JSE: All reds

Thursday, 8th August 2013 | The Jamaican stock market suffered declines across the board for all indices in spite of a positive advanced decline ratio of 8 to 6, albeit moderate.  The all Jamaica Index lost 89.71 points, closing at 86,890.98 and the JSE market index slipped by 50.98 to close at 86,214.63 and the Junior market eased to close at 801.72, 19 points lower than on Wednesday.

Just under $18 million worth of shares traded accounting for a volume of 6.57 million units. Cable & Wireless, which barely traded for several weeks, has now attracted interest ahead of the June quarter results as the stock traded 3 million units, in addition to 1.32 million on Wednesday, thus reducing the amounts on sale at 15 cents to 24 million units. Elsewhere, the other main contributions to the volume were Lasco Distributors traded 1.2 million units, Supreme Ventures 943,000 and 650,000 of Jamaica Money Market Brokers.

Carreras traded flat at $51.50 with just under 50,000 units. Caribbean Cement, continuing its response to the return to profit in the June quarter, gained 19 cents to close at $1.39 as 56,423 units traded. Grace gained 20 cents to close at $56.40 with very limited volume. Jamaica Money Market Brokers followed up yesterday’s 502,000 units traded and valued at $4 million with today’s larger volume worth $5.49 million and closed at $8.20, up 20 cents. National Commercial Bank traded just 21,750 units between $19.10 and $19.30 before closing at $19.30; demand seems to be building at the $19 level but supply is drying up below $23 and this is contributing to the low volumes being traded as investors try to get supplies at the lowest prices possible. Sagicor Life traded 256,514 units, closing up 5 cents at $8.70 but traded as high as $9. Scotia Group traded just 58,586 units down from just over 2 million units on Wednesday and closed the day at $21.01 after trading as high as $22. Supreme Ventures traded down to $2.75, off 15 cents, in direct response to the lower profit reported for the June quarter.

Junior market | Only stocks of 8 companies traded in the junior market as the prices of 3 gained and 2 fell, all with small changes.  Caribbean Creams traded 44,644 shares to close firm at $1.06. Dolphin Cove traded 24,417 units firm, at $1.35. KLE Group traded 10 cents down to another all-time low of $1.70 with 5,000 shares trading. Lasco Distributors saw 1,198,070 units changing ownership and closed firm at $1.48 and Lasco Financial, which traded 195,148 units, closed at $1.51.

Eppley shares still have not traded and has no bids or offers at the close of trading.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer market sentiment indicator shows that bids for 8 stocks were higher with3 stocks having offers lower than their last selling price.

After the bell | Kingston Properties released results showing a loss before fair value gain on investment property and miscellaneous income at $6.7 million for the six months ended June, 2013, compared with a profit of $6.7 million for the similar period in 2012. Profit for the latest quarter is $554,000 versus $4.2 million in 2012.

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Lasco Distributors, more room to profit

Lasco Distributors reported an 11 percent drop in pretax profits in the 12 months ended March this year even as sales climbed 10.6 percent for the same period. The March quarter revenues only grew by one percent, pulling down what was a more robust increase up to the December quarter. But things seem to be back on track in the June quarter as revenues are up 15 percent to $2.31 billion, an increase of $303 million over the corresponding period last year and profit is up to $164.2 million, an increase of 21 percent or $28.5 million over the same period in 2012. Earnings per stock improved from 4 cents in June 2012 to 4.9 cents in June 2013 quarter based on the new amount of shares issued.

LASCO Distributors continues to introduce new brands to market. Most recently, Baby Yum Infant Cereal and Breathezy, a generic alternative for Asthma Management, were launched.

Operating Expenses to Sales ratio was 13.1 percent compared to 14.1 percent, a significant improvement over the corresponding period last year.

LascoPills150x150“Revenue and profit performance was due to the increased volumes, aggressive marketing activities and improvement in efficiencies,” the company’s Chairman Lascelles Chin stated recently. He went on to say that “It is commendable that even with increased marketing activities and the introduction of new products each year, the company was still able to contain operating expenses. LASCO Distributors continues to do very well and will expand its range with exciting products and grow its revenues with brands from pharmaceutical principals, as well as our own LASCO brands.  This will be bolstered in particular from the new products to come from the LASCO Manufacturing expansion.”

The company is looking good going forward, especially after September when the Lasco Manufacturing factory expansion is completed and starts production of new products which will be marketed by the distribution company. IC Insider is forecasting that sales will pick up in the second half of the company’s year and earnings increase to $840 million or 25 cents per share for the year ending March 2014.

The company was able to reduce inventories from $1.28 billion at the end of March to $967 million, as such cash and investments increased from $507 million to $817 million over the same period. Current assets exceed current liabilities by $1.69 million at the end of June. There is virtually no debt financing at the end of the quarter and the equity is at a little over a $2 billion.

Insider call | Lasco Distributors is an IC Insider Buy Rated stock.

Related posts | All 3 Lasco companies approve splits | LASCO Distributors lowers profit

JSE: Scotia’s market today

Wednesday, 7th August, 2013 | The Jamaican stock market was dominated by trading in Scotia Group as just over 2 million units of the stock traded valued at $45 million as high as $23.49 but closed at the last trading price of $21.02. The other major trade on the day after the Independence Holiday was Jamaica Money Market Brokers trading 502,000 units valued at $4 million as the stock closed at $8, a decline of 16 cents. Jamaica Producers traded firm at $17.05 while trading 45,549 units valued at $816,000, Sagicor Life Jamaica traded 80,000 units closing down 20 cents at $8.65. Cable & Wireless traded 1,324,034 with just one trade at 15 cents thus reducing the amounts on offer at that price to 27 million units.

Carreras gained 39 cents to close at $51.50 with just under 7,000 units. Caribbean Cement responding to profit reported in the June quarter gained 20 cents to close at $1.20. Grace gave up 30 cents to close at $56.20 with limited volume. Kingston Wharves lost 29 cents to close at $7.51 with nearly 30,000 units trading.

The market closed today with stocks of 26 companies trading 6,149,080 valued at $61.36 million. There were 7 stocks advancing and 11 declining. The all Jamaica Index gained 209.24 points to close at 86,980.69 and the JSE market index went up by 118.92 to close at 86,265.61.

Junior market | Stocks of 11 companies traded in the junior market as the prices of 3 gained and 4 fell and the index inched up by 0.21 points to close 801.91. Caribbean Producers traded 76,108 shares to close firm at $2.03. Consolidated Bakeries traded 78,542 units firm at $1.35. General Accident Insurance traded 78,542 units and closed at $2 after trading as low as $1.85. Jamaican Teas chipped in with 107,474 shares between $4.41 the last traded price and $4.50 as the stock gained 11 cents for the day. KLE Group traded firm at $1.80 with 84,000 shares trading. Lasco Distributors saw 378,260 units crossing the monitor in today’s trade as the price gained a cent, closing at $1.48 and Lasco Financial which traded 120,840 units and closed at $1.50 off 4 cents.

Blue Power lost 40 cents in closing at $9.60 on small volume and so did Cargo Handlers that lost 50 cents to close at $13.50 and Dolphin Cove that lost 20 cents to close at $8.90 off 10 cents.

Eppley shares have still not traded and has no bids or offers at the close of trading.

Proven Investment Preference shares traded 787,900 units valued at $4 million while the ordinary shares which are quoted in US dollars traded 297,526 units at a value of US$34,232. The stock lost a fraction of a cent to close at US0.115 cents.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer market sentiment indicator shows that bids for 8 stocks were higher with2 stocks having offers lower than their last selling price.

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Image courtesy of Photokanok/FreeDigitalPhotos.net

Honey Bun growth slows to a crawl

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The year 2013 is the year of the snake in the Chinese’ calendar and the crawling pace that the snake normally exhibits is pretty much what’s happening to Honey Bun, a Junior Market listed company. Increased sales and profit which in slowed down in the first quarter of this year, has slowed even further in the latest quarter to June. Revenues crawled along at just 5 percent over the 2012 quarter compared to 20 percent in the Easter-boosted March quarter. Even then, the March quarter growth was slower than the near 32 percent growth for the first 3 months of the financial year.

Revenues were $161 million in the June 2013 quarter up from $154 million in 2012 and profit was only $2.3 million down from $7.5 million in 2012. For the year to date, sales are $540 million, up 17.9 percent from $458 million in the prior year. Profit on the other hand is flat at $40.8 million versus $41 million in 2012.

Gross profit in the latest quarter actually fell by $2.5 million compared to 2012, but year-to-date gross profit is up 9 percent while administrative expenses are up even more by 16 percent to $125 million. The increase to June clouds what has been taking place earlier. There was one-third jump in administrative and other expenses to $41.6 million, up from $31.3 million a year ago.

The company generated $189.6 million in sales in the March quarter up from $160 million in 2012 and for the six months $381.5 million versus $305.8 in the prior year.

Management attributed the reduced margin to rising prices for flour and other inputs, which could not be passed on to consumers at the same pace as the cost hikes. For the March quarter, management stated that sales improvement was as a result of increased sales to new markets and exports, which increased by over 150 percent, year over year for the 3 months.

Healthy finances | The company continues in a healthy financial state with working capital at a ratio of 3 to 1 inclusive of cash and investments amounting to $75 million. This cash is up from $24 million at the end of September last year. Receivables grew at the end of the quarter to $61 million compared to $43 million in 2012.

Equity was $297 million and loan borrowing at a low of $24 million at the end of June. The stock last traded at $4 each but could well decline somewhat with these results. This year’s earnings at the end of June was 43 cents. The September quarter’s results are difficult to predict as it is the worse quarter of the year for the company. As such, the EPS at year end in September is likely to be lower than for the nine months based on past years’ numbers.

Related post | Honey Bun not so sweet in Q1

JSE: Easy does it

Monday, 5th August, 2013 | The JSE market closed today with stocks of 27 companies traded resulting in a volume of 2.8 million shares valued at just $17 million. There were 6 stocks advancing and 7 declining as all the indices with price changes lost value moderately, in what seems to be a holiday mode market. Price changes were low with only Carreras with a 50 cent gain to $51.11 being the most pronounced movement as 44,487 units of that stock traded, valued at $2.28 million.

Main market trades of note | The all Jamaica Index shed 68 points and the JSE market index dropped 38.72 points. Jamaica Money Market Brokers traded just over 100,000 shares to close at $8.20, a gain of 11 cents on the day. Sagicor Life traded over 72,000 shares and lost 15 cents as it closed at $8.85. Scotia Group traded 266,649 units closing at $21.12 with a value of $5.64 million. Seprod traded 87,200 units valued at $1.285 million as the stock closed at $14.75 the same as on Friday. Mayberry Investments chipped in with 287,609 units at $2.60, accounting for $748,000.

Caribbean Cement cemented the gains over the last few weeks as the company reported a profit in the June quarter and investors cheered the results by bidding the stock up to $1.12 at the end of trading but bought all that was available at $1 and 99 cents. The stock closed up 10 cents on a volume of 471,000 units.

Junior market | Trading took place in the shares of 9 companies as the index shed 5 points. Honey Bun which traded 10,100 at $4 reported results to the June quarter which was flat with the nine months for 2012 but the results for the quarter showed a 4 percent sales increase but that was inadequate to prevent a reduction in profits which declined from $7.5 million to $2.34 million in the quarter. The stock has no bid at the end of trading.

KLE Group dropped 20 cents to trade at an all-time low of $1.80 but only 4,000 shares changed hands. Lasco Distributors traded 279,350 units and closed down 2 cents to $1.48, Lasco Financial traded 184,737 shares to end up 5 cents more than the opening price to close at $1.55 while Lasco Manufacturing traded 110,160 units and dropped 8 cents to close at $1.52 after trading as high as $1.60.

Eppley shares that were listed last week still have not traded and have no bids or offers at the close of trading.

Proven Investment Preference shares traded 532,000 units valued at $5.09 valued at $2.7 million while there was a small volume traded in the ordinary shares.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer market sentiment indicator shows that bids for 7 stocks were higher with 2 stocks having offers lower than their last selling price.

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Barita, Lasco Financial get thumbs up

Monday, 5th August 2013 | Two weeks into the earnings season and quarterly reports continue to flow in. How will the markets respond? Our ‘Stocks to Watch’ list gives clues for some of the market action expected this week.

Buy Rated Stock | New to our Buy Rated list are Barita Investments and Lasco Financial, which brings the number to 5 companies that have received a ‘two thumbs-up’ based on our review of their 2nd quarter results.

Other companies that reported results and solidified their position on our Buy Rated list are Access Financial and Lasco Manufacturing.

Better than a broker’s ‘buy’ recommendation, IC Insider has no vested interest in any stock transaction or conflict of interest. Our research is backed by published reports of the company’s performance and insights of future earnings that can be found at ICInsider.com. The final decision to buy, or not, is your personal choice.

Related posts | LASCO Financial small but tallawah | Access growth continues | LASCO Manufacturing profits in the future 

To find published reports for a Buy Rated stock on IC Insider, please use category Buy Rated’ under Company News or enter the company name, in full or part at ‘Search IC Insider’.

StockswatchAug5 Image courtesy of ImageryMajestic/FreeDigitalPhotos.net

Cement profit surge – not so fast

Caribbean Cement Company is reporting a major change in fortunes in the latest quarter ending June from a loss of $497 million in the first quarter to a profit of $359 million in the June quarter. For the six months to June, the Group is reporting loss of $137 million, compared to a loss of $1,204 million in the corresponding period of 2012.

The loss of $137 million is after charging $701 million of non-cash foreign exchange losses compared to $136 million of foreign exchange losses for 2012. In the June quarter, Forex loss is $252 million but interest cost fell by $62 million and is down $60 million for the year to June. The bright light is not all that it appears to be at first sight as the results benefited from the write back of $591 million of withholding taxes on interest that was due to the parent company which have been reversed. The write back results from the restructuring of the parent company debt into preference shares.

Management states that, “We note that even before the write back of the withholding taxes, operating profit for the second quarter had improved over the prior quarter from $98 million to $153 million. This improvement is principally as a result of increased revenue from the 3% price adjustment in the domestic market in April and a doubling of export sales volumes in the second quarter, due primarily to our entry into the very vibrant Panama market.”

cementpour150x150The numbers are saying that excluding extraordinary charges or income and assuming business is maintained at least at the current levels then a small profit should be eked out quarterly.  The preference shares which are redeemable are effectively participating shares and are entitled to receive the same amount of dividend per share as the ordinary shares. There will only be a total of 115 million preference shares to 851 million ordinary shares.

Sales | Revenues for the quarter is up to $3 billion from $2.4 billion last year and $2.68 billion in the 2013 first quarter. Local sales in tonnes was the same as the first quarter but exports grew to 68,000 versus 33,000 in the first quarter. Local tonnage is up year to date by 20,000 tonnes but exports are below last year six months by 34,000 tonnes. Last year the local company exported cement to Trinidad as the plant there was under strike.

The restructuring of US$75 million of debt due to Trinidad Cement, contributed shareholder’s equity moving from negative $2.939 billion at the beginning of 2013 to positive $4,501 million at the end of June. The restructuring of the debt was completed with the conversion of US$37 million to preference shares, in accordance with the approval given by the shareholders at the Annual General Meeting, and with TCL making a capital contribution of US$38 million to defray the balance.

Caribbean Cement’s management stated that “they experienced operational gains through significant improvements in our plant efficiency, in particular specific energy consumption, following expenditure of approximately US$5 million in capital maintenance and upgrade works earlier in the year. As a result of the improved performance, we have been able to meet our debt obligations over the last six months. With the restructuring of the intra-group debt, the threat of foreign exchange translation losses has been significantly mitigated. We expect to maintain the improvement in export sales and grow these even further as we enter new markets in South America. While we do not foresee any meaningful growth in the domestic market, with careful cost management and the expected growth in export earnings, we expect to maintain these favourable results over the rest of this year”.

The June results is pointing to earnings per ordinary share of around 40 cents for a twelve month period. With these results, the stock which has risen from a low this year of 60 cents to a $1 recently, could enjoy further gains in the period ahead.

Related posts | Carib Cement profit mired in concrete

Grace’s profit up 41% in June quarter

Thanks to good pick up in other income and increased segment profit from the food division, GraceKennedy’s profit before tax was pushed up by 53 percent to $1.19 billion and 41 percent after tax of $703 million in the second quarter of the year to June.

In the first quarter, profit after tax was up by just 4 percent and 13.5 percent before tax but the results were negatively affected by the cost associated with the government debt swap. For the year to June, after-tax profit increased by 21 percent over 2012 to $1.39 billion with revenues being up 8 percent to $33.9 billion. The second quarter revenues were up 12 percent to $17.2 billion versus the 4 percent in the first quarter.

In the first quarter, the retail and money transfer divisions did well in growing profits. Banking and investment recorded a loss of more than $200 million while the huge food division only eked out a very small increase over 2012 figures. In the second quarter things looked better all-round except for Insurance which recorded a loss of $100 million compared to a break even position in the first quarter. In the second quarter, the food division contributed $170 million of the increased profit as sales climbed by $1.33 billion compared $470 million in the first quarter. Retailing with just $144 million more sales contributed $74 million more to profits. Banking and investments’ contribution in the second quarter was $229 million, while money transfer contributed $55 million to the increase in profits for the quarter.

In 2012, the first quarter was the highest for revenues than any other quarter, while the profit in the second quarter of 2012 was the lowest. The big jump in profit in the latest quarter is unlikely to repeat at that level for the remaining of the year but earnings seem set to reach between $9.50 and $10 per share for 2013.

GraceRev&ProfitSummary

Grace is a dominant player within the Jamaican market in its traditional business of food and trading and its focus on overseas markets for expansion and growth is obvious. Any meaningful growth in these two areas in the local market would have to come from growth in the economy, which is not likely to happen for a few years due to fiscal deficit reduction. Grace’s deeper involvement in investing in overseas markets with a physical presence could provide the needed market intelligence to grow by acquisitions and thus speed up the growth rate as well as providing a solid platform for the company to introduce some of its existing products to a wider populace.

Increased lending by banks, or the pace of it, gives a good indication about likely growth in profits. As such the 17 percent annual growth of lending by the group’s commercial bank, First Global, is a good indication that there should be pretty healthy growth in profits going forward, subject to strong control on non-performing loans. Banking, of course, is only one area of the group’s business.

Grace is financially solidly based with equity of $33 billion and total assets of $107 billion at the end of June.

The shares are trading at around 6 times this year’s earnings and sells for just under 60 percent of book value and approximately 30 percent of sales, making it historically cheap but relatively adequately priced. This should be a good medium to long term buy — don’t expect an explosive movement in the stock price unless the entire market were to do the same.

Related posts | Dividends: Carreras cuts, Grace ups | Grace looking up

Access growth continues

Access Financial Services is reporting another successful quarter but at a slower pace of 22 percent for the June quarter than for the first quarter. For the six months to June, earnings are up a still strong 34 percent to $119.59 million and $89.38 million in the same period last year. First quarter earnings increased 47 percent to $61.5 million from revenues of $173 up $19 million over 2012 first quarter. For the June quarter earnings came in at $58 million from revenues of $197.6 million versus $47.5 million in June 2012 based on revenues of $166.8 million.

Revenues for the year which was up by 13 percent in the first quarter is up 18 percent in the second quarter over 2012 and up 16 percent year to date. In the June quarter, revenues grew by $20 million over that of the March quarter but expense increased by $23 million led by a $11.5 million increase in provision for bad loans which resulted in slightly lower profit for the quarter versus the first quarter.

The results are coming off of a successful 2012 when it clocked up earnings of $238 million from an increase of 47 percent from revenues of $661 million.

The company’s growth is emanating from very strong growth in loans which increased from $643 million in March 2012 to $758 million at the end of March this year and to $776 million at the end of June. The last quarter is the period of greatest demand for loans and therefore the most profitable period.

Access is primarily involved in payroll lending at high interest rates amounting to about 60 percent per annum but they have been moving to more rapidly expand their offering to the small business sector. Investor’s Choice projects $1.37 per share earnings for 2013 and recommends the stock as a good buy.

The company has increased profits in each year and the stock has grown from $18.30 to the equivalent of $90 each (the stock was split into 10 units for each 1 owned and now trades at $9 each). Investors would have received a dividend in each year since the listing amounting to 65 cents based on last year’s earnings, 45 cents for 2011 earnings and 31 cents per share based on 2010 earnings — not bad for those who backed the issue.

Insider Call | Access Financial Services is a IC Insider Buy Rated stock.

Related Posts | Access Financial defying IPO critics | 20/20 Hindsight: Access Financial IPO

LASCO Financial small but tallawah

LASCO Financial may be the smallest of the three listed Lasco companies but its performance has been tops for the past 2 years with growth in profits far out pacing its two bigger affiliates. The company which recorded strong growth in profit in the last fiscal year to March has continued that trend with profit of $39 million compared to $26 million for the first quarter, a strong 50 percent increase.

For the full year ending March this year, the company reported profit of $163.9 million compared to $102.4 million, a 60 percent increase. The strong increase in profit, helped propel the stock price up by more than a 200 percent increase from the end of December last year and 275 percent from the June 2012 when the price was of $4.25. The stock now trades at 42.5 cents based on a recent 10 for 1 stock split.

Profits grew 60 percent for the year to March this year, in 2012 it grew by 244 percent, helped by revaluation surplus on investment property that was booked and in the prior year growth was 187 percent. As the company grows in size, the growth rate has slowed but indications are that this should continue into the current fiscal year and the first quarter numbers support this so far.

According to management, the latest results emanated from trading income which is up by 47 percent to $144 million as a result of a 100 percent increase in the Cambio Division and a 28 percent increase in the Remittance Division.

Management also indicated that, “Lasco Financial has commenced significant investments in marketing activities, which are expected to capture even more substantial market share for our remittance division; the outcome of which will also yield growth opportunities in the Currency Trading division. This is noticeable in our selling and promotion expenses which saw a 58 percent increase, up from $36.3 million in the previous period to $57.6 million. Administrative and other expenses rose in the quarter to $47.6 million, up 33.7 percent over the same period of 2012.”

The company’s subsidiary Lasco Financial Services (Barbados) Limited and its agent Unicomer Barbados Limited (Courts) began trading in May 2013. Transaction growth has been satisfactory to date and LASCO Financial Services will continue to expand in the Caribbean region.

Growth | Total assets amounted to just $47 million in 2010 but has enjoyed rapid growth and is at $690 million at the end of June this year — still a small financial company in the local market with lots of room to grow. Loans advanced was nil at the end of 2011 and is now close to $100 million at the end of March this year. Loans and receivables rose to $334.5 million up from $237 million at the end of June last year. Cash also increased from $135.5 million to $221.7 million over the same period. Equity stood at $514 million. Based on the recent growth levels and investments in marketing to expand revenues IC Insider is forecasting earnings between 22-25 cents per share for the current year.

Insider call | LASCO Financial Services is an IC Insider Buy Rated stock.

Related posts | All 3 Lasco companies approve splits | Lasco Financial strong profit