ahead with strong gains in sales and profit for the quarter ending April this year and slightly less growth for the six months period. The 2019 performance outdistance the modest rise in both revenues and profit for 2018.
Revenues for the July quarter last year, surged nearly 26 percent to $364 million, but profit fell 7 percent to $24.5 million and for the nine months to July, profit was up just 4 percent to $105.5 million flowing from a 13 percent rise in revenues to $1.07 billion.
For the current fiscal year, profit climbed 29 percent for the quarter to $62 million from $48 million in 2018. For the six months to April, profit rose a more moderate 15.4 percent to $92 million from $81 million in 2018.
Sales revenue rose 29 percent for the quarter, to $438 million from $341 million and is up 27.5 percent for the year to date, to $896 million from $702 million in 2018. Management in their report on the results states that, “revenue growth reflects higher volumes in the company’s core business as well as success with our new products while 13 percent of revenues or $118 million is attributed to the M-Style products and our presence in the West”
Gross profit grew much slower than revenues in the April quarter increasing 14.8 percent and 16.7 percent for the half of the year. Gross profit margin is still a healthy 47.5 percent in the latest quarter and 45.3 percent in the 2018, for the year to date period.
Three directors of Main Event, including the mentor who is respossible to ensure compliance with teh JSE rules.
Earnings per share came out at 20 cents for the quarter and 31 cents for the half year. Last year, figures for the nine months showed signs that profit would end up in the 40 cents region but foreign exchange and increased bad debt provisions resulted in a loss in the final quarter and earnings of just 32 cents per share. IC Insider.com is forecasting earnings around 75 cents the current fiscal year ending October and $1.50 per share for the 2020 fiscal year, giving it a PE of around 7 times 2019 earnings and just 3 times 2020 projected earnings.
Gross cash flow brought in $148 million but growth in receivables, inventories, addition to fixed assets offset by loan inflows and reduced payables pushed net cash intake down and liquid funds of $59 million at the end of April. At the end of April, shareholders’ equity stood at $616 million with borrowings at $295 million. Net current assets ended the period at $260 million inclusive of trade and other receivables of $354 million, cash and bank balances of $98 million. Current liabilities stood at $214 million at the end of April.
More watching for NCB Financial
NCB Financial Group still in strong demand.
Investors continued to push both the stocks higher in the main and Junior markets this past week as results for a number of companies encouraged increased buying.
Last week IC Insider posited that NCB Financial seems to have broken through resistance at the $150 level. The $165 region where the stock trades is also a resistance area but the strong buying at this price point, suggests it is poised to move higher, with $190 being the next point of resistance. Investors pushed the price to an all-time high of $184.85 on Thursday before it pulled back to $169 and closed the week at $170.02. A lot of focus is on this stock with the closing bid and offer suggest it is one to continuing watching. One stock that should be on every one’s watch list is Scotia Group that will release second quarter results to April this week.
Barita Investments continues to enjoy strong buying interest as the price firms up around the $45 level and could yet move higher in coming days or weeks. Eppley seems to have demand that should push the price higher during the week as the company is getting set to launch an IPO for the Eppley Property Fund. The announcement that Sygnus Credit Investments borrowed $600 million and plan on raising more, coupled with good third quarter results is driving new interest into the stock.
Wisynco hit a new high last week as supply of the stock dried up.
Wisynco Group posted a new high of $16.50 on Friday as supply dried up. Some selling came in towards the close, but this one is heading higher over the next few weeks as investors start to focus on the more than $1.50 earnings per share expected for the new-year that starts in July.
Elite Diagnostic is finding interest now at $4 with the take out of supply below after March quarter results send positive message about future profits. While the current year that ends in June should realize earnings of 25 cents, it is the promise of more than 60 cents for the next fiscal year that is likely to be the catalyst for more interest in the stock. During the past week, Fosrich jumped to a record high of $6.50 but pulled by the close on Friday to end at $5.20, but with an offer to sell 32,166 shares at $4.98. Lasco Financial has seen buying coming in that drove the price over $5, and could move higher this week with the promise of increased profit for the current 2020 fiscal year. Lasco Manufacturing posted strong full year results with impressive fourth quarter numbers. The company’s profit performance encouraged more buying during the past week, with 6.75 million shares trading on Friday. Investors still wanted more, with the bid closing at $3.98 versus the last traded price of $3.91. Investors may find the $8 price for the Medical Disposables stocks on offer, pricey, but the full year’s results telegraphed a powerful message about profits to come that makes the stock still attractive at this price level. Expect demand to pick up in the future for this stock as the company continues to grow attractively.
Paramont trading could surprise.
Paramount Trading stock has been on the back foot for more than a year, with the start of the new financial year, the prospects for vastly improved profit, that IC Insider.com preliminarily places at 15 cents per share, will start to influence the stock price. At the close on Friday, the stock that traded at $2.29 has a bid of $2.10 with the offer at $2.50 and may be signaling that selling is mostly exhausted at these levels. Demand for Stationery and Office is not aggressive currently, but then supply is very short, suggesting it is only a matter of time before the price moves higher.
Investors should continue to keep eyes on Jamaica Producers, Sagicor Group and Honey Bun.
10 records in 10 days for JSE main market
The Jamaica Stock Exchange chalked up its 10th consecutive session at record high as JMMB Group traded at a new high of $42.50, up from $39.61 at the close on Wednesday and NCB Financial Group trading at a record $184.50.
At 11.17 am, the JSE All Jamaican Composite Index jumped 2,642.74 points to a record high of 483,354.79 and the JSE Index climbed 2,674.49 points to another record 440,231.57. The Junior Market rose 20.71 points to 3,128.48. The market moved on to higher levels as NCB traded at a new all-time high of $184.85 as the JSE All Jamaican Composite Index raced 6,813.16 points to a record high of 487,225.21 and the JSE Index surged 6,191.68 to 443,748.76 at mid-day.
If the market hold on to the gains, it would have broken through resistance at 480,000 points on the All Jamaica index and should be heading for the next level of resistance at 520,000 points.
Sunshine Palace opens June
Palace Amusement is expanding with the re-entry into the rapidly growing Portmore community with the new cinema Sunshine Palace expected to open around mid-June.
The newest cinema house when complete, will bring the number of movie houses operated by Palace to four. The new cinema has 4 auditoriums, providing seating for 674 persons. Patrons will be enjoy the best movie facilities in Jamaica with some seats equipped to recline for greater comfort and will enjoy digital screens for better quality viewing experience. The company in its 2018 annual report had stated then, “we are excited about the offerings of the four screens location to come” in Portmore. Reports reaching IC Insider.com is that the resident of the area are eagerly awaiting the opening new facility that will be located at the new Portmore Sunshine Mall, next door to the Sovereign Village Portmore.
Recliner box seats exclusively for cinema 4.
In 2004 fiscal year, the then Portmore cinema brought in just over $15 million in revenue, with segment profit of $1.2 million. In 2004, the population was around 160,000 persons and is now around 200,000, but the cinema can pull support from the wider environs including the parish capital, Spanish Town. IC Insider.com estimates that the new cinema could generate revenues of more than $350 million per year, assuming that at least just one person on average from the area attends the cinema annually. The estimated revenue would be just ahead of that is generated in the Montego Bay. With Portmore so close to Kingston, it could result in a switch in some of the existing business to the new one.
The plaza that will house Palace latest movie house.
Palace share last traded on the main market of the Jamaica Stock Exchange at $1,300.