JSE: Reports of insider trades

Latest reports of trading by connected parties: Updated as of 22 July 2013

Kremi | Three directors bought a total of 121,141,794 shares and sold a total of 121,832,193 Caribbean Cream Limited shares during the period July 16 – 18, 2013. Scoops Unlimited which had owned 121,144,794 shares was the seller on the 16th of July with the amount being split in two equal amounts of just over 60.57 million each.

Blue Power | A party connected to Blue Power sold 5,979 of the company’s shares. So did two senior managers who sold a total of 69,393 shares and a director who sold 303,916 during the period June 25, 2013 – July 14, 2013:

Mayberry Investments | A party connected to Mayberry Investments Limited purchased 48,559 of the company’s shares during the period July 15 – 17, 2013 and a related party purchased 100 shares of the company on July 18, 2013.

Sagicor Life Jamaica | Advises that two of its executives purchased a total 790,874 of the company’s shares during the period July 11 – 12, 2013. This could be a significant indicator of good profits ahead and is therefore worth watching.

To view our last report of insider trading dated 4th July 2013, click here.

Watching and rating

Monday, 22nd July 2013 | We’ll be watching to see what evolves during this week’s trading as we head into a period when companies start to release second quarter results. Our IC Insider “peep” behind the scenes, speaks a possible bull run since we see many instances where there’s a limited supply of stocks. Want to know more about the current demand and supply in the JSE? Read our market report Demand and supply tug of war.

Buy Rated Stock | Proven Wealth is new to our Buy Rated list. Before you buy, read our post, FX gains & securities boost Proven dated 4th June 2013, for an in-depth report of the company’s last reported results.

To search for published reports for a Buy Rated stock on IC Insider, please use ‘Search IC Insider’ and enter the company name, in full or in part.

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.


Demand and supply tug of war

Historically, July has been the month when the local stock market starts to look up. It is also the time of year when investors tend to be on holidays, thus reducing market activity. Additionally, we need to bear in mind that companies will start to release second quarter results which could move prices. Hence, what may be reflected by the movement in stock prices and market indices may be deceptive when gleaning market sentiments.

In dominoes they say that “a peep is better than a read” and this applies to the stock market as well, especially in the short run. Taking a “peep” behind the scenes, we see many cases where the supply of stocks has declined sharply. In several cases there is really no serious supply near to current prices to meet any increase in demand without prices rising sharply. We read that as a bullish signal coming from the market at this time.

jse_logo150x150Demand & supply | There are 7 serious buyers for Blue Power between $9.18 and 10.02 with a total demand of 84,000 shares and there are two sellers with 100,000 on offer at $10.50 and 10,000 at $13. AMG Packaging is in demand at $4.25 but there is virtually no current supply. Caribbean Cream has no demand currently but supply starts at $1.15 with 100,000 units. Dolphin Cove has virtually no supply currently with less than 20,000 units on offer. Jamaican Teas supply is very low with two sellers offering 55,000 units at $5.50 and demand is rising. Lasco Distributors, which should be releasing its first quarter results on the 29th of July along with the other two companies, has demand at $1.40 but the supply is at $1.60 up to $1.80. Lasco Financial has no active supply while the demand seems to have pulled back somewhat. Lasco Manufacturing with demand at $1.65 has no supply at the end of trading. Paramount Trading has had no supply for several days.

Cable & Wireless still has good supply at 15 cents with nearly 29 million units without any serious demand coming in to meet it. The sellers seem content to allow small buying to nimble away at the supply at 14 or 15 cents. Grace remains under pressure as demand is at $50, but in limited quantity as most of whatever demand is there is around $40. Carreras has slipped sharply from its recent highs and while there is quite some demand around $50-52 buyers, have been pulling back as supply continues to push prices lower. Troubled Caribbean Cement came in for demand this week and supply has receded and is now above $2. Desnoes and Geddes has buying at $4.65- 4.70 and supply at $5.18 but there are not a lot of sellers. Selling in Jamaica Broilers is moderate but buying is not aggressive. JMMB has demand at $8 but supply is way up at $8.80 but there is not much until $10.50. Jamaica Producers has very limited supply currently. Mayberry’s selling is not heavy but demand is just from Mayberry, with no other bid in place, which has been the case for several days.

National Commercial Bank has good buying for the stock between $18.50-19 and selling is very light. Selling for Pan Jam is very light.  Radio Jamaica has buying for 4.7 million shares with the closing bid at $1.23. Sagicor Life has buying around $9 but sellers are at a much higher prices. Scotia Group has good demand around $21 but sellers are much higher for the time being. Scotia Investments has some demand at $26 but mostly from one buyer with a seller supply at $30. Seprod has neither, much demand or supply, in the market and Supreme Ventures has virtually no supply.

We’ll be watching how JSE trading unfolds over the upcoming weeks starting with the Stocks to Watch as of Monday, 22nd July 2013.

JSE: Red day on market

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Friday, 19th July 2013 | The last day of the week saw a decline in all the indices and the gains made in the last two days were completely wiped out. More than 9.3 million shares valued at $23.37 million changed hands. Seven million Caribbean Cream stock traded with Stocks & Securities picking up the vast majority for in house purposes and Mayberry Investment doing most of the selling to them.

The advance decline ratio turned decisively negative as 12 stocks declined while only 4 advanced. All the indices moved down sharply with the exception of the junior market index that declined by just over a point and the US dollar index and the cross listed that had no trades.

Main market trades of note | The all Jamaica Index lost 1,105.03 points to close at 87,481.85 and the JSE market index fell by 627.68 to close at 86,550.40.

The sell-off continued in Carreras with 50,000 units valued at $2.64 million trading between $53.50 and the closing price of $52.85. Caribbean Cement, which has been showing more demand, traded 355,000 units at $1 each. Grace Kennedy traded 30,100 shares at a value of $1.69 million with all being traded at $56 while losing $1. Jamaica Money Market Brokers (JMMB) traded 15,314 units between $8.80 and the closing price of $8.02 was down 78 cents from the opening price. Jamaica Producers stock closed at $20 up 50 cents with only 1,200 shares trading. National Commercial Bank traded 129,468 shares valued at $2.52 million and closed at $19.30, down 20 cents. Radio Jamaica traded 186,243 units as investors sold to the buyer with 4.7 million shares that was on the bid at $1.30 and Scotia Group traded 190,226 units valued at $4 million to close at $21.10, the same at the last traded price on Thursday. Scotia Investments fell back by 69 cents to close at $26.01 with 4,565 units trading.

Junior market | 8 stocks in the junior market traded as 2 stocks increased and 5 declined. The dominant trader, Caribbean Cream’s 7 million shares traded at a value of $7.2 million, pulling the price down by 3 cents as the stock closed at $1.03. AMG Packaging traded 221,000 shares valued at $939,265 and gained a cent. Lasco Manufacturing traded 352,190 units and closed at $1.66, Lasco Distributors traded 168,600 to close at $1.50 and Lasco Financial traded 84,350 units to close at $1.40.

Proven Investment Preference shares traded 439,730 units valued at $2.24 million at the same price as the day before of $5.09.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer indicator shows that bids for 4 stocks were higher with 1 having the offer that was lower than their last selling price.


JSE: Ban hitting investors harder than smokers

Thursday, 18th July 2013 | The smoking ban may well save some lives but it could cause some pensioners theirs. Since the Minister of Health announced the ban, Carreras’ stock, which was at $60, has declined to $53 and looks as if it could go lower as investors exit the stock in fear of profits dropping sharply as the ban takes a toll on demand for the product.

The move has taken $3.5 billion off the value of the shares so far. Shareholders include are pensioners, pension funds and other pooled funds that investors look to for income. The stock traded more than 182,000 units closing down by 75 cents to $53 in today’s trading. There are good bids at $52.50 that could lend support for a while depending on the strength of selling that may still come.

Trading activity was slow for most of the day except for the Lasco stocks, Caribbean Creams and Caribbean Producers and a few others. Activity picked up in the last leg with some upward prices and increased bids for some of the stocks that are in demand.

Stocks of 28 companies traded 6.99 million units valued at $27.2 million as 2 stocks reached an all-time high and one closed at a 52 weeks low and one at a 52 weeks high at the end of trading. The advance decline ratio turned decisively positive as 12 stocks advanced and 6 declined, as the indices with active trades all gained.

Trades of note Main Market | The all Jamaica Index gained 837.12 points to close at 88,586.88, the JSE market index was up by 475.50 to close at 87.178.11.

Grace Kennedy lost $1 to close at $57 in trading 22,451 shares, a continuation of recent weakness in the stock as the company’s stock buyback seems not to be active. Jamaica Money Market put on 30 cents to close at $8.80 with 151,000 units trading.  Sagicor Life traded 21,820 shares at $9, the stock closed up by 45 cents, National Commercial Bank (NCB) closed up 40 cents to $19.50 while trading just 7,000 shares, importantly there was 73,000 units on the bid of $19.50 at the end of trading. The NCB move could well be linked with the expectation that the company will be releasing results and disclosing dividends on Thursday next week. Sagicor Investments traded down $1 to $17 but only traded 2,298 shares, Scotia Investments traded up 69 cents on 1,900 units and closed at $26.70. Barita’s 100 shares traded and pulled the stock down to a 52 weeks low at $2.30. At the end, the bid was at $2.50 for a small quantity.

Junior market | Stocks of nine companies traded in the junior market as the index climbed by 12.87 points to 816.26. Caribbean Cream traded 1 million shares and closed down firm at $1.06. Caribbean Producers traded 520,000 shares and closed up 7 cents at $2.10. General Accident traded 142,500 shares and closed down at $2 up 5 cents and Jamaican Teas saw buying coming in, as stock traded 120,000 shares and closed 28 cents better, at $4.28. Lasco Distributors traded 2.79 million shares and closed up 5 cents to $1.50 with Mayberry being the broker buying the bulk of them, the main selling broker was Scotia Investments. Lasco Financial traded at an all-time high of $1.45 but gave up some, as it closed at $1.39 while trading 500,946 units. Lasco Manufacturing traded 319,103 shares and dropped 2 cents to $1.68. Blue Power traded 14,390 shares and dropping 26 cents and closed at $10.04. Dolphin Cove closed at all-time high of $8.70.

Proven Investment Preference shares traded 1.06 million units valued at $5.4 million while there was no trading in the ordinary shares which are quoted in US dollars. At the close there was no stock on offer.

IC bid-offer Indicator | The Investor’s Choice bid-offer market indicator, shows that bids for 7 stocks were higher with 1 stock having an offer lower than their last selling price.


JSE: Advancing stocks = declining ones

Wednesday, 17th July 2013 | In Wednesday’s trading on the Jamaican Stock Exchange, the advance decline ratio remained even as 8 stocks advanced and 8 declined as trading took place in the stocks of only 20 companies. The trading resulted in 9.129 million units valued at $21.2 million changing hands as 2 stocks reached an all-time high, one closed at a 52 weeks low and only one closed at an all-time high at the end of trading.

Main Market | The all Jamaica Index gained 212.18 points to close at 87.749.76. The JSE market index was up by 120.52 to close at 86,702.61.

Carreras’ stock declined to $53.75 off 75 cents as it traded 54,578 units. Grace Kennedy gained 79 cents to close at $58 in trading 23,118 shares. Sagicor Life traded 260,00 shares as high as $9, the stock closed at $8.55 up by 5 cents, National Commercial Bank (NCB) closed down 40 cents to $19.10 while trading just 49,500 shares. Jamaica Money Market put on 40 cents to close at $8.50 with only 200 units trading. Scotia Investments dropped 50 cents on 1,500 units and closed at $26.01.

Junior market | The junior market index fell by 11.07 points to 803.39. Caribbean Cream traded 434,800 shares and closed down firm at $1.06. Lasco Distributors traded 6.34 million shares and closed down 6 cents to $1.45. Lasco Financial closed at $1.39 while trading 324,288 units. Lasco Manufacturing traded 1.07 million shares to close up at $1.70. Blue Power traded 7,500 shares and gained 30 cents to close at $10.30.

IC bid-offer Indicator | The Investor’s Choice bid-offer market indicator, shows that bids for 5 stocks were higher with 2 stocks having an offer lower than their last selling price.


JSE: 121m Kremi shares trade

Tuesday, 16th July 2013 | Caribbean Cream was the dominant trade today as 121.14 million units were crossed by Stock & Securities for a client in two blocks of 60.5 m units each. All traded at $1.10 for a total consideration of $133.26 million. At the time of the prospectus, Scoops Unlimited was shown as owning 121,141,801 units and this would have been the block that was traded and put into two new hands. The other dominant trade was National Commercial Bank which traded 1 million units at a value of $20.15 million. The stock traded up 44 cents on the day to close at $19.50.

A total of 30 companies traded 124 million stocks with a value at $172.67 million for the day. The advance decline ratio was exactly even with 7 stocks advancing and 7 declining. The indices declined sharply as Scotia Group dropped sharply on the day.

Trades of note Main Market | The all Jamaica Index gave up what was gained yesterday and more, as the index shed 2,310.88 points to close at 87,537.58 points. The JSE market index lost 1,312.62 points to close at 86,582.09 as Carreras traded 13,280 shares between $53.90 and $54.50. The stock closed off 87 cents at $54.50. Scotia Group traded 597,000 units and lost 92 cents to close at $21.08. Jamaica Producers lost 50 cents to close at $19.50 on 56,000 units, Pan Jamaican put on 39 cents to close at $51.50 while trading 5,000 shares.

Junior market | 12 stocks in the junior market traded as most of the stocks recorded moderate increases and the junior market index moved up by 7.03 points to 814.46. Caribbean Cream, fresh from its first quarterly report to the stock exchange which showed improved profit in the last quarter to May, traded 121.145 million units and closed at $1.06. AMG Packaging traded 200,000 units but remained firm at $4. 25, Blue Power traded 38,172 units to close at $10. Lasco Distributors has struggled to hold the higher prices it recently traded at and fell back to $1.50 while exchanging 155,517 shares. Lasco Financial is doing a little better having traded at a new all-time high during the day at $1.41 but closed at $1.40, the same close as Monday’s, as 227,500 units changed hands. Lasco Manufacturing traded 190,288 shares and gained a mere cent up to $1.66.

Market intelligence | The Cable & Wireless stocks on offer are now down to under 29 million shares at 15 cents. Gleaner has over 1.24 million units on the bid at $1.16 but there are 6.4 million units on offer at $1.50. RJR still has a bid for 4.9 million units that was at $1.23 and has seen the bid moved to $1.30.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer market sentiment indicator shows that bids for 5 stocks were higher with 2 stocks having offers lower than their last selling price.


IPO: What or who is Eppley?

The English dictionary has no such word, much less the meaning for ‘Eppley’ and a Google search has it as a little-known surname. However, it’s a name that will be on investor’s minds over the next couple of weeks as the company seeks to raise $82.6 million as a prelude to listing on the junior market of the stock exchange. The shares are clearly not meant for the average investor due to the small number of shares on offer and the price of $377 per share, which is the same as the net asset value of the shares, represented primarily by liquid assets. The shares are also priced around 10 times earnings before tax.

Who are they? | Although the public knows nothing about Eppley, it was established in 1973 and has been operating for some time under the name, Orrett and Musson Investment Company Limited. The Company is also an affiliate of General Accident which provides the Company with the necessary infrastructure to monitor and manage its investments plus ancillary administrative services. In consideration for these services, General Accident receives an incentive based fee, which is calculated as 20% of the Company’s average return on equity that is greater than 12% per annum.

The Directors, who are associated with the Musson group as directors or executives, are Nigel A. L. Clarke, Melanie Subratie, Nicholas Scott, Sharon Donaldson, Jennifer Scott, Maxim Rochester, Keith Collister, Alexander Melville and Byron Thompson.

The offer opens on Monday, 22 July 2013 and is scheduled to close on Monday, 29 July 2013 with 218,999 shares offered to the public of which 145,999 are Reserved Shares. Applications from the general public is at a minimum of 20 shares and multiples of 10 thereafter.  If any of the Reserved Shares in any category are not subscribed by the persons entitled to them, they will be available for subscription by the other Reserved Share Applicants, and thereafter, by the general public.

The proceeds are expected to be used to expand the capacity of the Company to provide credit facilities and to pay the expenses of the Invitation, which the Directors believe will not exceed $7.5 million. There will be no liquidity for these shares as the float is far too small.

EppleyNigelClarke150x150Business profile | The Company manages a portfolio of loans, leases and other forms of commercial credit. In so doing, it provides a variety of credit products to corporate and professional customers, including insurance premium financing — the company’s main line of business, lease financing arrangements for equipment (mostly motor vehicles for commercial and professional clients), commercial loans, and other forms of credit.

Insurance premium financing involves the financing of insurance premiums for personal and commercial insurance contracts, generally for periods of less than a year. Leasing involves the provision finance leases and commercial lending involves a variety of loans products that in most instances differ in structure or collateral from loans the Directors consider to widely available in the marketplace.

The Directors anticipate that commercial lending and leases will comprise an increasing share of the Company’s business following the Invitation.

Eppley aims to provide more attractively priced credit to its clients with better service than what is currently available in the marketplace. It aims to do this by maintaining a lean and efficient organizational structure, making fast investment decisions based on common-sense credit standards, and exercising strict confidentially and privacy in its dealings.

The Company’s business strategy is to deliver high and consistent risk-adjusted returns to its shareholders. It believes that commercial credit offers more attractive risk adjusted returns than other available fixed income investment alternatives, including Government of Jamaica debt. The Company stated that the vast majority of its aftertax earnings will be distributed to shareholders as cash dividends subject its Dividend Policy. The policy may be revised by the Board from time-to-time with the distribution being not less than 50% of its after-tax earnings.

Eppley’s numbers | The Company’s average return on operating assets, which provides an indicator of the rates at which it is able to lend, has fallen from 28% in 2008 to 15% in 2012. This reduction occurred at a slower pace that the reduction of interest rates in Jamaica. At the same time, the Directors note that the average cost of the Company’s operating liabilities, an indicator of the rates at which it is able to borrow, had not declined as rapidly. As a consequence, the average net income spread has tightened from 15% in 2008 to 8% in 2012.

eppleytype150x150The Company has restructured its balance sheet moving way from greater reliance on debt financing to a greater use of equity funding. The restructuring involved repaying related party assets and borrowings subsequent to the last audited report at the end of 2012, as well as actual or planned conversion of some loans from related parties into equity.

The Company’s cash and deposits were $115.5 million higher on 30 April 2013 compared to 30 April 2012. In keeping with its business strategy, Eppley began its lease operations late in the first quarter of 2013 and recorded lease receivables of $18.7 million as at 30 April 2013.

Eppley’s net investment income declined to $14.9 million in the 4 months ended 30 April 2013 compared to $16.1 million in the 4 months ended 30 April 2012. This was a result of increased holdings of lower yielding cash and marketable securities in the period. The Company’s other operating income increased significantly, mainly as a result of foreign exchange gains on its holdings of hard currency. As a result, its profit after tax increased from $7.0 million in the 4 months ended 30 April 2012 to $12.1 million in the 4 months ended 30 April 2013.

Listing of the shares on the stock exchange will provide visibility for the Company and opens it up to borrow cheaper funds than if they were a non-listed company. Listing will also improve the return on equity as there will be no taxes for 5 years on profits.

IPO outlook  | This one looks like a medium term investment but due to the listed number of shares, investors may want to acquire some in the IPO to ensure that they have them well ahead of when profits start to grow.

Kremi up, hardly out of the blocks

Caribbean Cream’s 49 percent jump in revenues in the first quarter to May this year, melted down to just 24 percent in pre-tax profits as costs rose above the growth in inflows. The situation for the February quarter was even worse as a 48 percent increase in sales delivered just $1.5 million in profit, a collapse from $18.6 million in 2012. Profit after tax rose to $11.7 million, up from $5.4 million, thanks to a roughly $6 million turn around in taxation.

Costs rise faster |  In the May quarter, direct labour cost climbed 69 percent to $11.4 million, electricity moved up by 86 percent, water jumped 106 percent to $1.2 million, machinery depreciation was up 117 percent. There were savings in packaging cost, down 53 percent to $725,000, factory rental was down by 44 percent to $1 million. IC Insider understands that the company underwent some major changes in how some aspects of the operations are done. The company used to purchase certain items from Scoops Unlimited, but this operation is now taken over, hence costs are structured differently than in the prior year period. The acquisition of their own warehouse means reduction in rental but a rise in finance cost. There was also a price adjustment in March for the products to help cover the increased production cost.

KremiBanner600X250Admin cost | Administrative cost was fairly well contained having increased far less than sales. The increase most likely would have been partially impacted by added costs to facilitate the IPO which occurred in the quarter. As such legal and professional fees were up nearly $1 million and audit and accounting fees by $1 million. Utility cost were down as well as depreciation but these may be due to reallocation of charges to direct expense instead of administrative expenses as was shown in the prior period. Interest and finance cost also showed an increase of $1 million. There was also a loss of $937,000 on disposal of fixed asset. The growth in profits before tax would be 36 percent if the loss on fixed asset is excluded. With the increased level of revenue, far more would have been expected under normal circumstances. The next quarter will be the true test when one-off costs should not recur.

Caribbean Cream’s rapid sale growth is phenomenal and looks as it can continue for a while yet. This is the aspect that many investors should be looking at as the company expands its customer base and captures market share with good products at competitive prices. As sales continue to rise rapidly, cost is likely to grow at a much slower pace thus helping to boost profits at a rapid pace.


At the end of May, current assets stood at $131 million up from $102 million at the end of February. Increased cash which stood at $65 million and a $24 million reduction in inventories were the factors giving rise to current asset change. Current liabilities on the other hand stood at $75.66 million a decline from February’s $126 million as the amount for payables was cut from $100 million to $64 million. Borrowed funds stood at $81 million, just a bit lower than the amount due at February.

Capital spend | The company spent $100 million on capital prior to the IPO but more is to be spent as new cold room machinery is to be installed later this year. Management states that this will cut cost and increase efficiency in freezing the product.

Valuation | The stock is selling at roughly 30 percent of sales. This compares with AMG Packaging at 100 percent of sales, Blue Power 50 percent and Jamaican Teas is around 100 percent of sales. The PE on forward earnings for 2014 is only 2 and there is much room for the stock price to move upward.

Management | The report containing the results show signs of some management weakness that they need to correct. In the investment world, communication is key. The changes in the operations and the resulting changes in the line items of costs should have been addressed in the directors’ report to shareholders. Costs that were of a one-off nature should have been highlighted so that investors could get a clearer picture about ongoing costs and profits. Instead, investors have to dig into the numbers making assumptions that really should not be necessary.

JSE: Scotia Group pushes index but…

Monday, 16th July 2013 |  The all Jamaica Index climbed 1,673 points to close at 89,848.46 points as Scotia Group traded as high as $23.84 — the major factor pushing the index. However, the stock closed trading at $22, the same closing price as Friday, which suggests there could be a major correction in the upward move on Tuesday.

The JSE composite index closed at 87,894.71, up 950.57. Scotia was not the only stock to affect the indices as trading was low at only 5.9 million shares valued at $22 million. Sagicor Investments put on $1 to close at $18 and only traded 1,500 units. Carib Cement put on 20 cents as 4 million shares traded at $1 each for a total sum of $4 million. Scotia Investments put on 50 cents to close at $26.51 and Seprod put on 49 cents to close at $15 both with very insignificant volumes. Scotia Group was mostly gobbled up by Scotia Investments who traded 533,000 shares for a value of $12.65 million.

The advance decline ratio was slightly in favour of advancers with 9 advancing and 8 advancing.

Junior market | Junior market activity has cooled for the time being as 7 stocks traded with moderate price moves except for a 69 cents drop in Access Financial Services as the stock closed at $8.36 with 10,000 shares trading. Lasco Financial traded and closed at an all-time high of $1.40 cents, the volume traded was 59.700 units. Lasco Manufacturing traded as high as $1.70 but could not hold as the 653,878 shares landed the last selling price at $1.65. The junior market slipped again to 807.43 down 8.61 points.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer market sentiment indicator shows a weakening in market momentum with bid for only 1 stock higher than the last selling price and one stock having an offer lower than the last selling price.