Future Energy Source Company (Fesco) initial public offer of shares will open at 9 am on Wednesday, March 31 and close on April 9, at 4 PM, unless it closes earlier.
The issue comprises 300 million new shares with 200 million to be sold by existing shareholders at 80 cents each. If successful, the total issued shares will be 2.5 billion, with the shares slated to list on the Jamaica Stock Exchange Junior Market.
The projection shows a profit of $151 before taxes for the year ended March 2021 from revenues of $7 billion and earnings per share of 7 cents. The company forecast revenues of $106 billion and a profit of $264 million or 10.5 cents per share for 2022.
ICInsider.com had earlier done a detailed review of the offer and rated it a buy with long term growth prospects as there is much room for expansion as it currently has only 14 service stations under its banner. NCB Capital Markets is the lead broker.
Fesco IPO opens next week
More record profits for Limners & Bards
Limners and Bards reported strong first quarter results with rising revenues and profit for the first three months of the new fiscal year. Revenues for the quarter ending in January this year grew a strong 36 percent over the 2020 period to $356 million from $263 million, 
with profit rising 36 percent to $67 million as cost of operations rose 38 percent over the 2020 period.
Profit for the quarter is more than 50 percent of the profit of $127 million made in the fiscal year ending October 2020.
The growth in revenues continues the increase of 31 percent enjoyed in 2019 over 2018 and 44 percent in 2020 over 2019. “The revenue growth is attributable to increases in the company’s core business, media placement (up $21.3 million or 16.6 percent) and production (up $72.8 million or 92.3 percent). These increases were to some extent offset by reduction in advertising agency (down $0.9 million or 1.7 percent) during the period,” Steven Gooden, Chairman and Kimala Bennett, Chief Executive Officer, stated in their report to shareholders in their comments on the results for the first quarter.
The principal activities of the company is that of an advertising and public relations agency and have several large Jamaican businesses as clients.
Kimala Bennett, Chief Executive Officer of The Lab.
Cash and cash equivalents climbed to $342 million from $249 million at the end of the first quarter in 2020 but is down from $380 million at the end of the fiscal year ended October last year after the company paid $70 million in dividends. Current assets ended at $560 million, with current liabilities at $157 million, leaving them in a healthy working capital position. Shareholders’ equity stood at $461 million at the end of the 2021 first quarter, slightly lower than the $464 million at the end of October last year.
The company seems set to nearly doubling profit for the full year, with a profit of approximately $200 million and earnings per share of 20 cents. The stocks traded at $2.80 on the Junior Market of the Jamaica Stock Exchange on Friday last, with a PE of 14 based on projected earnings.
The stock seems to be meeting resistance at $3, after trading at a record high shortly after listing in 2019 when it hit $4. This past week following the results, it traded at $2.95 when 1.1 million units traded, followed by 3.1 million on Friday, the highest daily volume for some time. Prior to December 2019, it hit $3 and again in December 2020, $3.10 and then retreated, but could move up to $3.30 with a PE of 16.5 times this year’s earnings.
Berger Paints holds some promise
Berger Paints held the number one spot in ICInsider.com’s TOP15 list for 2021 based on its performance for the nine months ended September 2020, which has changed with the failure for sales growth to continue into the final quarter.
Revenues climbed eight percent in the September quarter to $574 million, with a gross profit of $304 million. Profit suffered a sharp fall in the June quarter, with sales negatively impacted by the partial closure of some businesses resulting from the spread of the covid-19 pandemic in the country. Revenues for the nine months were down, with profit after tax coming in with a loss of $60 million. Revenues for the fourth quarter to December failed to enjoy the level of growth in the September quarter and dipped against the similar quarter in 2019.
Audited financials for the full year show revenue for 2020 of $2.37 billion, six percent below 2019 figures, with the fourth quarter dipping just two percent at $877 million versus $892 million in 2019. Losses suffered in the earlier part of the year were simply too much for the company to overcome and recoup. Profit before tax for the year was down a noticeable 72 percent to $12 million, but profit before tax for the December quarter of $38 million was vastly better than the loss of $9 realised in the 2019 period. The December quarter profit after tax of $32 million was vastly better than the $11 million in 2019.
Direct operating cost declined by 4 percent or just $38 million to $1.22 billion for 2021. Staff cost also declined from $558 million to $512 million.
At $211 million, cash and bank balances fell 64 percent in 2020, down from the $585 billion recorded at the end of 2019 as the company paid down the $655 million owed to fellow subsidiaries by $552 million. Current assets of $1.3 billion include trade and other receivables of $575 million and inventories of $446 million, down from $639 million in 2019.
Berger Paints is one of IC Insider’s TOP 10 stocks.
Current liabilities ended at $484 million for the financial year, down from $1 billion in 2019, with amounts owing at the end of 2020 include $148 million due to the parent company and $102 million due to fellow subsidiaries. Shareholders’ equity closed out the year at $1.15 billion. The only interest bearing debt was for leasing, amounting to $65 million.
Earnings per share for 2020 was just 5 cents compared to 14 cents in 2019. IC.com projects 2021 earnings of $1.50 as the company benefits from recovery of sales that fell out in 2020 due to the effects of Covid and increased sales from a buoyant construction sector, relatively new automotive paints and better data usage from the new IT system.
The stock last traded at $13 on the Main Market of the Jamaica Stock Exchange and is now at the lower end of the ICTOP10 stocks for 2021 at a PE of 9 times 2021 earnings, but it could surprise with better than expected results.
Jamaican Teas profit jumps sharply
The Jamaican Teas Group enjoyed an outstanding first quarter with rising sales and profits fueled mainly by strong growth in exports that rose 88 percent over the prior year and accounted for 64 percent of total sales in the quarter and positive contribution from the investment division.
Jamaican Teas traded the most volume on Monday.
Sales rose 41 percent to $611 million and profit attributable to shareholders jumped 321 percent to $117 million from just $28 million in 2019. The improved profit result occurred with profit fully taxed compared to the 2019 quarter that was taxed at 50 percent of the normal rate for Jamaican Teas’ profits.
The real estate division also contributed to improved profits following completion of an apartment complex. The subsidiary QWI Investments, contributed positively to the profit performance following improved investment performance, resulting in the equity portfolio delivering a $143 million increase from dividends and capital appreciation of stocks in the quarter.
The supermarket contributed reduced sales and profit due to continued curfew restrictions on its hours of operation and the closure of schools. Manufacturing sales climbed 48 percent to $428 million for the quarter, with domestic sales increasing just 7 percent compared with a year ago.
First quarter revenues at the Supermarket amounted to $135 million slightly below the $142 million generated a year ago. There was a progressive fall in the rate of decline as the quarter elapsed.
The gross profit margin was a consistent year over year with a 27.5 percent margin for the latest quarter versus 27.4 percent for the 2019 first quarter for the group.
Marketing expenses fell for the quarter by $5 million to $8.7 million resulting mainly from the cost of new products launched in 2019, and not repeated in the latest quarter.
Administrative costs rose moderately by 11 percent to $63 million and Interest expense declined during the quarter resulting from lower interest rates on some borrowed funds. According to the directors in their quarterly commentary, referring to the sale of apartment units they developed, “we have signed contracts and expect to record sales for the last 4 apartments in our second quarter. Manufacturing sales after the end of the quarter are 15% higher in the first 28 days of January compared with a year ago and our quoted investments continued to improve.”
Earnings per share came in at 5.5 cents, 323 percent above the 2019 – earnings of 1.3 cents. ICImsider.com earnings forecast is for 30 cents per share, gains in the investment division could impact it positively or negatively. Based on the forecast the PE ratio at the last traded stock price of $2.75 is 9.2, suggesting a strong upside for the stock assuming a target PE of 20.
Jamaican Teas produces black and green and many herbal teas, soaps and some other consumer product and owns a supermarket and has a subsidiary that invests in local and overseas stocks. The chairman of the group is John Jackson.
Persons who compiled this report may have an interest in securities commented on in this report.
45% gains for ICTOP15 stock
Robust gains for some stocks after less than a month of trading in 2021 have shaken up ICTOP 15 stocks forcing a number of them out or at the edge of moving out of the 2021 TOP list. Jamaican Teas now the lead stock for the year, dropped out of the Junior Market list this week, with a rise of 45 percent since the start of the year.
Jamaican Teas is the leading JSE stock for 2021 to date with a 45% increase in price.
This brings to two, stocks that have migrated from the Junior Market TOP15 so far. Jamaica Producers fell out of the Top 15 Main Market list with the price dropping to $19.81, from $21 but Margaritaville suffered a greater fall to replace it.
Jamaican Teas one of the top 15 stocks for 2021 scaled record highs this past week as more and more investors piled into the stock since the three for one stock split in November last year. The gain also follows the directors’ report for the September quarter results that stated “Subsequent to the year-end, overall sales increased by 47 percent in October 2020, with export sales increasing 85 percent and a 10 percent increase in domestic sales. We have good orders in hand for November and these developments, along with booking of more real estate sales, hopefully, improvement in the investment portfolio should result in a good first quarter for the financial year 2021.”
Mailpac was the first to drop out of the list and now has gains of 29 percent so far in 2021. Lumber Depot surged to $2.10 on Friday but closed at $1.95 from $1.46 last week and now sits at 15th spot on the Junior Market TOP15 for 2021, with a 25 percent gain for the year to date. Reports in the newspapers indicate bullish sales expectations from Caribbean Cement and rising prices for some construction inputs.
MailPac is the Junior Market second-best performing stock for 2021.
The news pushed investors to snap up Lumber Depot stock and drove the price much higher, since. QWI Investments is up 17 percent since the end of last year to trade at 90 cents with the net asset value rising since the latter part of last year to sit at $1.18 as gains in both local and overseas stocks continue to add to the value of the company’s portfolio. The stock is now at 14th spot on the Main Market list. A large number of shares were overhanging the market and pressuring the stock price. Once they were bought out, the supply has shrunken leaving room for the price to recover.
Caribbean Cream posted eleven percent growth in sales for the November quarter and eight percent for the nine months, with profit rising 96 percent for the nine months and a 37.5 percent increase for the third quarter. The stock is up 18 percent for the year at the close on Friday and remains at the seventh position on the 2021/22 TOP15 list.
With interest rates at low levels on government bonds and expected to remain low for a protracted period, investors are becoming more comfortable with PE of 20 times earnings or more, according to the TOP 15 rankings the above stocks still have room to gain over 90 percent from the current price for the rest of the year.
It pays to read ICInsider.com.
Trading rises on JSE USD market
Trading picked up on the US dollar market of the Jamaica Stock Exchange on Friday, with the market rising after trading 54 percent more shares than on Thursday with a value that was 25 times greater.
Trading ended with six securities changing hands, compared to three on Thursday and ended with the price of one stock rising, three declining and two remaining unchanged.
The JSE USD equity index advanced 0.15 points to 187.55. The average PE Ratio ended at 13.4 based on ICInsider.com’s forecast of 2020-21 earnings.
The market closed with an exchange of 233,569 shares, at a consideration of US$92,790 compared to 151,769 units at a mere US$3,664 on Thursday.
Trading averaged 38,928 units changing hands at US$15,465, in contrast to an average of 50,590 shares at US$1,221 on Thursday. Trading ended with an average of 42,162 units for the month to date at US$6,883 in contrast to 42,733 units at US$5,369 on Thursday. By comparison, November ended with an average of 51,134 units for US$4,516.
Investor’s Choice bid-offer indicator reading for the market shows two stocks ending with bids higher than their last selling prices and one with a lower offer.
At the close of the market, Productive Business Solutions shed 18 cents in ending at 66 US cents, in an exchange of 95,356 shares, Proven Investments dropped 0.01 of a cent in closing at 25.97 US cents after trading 50,809 stock units, Sterling Investments closed at 2.35 US cents, with 21,196 shares changing hands. Sygnus Credit Investments dropped 1.20 cents to settle at 15.80 US cents, trading 58,948 shares and Transjamaican Highway gained 0.14 US cents to close at 0.94 US cents after exchanging 10 units.
In the preference segment, JMMB Group 6% settled at US$1.05, switching ownership of 7,250 stock units.
Prices of securities trading are those for the last transaction of each stock unless otherwise stated.
Q2 profit up at Carreras
Cigarettes are no longer the in-demand and sexy product of former years, nor are stocks of companies involved in the product in strong demand either.
It is against that background that the former highflier and Jamaica Stock Exchange-listed Carreras is to be viewed. But stocks of these companies are sought after by many who see great value in the high dividends paid by them, even if growth in profit is moderate. Years of increased prices on the product, mostly fueled by increased taxation, stymied demand and affected the profitability of the company. For the current year, aftertax profit climbed 11 percent for the September quarter to $911 million from $822 million but dropped 11 percent for the year to date from $1.75 billion to $1.56 billion. Taxation on profits climbed 10 percent in the quarter and the half year to $308 million from $279 million and $531 million from $591 million respectively.
Before tax charges, profit climbed 11 percent for the September quarter to $1.2 billion, up from $1.1 billion in 2019 but dropped 11 percent for the year to date from $2.34 billion to $2.1 billion.
Operating profit climbed by 12 percent for the quarter to $1.2 billion from $1.1 billion but decreased 10 percent for the half year to $2.1 billion from $2.3 billion in the same period in 2019.
Carreras leading brand
Revenue grew 8.5 percent for the quarter to $3.46 billion from $3.2 billion in 2019, with a seven percent drop for the six months to September from $6.64 billion to $6.15 billion. The revenue includes special consumption tax of $2.6 billion, two percent less than the similar period in 2019.
Cost of sales grew nine percent for the quarter from $1.61 billion to $1.76 billion and fell by six percent for the year to date from $3.3 billion to $3.1 billion. Gross profit improved by eight percent for the quarter from $1.58 billion to $1.7 billion but shrunk nine percent for the six month period from $3.3 billion to $3.1 billion. The gross profit margin for the quarter and the six months stood at 49 percent, down a single percentage point from the respective corresponding periods.
Administrative, marketing and distribution expenses fell one percent for the quarter and three percent for the first half of the fiscal year, to $490 million and $999 million, respectively.
The company is in excellent financial health having generated cash inflows from operations of $1.4 billion and after paying $1.6 billion in dividends cash and bank balances stood at $1.8 billion. Current assets ended at $3.53 billion inclusive of accounts receivables of $1.3 billion, with cash funds and inventories making the rest. Current liabilities stood at $2.05 billion. At the end of September, shareholders’ equity stood at $1.8 billion.
Earnings per share came out at 18.76 cents for the quarter and 32.18 cents for the half year. ICInsider.com forecasting 80 cents per share for the fiscal year. The stock last traded at $6.50 on the Main Market of the Jamaica Stock Exchange with a PE ratio of 8.3 times 2021 earnings.
A dividend of 17 cents per share will be paid on December 16, bringing the payments in the year to 64 cents, for a yield of 10 percent on the current price.
Berger Paints Q3 profit surges
Profit before taxation soared an outstanding 524 percent for Berger Paints for the third quarter, but that was insufficient to wipe out the losses incurred in the first and second quarters, amounting to $63 million.
Berger Paints Q3 profit jumps.
For the quarter ended September 2020, the company recorded a profit before tax of $58 million, up from $9 million for the corresponding quarter in 2019.
Taxation climbed 700 percent for the quarter from a loss of $1.8 million to $14.7 million for the quarter but dropped by 162 percent for the year from $10 million to a credit of $6 million. Net profit came in at $43 million for the quarter, a 481 percent jump over the comparative quarter’s figure of $7.4 million.
Profit after tax dropped 151 percent from $40 million to a loss of $20 million for the nine months period after-tax, losing $26 million, for the nine months to September, compared to a profit of $50 billion at the end of September 2019. Heading into the traditional festive season, Berger will be hoping to close out the fiscal year on a high note with a strong increase in the final quarter profit.
Revenue improved by eight percent for the quarter from $534 million to $574 million but fell nine percent from $1.63 billion to $1.49 billion for the nine months to September.
Direct Manufacturing expenses fell by 29.7 percent for both the quarter and the year to date, recorded at $304 million and was down 26 percent to $763 million respectively. Gross profit jumped 103 percent for the quarter from $150 million to $304 million and increased 20 percent for the year to date from $609 million to $732 million, with gross profit margins of 53 percent for the quarter, up from just 28 percent in 2019 and 49 percent for the 2020 nine months, up from 37 percent in 2019. The input in paint production is heavily based on petrochemicals as such a fall in the price of oil on the world market would result in reduced production cost for the company.
Depreciation jumped 78 percent for the quarter to $20 million and a 58 percent increase to $45 million for the year. Other operating expenses declined 8 percent for the quarter from $118 million to $108 million and saw a 25 percent rise for the year from $262 million to $327 million. Other income for the quarter stood at $7.2 million for the quarter up from just $182,000 and at $7.7 million for the year to date from $54,000 in 2019.
The company implemented new information technology last year, which the company claims are working well. “The recently deployed Enterprise Resource Planning (ERP) system has settled and has been providing Management with key insights to allow for a deeper appreciation of the business drivers and, with that, quicker decision making. Although a relatively new deployment, it is already contributing value to the business,” the Chairman, Adam N. Sabga, remarked in a statement accompanying the quarterly.
Net cash inflows generated cash of $21 million, but a reduction in amounts due to payables and fellow subsidiaries resulted in cash from operating activities was an outflow of $190 million and capital spend and loan payments increased cash outflows to $263 million. Current assets stood at $1.37 million inclusive of Inventories of $509 million, Receivables of $443 million and cash and bank balances of $306 million. Current liabilities tallied $572 million inclusive of $126 million due to the immediate parent company and $369 million to fellow subsidiaries. At the end of September, shareholder’s equity stood at $1.1 billion.
Earnings per share came in at 20 cents for the quarter and a loss of 10 cents for the nine months to September and ICInsider.com projects full-year earnings of $2.25 per share with a rise to $2.80 in 2021.
The stock is currently trading at $11.85 on the Main Market of the Jamaica Stock Exchange with a PE ratio of 5.3 times 2020 earnings.
Good news drive interest in Jamaican Teas
Shareholders of Jamaican Teas approved a three for one stock split effective November 30 at a meeting held by the Company on Tuesday. The record date for the split is Monday, November 30, but the stocks go ex split on Friday, November 27 and will commence trading at the post-split price on that day.
John Mahfood CEO and Director of Jamaican Teas addressing the EGM.
In an update to shareholders at the meeting on recent developments within the Group and the outturn for the year to September, they were advised of the continued growth the Group experienced since listing in 2010 with equity moving from $392 million to $1.8 billion at the end of September, this year. Management advised that helped by good results for 2020, the Group moved from a billion-dollar entity to a $2 billion one measured by sales that closed the past fiscal year at $2.2 billion.
Management considers one of the highlights of the recently concluded quarter to be the strong 65 percent gain in export sales over the prior year as well as exports accounting for 65 percent of total manufacturing sales in the quarter. The level of exports meets one of the objectives set at the time the Company went public in 2010.
Early indications and feedback from our overseas customers point to a continuation of the positive trend in exports for the 2021 financial year, the meeting was told.
While exports were dominant, domestic sales did relatively well, with local manufacturing sales increasing 17 percent over 2019. Overall, sales climbed 44 percent to $407 million in the fourth quarter, shareholders were informed. The Real estate division contributed $240 million in sales and is set to contribute around $160 million in the December quarter.
The Group had a disappointing year in the investment division, as it incurred a loss with the fall in the value of local investments but saw some improvement in the second half of the fiscal year, with profit in both quarters. Management expressed the view that there should be an improvement in its fortunes in the new year.
Net profit attributable to Jamaican Teas for the quarter was $131 million, a decline of 27 percent from the $180 million profit in the corresponding quarter of the previous year. For the full year, net profit attributable to Jamaican Teas was $210 million, a decline of 47 percent from the $400 million generated in the previous year.
After the year-end, Jamaican Teas had increased sales of 47 percent in October 2020 over 2019, with export up a robust 85 percent and a much less robust 10 percent for domestic sales. Orders in hand for November suggest a continuation of the positive trend seen in October.
Jamaican Teas’ shareholder – Mr. Lanzel Bloomfield addressing the EGM
The Group will be booking more real estate sales in the December quarter. With the above developments, management expects a good first quarter for the financial year ending September 2021. The Group plans to commence a major expansion of the factory to meet the increasing demand for its manufacturing products.
Since the company advised the JSE on September 29 that the board would meet to set a date for the three-for-one stock split, the price rose by 56 percent to $6.70. The stock traded at $4.30 on the day of the announcement. The release was posted after trading closed. The next trading day, the price jumped to $4.83 with 161,040 shares trading. On the first day of October, the price moved to $5.02 with 1,099,894 shares trading. The stock traded at $5.50 on Monday last week. On Tuesday, it traded at $5.99 and moved $6.30 on Wednesday and $6.70 on Thursday and Friday.
Seprod’s sugar closure sweetens profit
Seprod’s costly journey into a new difficult area of sugar manufacturing resulted in billion-dollar losses for the group. That management chooses to take on the worse performing and most difficult sugar operation in Jamaica raises some fundamental questions about corporate decision making, but then sometimes experience teaches wisdom.
After shedding the above loss-making business, profit from continuing operations surged 351 percent to $1.3 billion for the September quarter, up from just $285 million in 2019, but the jump benefited from $780 million, generated from other operating income, with $762 million of it being gains realized on the sale of a property.
Without the additional boost from the property sale, profit from continuing operations would stand at $551 million for the quarter, an increase of 94 percent, and $1.8 billion for the nine months to September, an increase of 52 percent. Earnings per share came out at $1.75 for the quarter and $3.38 for the nine months to September but would stand at 75 cents for the quarter and $2.41 for the year to date when adjusted for the one-off gain.
Revenue saw a sharp increase of 23 percent for the quarter to $10.1 billion from $8.2 billion and more moderate growth of 16 percent for the nine months to September to $28.7 billion from $24.5 billion in 2019.
Direct Expenses grew 12 percent for the quarter from $5.3 billion in 2019 to just under $6 billion in 2019, and 15 percent for the year-to-date from $15.8 billion to $18.1 billion. Gross profit margin increased to 41 percent for the quarter from 35.2 in 2019 and 37 percent for the nine-month period from 36.4 percent. Gross profit (GOP) jumped 42 percent for the September quarter moving from $2.9 billion in 2019 to $4.1 billion in 2020. GOP increased 17 percent to $18 billion from $15.8 billion for the nine months to September in 2019.
The Manufacturing segment generated revenues from third parties of $7.26 billion, up from $6.7 billion in 2019 while, Distribution accounted for revenues of $21.4 billion in 2020 and $18 billion in 2019. Segment results for the Manufacturing amounted to $2.47 billion in 2020 from $2 billion in 2019, while Distribution contributed $1.36 billion from just $684 million in 2019.
Despite a 52 percent increase in administrative and other operating expenses from $2.1 billion to $3.3 billion, profit before finance and other costs grew by 159 percent for the period from $651 million to $1.7 billion.
Some of Seprod”s products.
Loss from discontinued sugar manufacturing operations contributed to a loss of $31 million for the September quarter and $47 million for nine months. Total comprehensive income stood at $1.3 billion for the quarter, up from a loss of $124 million, and $2.6 billion for the nine months to September, up from $470 million in 2019.
Gross cash flow from operating activities stood at $4 billion, and working capital pulled the amount down to $2 billion. Dividend payment of $367 million and acquisition of property net and loan receipts of $1 billion saw net funds for the period increasing $1.6 billion to end at $3 billion. At the end of September, shareholders’ equity stood at $16.5 billion, while $14 billion was due from borrowings. Current assets ended the period at $17 billion including, Inventories of $6 billion, receivables $7 billion and cash and bank balances of $3 billion, while Current Liabilities stood at $9.6 billion with current loan liability amounting to $3.6 billion.
The stock is currently trading at $60.75 on the Main Market of the Jamaica Stock Exchange. With the most profitable period being the December quarter, IC Insider.com is forecasting earnings of $4 per share for a PE of 15.2 based on 2020 earnings.
The group is involved in the Manufacturing and Distribution of various household goods for the local and overseas markets, including cereals, flour, milk, cooking oil, margarine, to name a few. the stock has moved up in price since the results, historically, it has delivered some of the best returns for investors in the local market over several years. It’s a good long term investment.
