Pulse looking better

Pulse Investments disclosed earnings in the March quarter of $45.4 million a slight improvement over the $44.3 million generated in the 2012 period. For the nine months to date, earnings are up to $148 million against $136 million in 2012. The company generated revenues of $210 million and $171 million for the nine months to March 2012. While the net earnings are close to 2012 figures, the quality this year is better with $99 million being earned to date before a $51.5 million appreciation in investment property (2012 $82.5 million) was booked as income thus boosting the net profits.

Administrative expenses declined in both the quarter and for the nine months this year versus 2012. Earnings per share is put at 16 cents in the quarter and 53 cents year to date suggesting that around 70 cents earnings per share for the full year to June is possible.

Pulse280X150The company’s statement of financial position is undergoing a slow metamorphic change as loan liability is down to $24.4 million from $26 million in 2012. Cash funds are up to $13.3 million from $9.9 million in March last year. Trade receivables are down from $50 million at the end of March last year to $22 million this year. Payables are up from $38.3 million to $45.5 million.

Pulse shares last traded at $1.60 but there haven’t been any serious takers for them with an offer in place for several months at $1.60. The stock is undervalued but there is not likely to be any strong demand for a while. All that could change, if the stock market continues to push the prices of the better quality stocks upwards forcing investors to look elsewhere for stocks to invest in. Pulse could come into its own.

Pulse Investments’ business is focused on grooming models and contracting them out to the trade, staging Caribbean Fashion Week, ownership of shops and other property for rent.

JSE: Wednesday, 22nd May 2013

JSE flashes a strong bull signal  | When the Jamaica stock market closed there were 12 stocks which had bids higher than the last selling price with no offers below the last selling price, a strong bull signal. Additionally 3 stocks traded at 52 weeks high and the advance/decline ratio was 3 to 1 with 13 stocks gaining and 4 down.

The all Jamaica index closed up 1,025 points ending the day at 86,150 and the main market index was up 582 points closing at 86,275.28.  The all Jamaica index is just below the February 6th level of 87,430 points. The most telling bullish sign is that the market index has decisively broken through the upper resistance level of the major downward slopping channel that goes back to 2004. There is one short-term resistance level to break through and this should happen in a day or two as the all Jamaica index is just touching that line. With the positive number of stocks that can’t get orders filled at current levels, the break will happen soon.

Newly listed Caribbean Cream traded as high as $1.20 but closed at $1.1 as over 861,000 shares traded. The offer closed at $1.10 with a bid of $1.07. Carreras closed up $2.48 trading over 86,000 units to close at $60. D&G was up 30 cents closing at $4.90 on very small volume. Grace gained 50 cents closing at $60.50 with only 2,000 shares trading. Junior Market Honey Bun lost 50 cents closing at $3.50 but only 1,000 shares changed hands. Lasco Manufacturing posted a $1.19 gain trading at $12.50 with just 6,000 of the stock traded. Pan Jam lost $3.59 to close down at $54.01 and 11,619 shares traded. Scotia group gained $1.39 closing at $$21.60 and Scotia Investments is up $3 to close at $26.50 with 246,800 units by one buy order on the bid at the last selling price.

Trading took place in 2,700,407 shares with a value of $20,978,749.

JSEINdicesMay22

Carreras gives 15.3% return

Carreras Limited has declared an interim dividend of $1.30 per share and a special dividend of $0.94 per share payable on June 20, 2013 to shareholders on record as at June 6, 2013. The ex-dividend date is June 4, 2013.

This latest dividend brings the total paid since June last year to $7.64. Shareholders who bought shares around the $50 level when Lascelles sold a block of the Carreras shares last year, have enjoyed a 15.3 percent dividend income return. The stock closed today at $60, making a total gain of 35 percent within a year.

Carreras paid an interim dividend of $1.40 per share and a special dividend of $1.20 per share on March 13, 2013, an interim dividend of $1.30 per share was paid on December 11, 2012 and another of $1.50 per share was paid on August 23, last year.

C&W: Less jobs, more capital spend

Add your HTML code here...

As the Cable & Wireless worldwide operations strive to adjust to changes in market forces and consumer demand, the group has been undergoing changes. Within the Caribbean region, stiff completion and tight economies as well as changes in the way people communicate have forced changes in their businesses in the region.

In an effort to improve results for the future, Cable & Wireless Caribbean incurred net exceptional items (excluding impairments) of US$50 million relating to redundancy and restructuring programmes in the Caribbean. The prior year charge of US$66 million was primarily in respect of restructuring activities in The Bahamas and Panama.

What about Jamaica? |  Cable & Wireless Caribbean incurred US$26 million as an exceptional charge for cash payouts for redundancy and restructuring programmes. This charge was related to Jamaica and the eastern Caribbean but our calculations suggest that the bulk relates to Jamaica. Cable & Wireless Jamaica had indicated that it was making 300 persons redundant earlier this year and outsourcing the field force technician services to Erickson. The redundancy charge will wipe out any hope that may have existed for the Jamaican operation to return to profit in March 2013. In addition, the Jamaican operation would have picked up a large exchange rate adjustment charge on its foreign currency denominated debt. The stage should, however, be set for it to return to profitability in the 2013/14 year.

cable-and-wireless280x150There was also exceptional impairment and depreciation charge of US$86 million in the year ended March 2013. This was mainly due to the difficult environment in the Eastern Caribbean. The prior year charge consisted of a non-cash impairment and accelerated depreciation charge of US$244 million primarily due to poor financial performance in Jamaica.

Capital spend continues | C&W continues to spend on capital improvements within the Caribbean basin which includes Panama. Capital investments continued to be in 4G/HSPA+ mobile data networks supporting smartphone sales in Panama, The Bahamas, Barbados, BVI, St Lucia and Cayman, selective pay TV investments, and improvements to the fixed broadband network. These fixed broadband investments include continuing the fibre roll-outs in the Caribbean and completing the Next Generation Network in The Bahamas. They have also pursued strategic investments in transmission capacity and cable systems to support both retail and carrier sales asa well as advancing billing and customer relationship management systems.

They have completed the second year of investment in the Bahamas having invested around US$100 million in capital projects during that period.

C&W Caribbean still restructuring

The Caribbean contributed revenue of US$1,120 million to Cable & Wireless Worldwide revenues in the year ending March 2013. The revenues for the region were down 4% on the prior year.

Mobile revenue of US$527 million was down 1% on the prior year driven principally by lower average rate per unit (ARPU). Subscriber numbers were broadly flat on the prior period with a 16 percent growth in Jamaica following regulatory changes which enabled improved competitive positioning, stimulating subscriber and usage growth offset by churn in the Eastern Caribbean. There has been sustained growth in mobile data usage following the launch of high-speed networks in a number of islands during the year and the Company plans to expand on this where commercially viable.

Broadband & TV | Revenue fell by 2% to US$120 million for broadband & TV operations. LIME TV was launched in Barbados during the year and over 3,000 customers have signed up subscriptions to date with plans to roll out IP based TV services to a number of islands in the coming year.

cable-and-wireless-cables150x150Fixed voice revenue at US$290 million was 10% down compared to the prior year. Voice substitution continued across the region, although the ARPU and revenue decline this year was mainly influenced by Jamaica where regulatory changes and the introduction of a special telecommunications tax led to lower revenues. Enterprise, data and other revenue at US$183 million was down 7% on last year due principally to a lower level of cable capacity sales in the period.

Gross margin | Operating costs were 5% down compared to the prior year at US$578 million. Across the Caribbean, the Company has embarked on targeted cost reduction programmes to improve efficiency and build a sustainable operating base. During this year, staffing headcount has reduced by 12% to 3,421 and there was further outsourcing of field force technician services in Jamaica. Much of the improvement came from the Bahamas business which has seen a full year’s benefit of the restructuring undertaken following acquisition of the company in 2011.

What about C&W Jamaica? | Read IC Insider’s ‘C&W: Less jobs, more capital spend

FX gains boost Kingston Wharves

Revenues for Kingston Wharves were up 42 percent for the quarter ended March to $1.17 billion. The amount includes $148.86 million or a 91 percent increase in interest income and a large amount of foreign exchange gains flowing from changes in the Jamaican dollar value for assets denominated in United States dollars, as well as a 38 percent increase in transshipment and domestic container movements.

Port revenues | Increased revenue and cost saving initiatives implemented by the group contributed to positively to the profit performance for the quarter. Revenues for port activities were $999 million up from $804 million for the similar period in 2012, an increase of $195 million or 24 percent. A combination of volume increases and the impact of the declining value of the Jamaican dollar are factors that contributed in a major way to the results.

Profit | Operating Profit increased 142 percent for the first quarter, moving from $155 million in 2012 to $374 million. Profit attributable to stockholders was $153 million compared to $65 million for the same period in 2012. Earnings per stock for the first three months was 10.63 cents compared to 5.90 cents for the corresponding period in 2012.

KingstonWharves150x150Without the gain from the movement of the local currency, profits for the quarter would have been much lower, which is something for investors to bear in mind in considering the company’s stock as an investment. The stock is now selling for more than 17 times this year’s likely earnings, well ahead of other companies on the market presently.

Management stated the group will be making substantial long term investments in order to participate fully in the Kingston port expansion. During the quarter, the first phase of the initiative aimed at the expansion and improvement of the range of services offered was implemented. These include steps to acquire container handling equipment and provide stevedoring services for a new client.

Financial strength | Kingston Wharves is in a healthy financial position with borrowings of $2 billion and equity of $12 billion. The group has $3 billion in cash which will be used in the expansion and modernization of the operations in preparation for increased business when the expanded Panama canal opens.

JSE: 38m shares for IPO

The Jamaica Stock Exchange (JSE) is to issue 28 million shares to the public during this quarter and have the total share capital listed in the exchange thus confirming what IC Insider reported last week.

In a release to the public, the JSE stated that the Shareholders of the Jamaica Stock Exchange have given their approval to list the ordinary shares of the Company on the local equity market via an Initial Public Offer (IPO). The Company will offer, by way of Subscription, 28,050,000 new ordinary shares equal to 20% of its ordinary shares to the public. Upon completion of the sale, the Company will apply for its shares to be listed on the JSE. The Company expects to make the Offer to the Public in the 2nd Quarter of 2013.

An additional 10,200,000 existing ordinary shares will also be available for sale to investors, bringing the total ordinary shares available to 38,250,000 units. This means that the JSE has split the existing 28 million ordinary shares into 140 million units. It appears that existing shareholders will be selling off some of their holdings to the public at the same time. The JSE did not indicate the likely price the issue will be coming to market at.

jse_logo150x150According to the Chairman of the JSE, Donovan H. Perkins, “The Board of the Exchange has approved the listing of its shares to allow the public to participate in the success of the JSE. We think it appropriate that the very entity that is supporting and seeking to expand the capital markets, should also participate in these markets.”

Marlene Street Forrest, General Manager of the JSE also added that, “with the green light given by the shareholders, this is a natural and positive progression of the organization as it is another step in the direction towards maximizing shareholders’.

The issue could come to the market at a time when trading interest would have reached new heights than a few months ago.

Consolidated Bakeries’ Q1 Profits Up

Consolidated Bakeries, producers of the well-known Purity brand of baked products, reported profit before tax for the March quarter of $14.2 million, 58 percent more than the corresponding period last year. Profit after tax jumped by 216 percent but the company is unlikely to be paying any taxes for the next five years under the junior market tax incentive. Revenues grew to $172 million, an increase of $32 million or 23 percent over the same period last year.

Management indicated, in a release with the quarterly results, that all key product lines grew during the quarter. Whilst revenues climbed 23 percent gross profit of 38 percent in 2012 fell to 37 percent in the quarter, and the growth in gross profit, was up 18 percent year over year. Operating expenses grew by just under 12 percent. Going forward, the company says they will accelerate operational improvements to combat increased input costs.

These developments sound great. The concerns that investors must be having is that last year’s results for the first half looked good and then, what seemed like a sudden shock, the company announced earnings of a mere $3.7 million, well below the amount reported for the 2012 first half and lower as well than the full 2011 earnings of $12.8 million. Will the market get another surprise? That is difficult to say. Management did indicate that they took a deliberate decision last year to slow production whilst attempting to get their processes right.

Consolidated_Purity150x150The company was listed on the Junior Market of the Jamaica Stock Exchange in December 2012 with the stock price trading as high as $2.05 but declined to 90 cents after the poor 2012 results were released in March.

The company completed the conversion of the tracking of routes to a computerized hand-held system which facilitates better tracking, monitoring and management of the company’s distribution process, thereby reducing costs and improving sales. Their efforts to improve operations continued with additional adjustments to the  processes and plant organization, including the appointment of both an experienced warehouse and loading manager. As a consequence, the first quarter saw significant improvements in quality and products.

The company continued exports to three overseas markets, and gained additional listings and space with independent retailers, and significantly, a major retail chain in the North America.

Current assets increased to $202 million from $96.8 million over the same period last year, primarily due to the growth in receivables of $32 million and investments and other cash equivalents by $64 million. Current liabilities increased from $69 million to $89 million at a slower pace than current assets due to the capital injection from the IPO in December last year. Consolidated has equity of $485 million, well in excess of loan funding of $48.5 million.

Management stated, “In the coming months we will build on and continue the internal changes of the first quarter, starting with additional branding and our route to market programs. We will be adjusting and or replacing equipment to our production line of single serve and bread products, at the same time increasing exposure and awareness of our brand.”

PurityFinDetails

JSE | Tuesday, 21 May 2013

Pan Jamaica Investment Trust stock jumped $4.08 today to close at $57.60 back to the level it traded at prior to the NDX debt exchange of Government of Jamaica bonds in February this year. Pan Jamaican traded 75,651 units valued at $44.1 million. Grace Kennedy followed up with a gain of $1.75 with the stock getting back to its recent high of $60 while trading just 5,861 shares.

The Jamaican stock market put in a splendid performance today with 27 stocks trading valued $112,141,197 as 21.8 million shares changed hands. Sagicor Investments, accounted for 5.378 million units with a value of $83.55 million, all of the shares were sold and bought within Pan Caribbean brokerage house. Consolidated Bakeries traded over 12.3 million units worth $11.94 million. NCB Capital markets bought 12.11 million units at 90 cents for clients. Mayberry Investments traded 2.068 million units valued at $4.18 million on a day when the number of advancing stocks were in excess of declining ones, almost 3 to 1 as 15 advanced versus 6 declining.

MoneyKeyboard150x150At the end of trading, 8 stocks closed the day with bids higher than the last selling price. There were none with offers lower than the last sale price. One stock made 52-week high as Caribbean Cream, the new listing on the junior market, gained 14 cents to close at $1.15 up 15 percent on the IPO price with 60,000 units trading today. At the end of trading, there were more than 400,000 units on the bid between 94 cents and $1.06 and 265,000 on offer at $1.15 to $1.20.

Other stocks that had noticeable price movements were, Access Financial down 50 cents to $7.50, Blue Power off 55 cents to $6.05, Carreras down 38 cents to $57.52. JMMB climbed 45 cents to $7.50, NCBJ up 35 cents to close at $18.89 as 130,191 shares traded having traded as high as $19. Seprod shed 48 cents and closed at $14.52 on very small volume of 1,500 units.

At the end of trade, the main market index put on 297.88 points closing at 85,693.25 and the All Jamaica Composite closed over the 85,000 mark the first time since early February when it closed at 85,325, today it closed at 85,125. The main market index closed at the highest point today, since it closed at 85,693 on March 6th this year.

The positive advance decline ratio coupled with the number of stocks with bids above last selling price are two factors that say this market is heading higher.

JSEINdicesMay21

Profits up 19% at Jamaican Teas

Jamaican Teas recorded a profit of $51.2 million for the 6 months of its fiscal year ending March. Last year for the same period, the group made $43.2 million, an increase of 18.6%.  Profit in the March quarter this year amounted to $25.7 million versus $22.2 million in the comparative period in 2012, an increase of 15.9%. Return on equity rose to 20 percent. The improved results came from growth in sales by 44% to $528.2 million, versus $365.9 million in the prior year to march. This was due to healthy increases in both export and retail supermarket sales including a supermarket in Savannah La Mar which contributed $36 million for the second quarter, compared to $12.6 million in 2012. However, during 2012 period investments sold contributed more to profits than for this year. As a result the core business contributed more profits than the reported figures suggest. According to management’s report, sale of investments in the March quarter resulted in a loss of $3 million.

Sales at the Kingston supermarket were up on the similar quarter in 2012 and the store in Savannah La Mar enjoyed steady sales during the period. It recorded its first profit in March. Management is hopeful to build on the second quarter performance, effectively wiping out, or reducing the losses experienced in the first half.

Despite tightness in the local and regional economies, the company was able to generate improved sales in the manufacturing business and more importantly in domestic manufacturing sales that contribute proportionately more to profits than either export or retail sales.

The jointly-owned supermarket in Montego Bay continues to show improvement but has not shown profit to date.  Sales in the six months rose 16 percent above the similar period of 2012. As per management, “We enjoyed an encouraging improvement in sales since the start of the quarter, pushing us closer to a break”. The group’s share of the loss is $1.6 million in the latest quarter.

JaTeasArticlechart

Apartment complex | An apartment complex developed by the group on Kingsway will be completed by the end of May or very early in June.  Sale of the units attracted solid buying interest with more than 90 percent having written commitments. The sale of the units is expected to be booked before the end of the financial year in September when ownership would be transferred to the new owners.  The group has plans for more developments now that the first was successfully executed.

Financial strength | The group continues to maintain a healthy financial position with working capital and investments of $388 million and this position should improve when the apartments are fully sold.  Equity was $550 million and will continue to rise.

Image from Behance.net

Image from Behance.net

Borrowings are up to $145 million from $75 million in March 2012, most of the increase relates to loans to partially fund the building of the apartment complex and is expected to be repaid from the sale proceeds. In addition, the group acquired the supermarket building in Kingston and is carrying a medium term loan on it, which was booked last year after the March quarter. The proceeds from the sale of the apartments is more than adequate to cover the total loans on the books.  The group is acquiring a property to house Jamaican Teas operations which will result in discontinuation of rent but there will be interest cost relating to loan-funding for the acquisition.

Outlook | Management says they will continue to see buoyancy in sales after the end of the quarter at all locations. “The equity portion of the investment portfolio has fluctuated with recent market volatility but in recent weeks we have seen some improvement in the prices of some of our investments. There are signs that the local stock market is picking up life and if that continues, the valuation of the investment portfolio should rise in the months ahead, thus improving the equity base of the group.”

Management concluded their report by stating that with the performance for the first 6 months, the pending sale of the apartment complex, as well as sales performance subsequent to the March quarter, suggest that results for the 2013 fiscal year should exceed the 2012 fiscal year barring unforeseen developments. At the annual general meeting, the range for profit given by the company was $125-140 million for the year to September, which works out at earnings per share of 80-83 cents.