QWI Investments‘ net asset value (NAV) per share surpassed the $1 mark again in hitting $1.01 per share at the close of the markets on Thursday. The NAV is up 26 percent from the lows reached in March.
The share price tumbled over the past month with the fall in the overall market, in sympathy with the fall in the net asset value per share to a low of 80 cents on March 20 but recovered some lost ground to close on April 3, at 93 cents per share. The stock traded on the Jamaica Stock Exchange as low as 63 cents on March 10 with that price proving to be a bottom so far. The price moved upwards to close on Thursday at 83 cents for a rise of almost 32 percent since the low in March.
The Company’s investment portfolio is invested in stocks that are listed on the Jamaica Stock Exchange, USA stock exchanges, with a few stocks that are listed on the Trinidad and Tobago Stock Exchange.
The local stock market has seen a V-shaped recovery over the past three weeks, and if this continues into the fourth week, it could result in more gains in the NAV for the Company. The stock is listed on the Main Market of the Jamaica Stock Exchange.
QWI recovers 26% of lost value
Berger Paints set to surprise
Berger Paints is one of IC Insider.com’s top stocks for 2020. It is may not the most popular company listed on the Jamaica Stock Exchange, but it seems set to surprise many investors with its performance in 2020. 
It gained much attention with strong growth in profits in the financial year to March 2017, ahead of a switch in majority ownership in August 2017 to the Trinidad based ANSA McAL Group resulting in significant changes in directorship and management. In 2019, the company changed the General manager after a relatively short stint at the helm, a move that could augur well for the company going forward.
In 2019, raw materials accounted for 50 percent of the input into paint production. Most of the raw material used in paint production is petroleum-based, resulting in paint companies benefit when the petrochemical industry goes into a downswing and conversely, a hike in the price of petroleum products raises input costs. Titanium dioxide and crude derivatives form about 50 percent of the raw material cost of paints. In 2019 the average price of crude oil on the world market US$57 for WTI, for 2020 so far, it is at US$43 per barrel, with the current price around US$22 per barrel. If the current trend holds, it will result in lower input costs for Berger for 2020. Management in reporting to shareholders for the year to December stated, “year to date to February 2020, performance indicators are ahead of 2019 with signs of a positive trajectory”.
Between 2012 and 2017, profits increased at an outstanding rate, however, in 2018, the profit was relatively flat and declined in 2019. The company reported lower sales and sharply reduced profit for 2019. The company recorded a two percent reduction in revenues to $1.12 billion for the six months to June and a 6 percent reduction to $1.6 billion for the nine months to September 2019, versus $1.7 billion for the corresponding period in 2018. It ended the year down 7 percent at $2.5 billion. Adverse weather conditions experienced in the third and fourth quarters, negatively impacted revenues, the company told shareholders in a statement accompanying the third and fourth quarter reports. Also affecting sales was the extensive road works that disrupted their customers’ businesses.
Berger Paints is one of IC Insider’s TOP 10 stocks.
“The company implemented a new an Enterprise Resource Planning Software (ERP) system which provides a fully integrated manufacturing and financial platform and is providing the required details and analytics for the business, the management stated.” The company also introduced a new automotive line of paints to deepen BPJL’s reach into the automotive market.
IC Insider.com projects earnings per share amounting to $2 for the current year and it now trades at an attractive P/E of just over six times projected earnings.
Buy Caribbean Producers now for 2021
There are few opportunities in the stock market to generate significant gains than from a beaten-down stock that has strong credentials, dominating the sector it focuses on and has been growing. This is the case with the Montego Bay-based, Caribbean Producers that has seen good times and bad times in the recent past but was enjoying a strong rebound in the first two quarters of the 2020 fiscal year.
Caribbean Producers back in TOP 10
The company’s primary market is the tourist industry. With a virtual closure of the industry currently, sales have come under severe pressure and that will hit the bottom-line severely, even if for a few months. Until the adverse reaction of the market to the Coronavirus outbreak, technical indicators showed that the stock was consolidating with the possibility of a break out from the $5 level with six months results coming far better than the disappointed 2018 half-year results. All that has changed for now as the stock nosedived to $2 as heavy selling pressured the stock.
Expectations are that the company’s third and fourth-quarter results will show the negative impact of the closure of hotels on sales and profit. Investors should bear in mind that the fiscal year starting July may not be affected or not as severely as the second half of the current fiscal year. Importantly, revenues rose 11 percent in September and in the December quarters to US$32.4 from US$29.4 million. IC Insider.com forecast is for a small profit in the March quarter to add to the profit of US$89,000 reported for the 2019 half-year. The stock price collapsed from $5 it was trading at in February to a low of $2 recently. This fall is worse than when they lost US$1.2 million in the year to June 2019 when it still traded above $4. Admittedly, the company has US$39 million of borrowed funds that exposes it to a high degree of risk if the disruption in the business is prolonged. While interest-bearing debt climbed during the year, shareholders’ equity stood at US$22.5 million.
CPJ‘s profit declined 162 percent for the year ended June 2019 to a loss of US$1.17 million compared to a profit of US$1.88 million for the year ending June 2018, with operating revenue for the year amounting to US$94.6 million from US$93.3 million in 2018. The loss resulted from a decline in profit margin in the year and US$679,713 write-off of the cost of developing the inventory IT management system.
For six months to December 2019, gross profit rose faster that growth in revenues at 19 percent to US$8.5 from $7.1 million. Selling and administrative expenses slipped from US$5.8 million in 2018 to US$5.4 million to US$20 million. Finance costs increased in the year to US$791,818 from US$411,143 in 2018 and depreciation jumped from US$609,271 to US$1.4 million.
There are risks in investing in the stock current, but the low price makes it a compelling buy for a big pay off in 2021. IC Insider.com rates the stock a buy based on full or nearly full recovery, for the 2021 fiscal year.
Trans Jamaica dominates US trading
Trans Jamaica Highway commenced trading in the US dollar market having been listed at the start of trading and dominated market activity 86 percent of the day’s volume.
At the close of trading, the US dollar market ended with 2,713,918 units for $94,890 with the market declining 15.09 points to close at 184.86. First Rock Capital lost 0.6 of a cent to close at 8.4 US cents, with an exchange of 8,880 units, JMMB Group 6% preference share lost 1 cent to close at US$1, with 479 stock units changing hands, Margaritaville traded 100 shares at 24 US cents. Proven Investments shed 1.5 cents in swapping 332,924 units and closed at 23.5 US cents, Sterling Investments lost half of a cent in trading 32,300 stock units and closed at 2 US cents. Sygnus Credit Investments traded 6,264 units 12 US cents and Trans Jamaican Highway shed .001 of a cent in transferring 2,332,971 shares to end the day at 0.9 of a US cent.
Prices of securities trading are those for the day’s last transaction unless otherwise stated.
TransJamaican IPO pulled in $25.5B
Ministry of Finance, Dr. Nigel Clarke in his budget presentation in the Jamaica Parliament stated that the TransJamaican Highway IPO pulled in $25.5 billion from 36,428 applicants.
National Road Operating and Constructing Company (NROCC) that owned all the 12.5 billion ordinary shares that are issued, 8 billion ordinary shares at $1.41 each and they upsize the offer by an additional 2 billion shares.initial
the issue attracted more applications than the 31,000 brought in by Wigton Windfarm. The shares went to the market at a PE ratio of 24 times earnings and will hit the market at a time when the market values have declined sharply since the debut of the IPO in February.
Worse day for Jamaican Stocks
The Jamaica Stock Exchange suffered it worse day with a fall of 24,224.80 points off the Composite index on Thursday, beating the 14,424.69 points fall on Tuesday when the market closed at 511,165.47.
Main Market stock suffering significant declines include NCB Financial $1.55, Caribbean Cement $2, PanJam Investments $2.01, Scotia Group $2, Sygnus Credit $3.30 and Wisynco off $2.45.
The Junior Market that has been under pressure some months and fell 99.62 points on Wednesday dropped another 102.35 points on Thursday, to close at 2,656.41. Junior Market stocks that suffered the greatest losses that to Thursday’s sharp fall include Access Financial down $2.11, Blue Power off 56 cents, Cargo Handlers with a loss of 96 cents Express Catering falling 46 cents, General Accident down 80 cents, Knutsford Express off by 65 cents and Stationery and Office Supplies down 75 cents.
Jamaican stocks set for 2020 growth
The Jamaica Stock Exchange saw divergent movement in the three markets it operates, in 2019. While the major focus was on the Main Market performance with 34 percent gain, the US dollar market actually outdid it with gains of 40 percent but the Junior Market was nowhere to be found.
Almost clear skies for the Jamaica Stock Exchange
The Junior Market had its worse performance in three years, with an increase of just 3.4 percent. Last year was the fifth year of annual gains for the Jamaica Stock Exchange. In the past, the five-year mark meant that the market had peaked and was due for a major correction. Technical and fundamental indicators are not pointing in this direction currently.
Technically, the Main Market has 900,000 plus points on its radar, 60 percent away for the All Jamaica Composite index from the start of the year. The market is being steered by an upward sloping support line. There is no indication of any major resistance until it passes the 900,000 points mark.
The PE for the Main Market based on 2020 earnings is down to 16 times, 25 percent below the 2019 PE at the end of 2019 of 20. NCB Financial performance is going be crucial to the performance of the market index as it controls so much of the market capitalization. In the end, the index is just a barometer of the movement in the value of all the companies listed and investors would be well advised to focus on the quality of stocks that will provide good returns. IC Insider.com forecast shows 13 to 15 companies that could double in price during the next 15 months in the Main Market starting in January.
The Junior Market is poised to move much higher on improved profits for 2019 and 2020, even as some 2019 results were disappointing and did not stimulate investors to acquire these stocks in increasing volumes with many of them still undervalued relative to values in the Main market. 
Improvement in profitability will convince investors that there are excellent values in this segment of the market.
There are 28 Junior Market stocks with the potential to deliver gains between 100 to 600 percent in 2020 and up to March 2021. The major reason for the large group is the lack of performance in the market in 2019. Investors placed a major focus on the Main Market, driving the PE ration to 21 compared to 14 for the Junior Market. At the end of 2018, both markets were trading around 17 times 2018 earnings. This divergence, suggests that there are good opportunities to profit from in 2020, as investors move to take advantage of undervalued stocks when
The forecast assumes that economic growth will continue during the year around the 2 percent level and that interest rates will remain close to current levels with Treasury bills rates staying under 2 percent. A major factor, that is important in viewing the market is the number of companies that are enjoying strong growth in sales as well as those that are expanding or likely to do so. Such developments bode well for major gains in profit going forward.
Investors should not ignore companies that performed poorly in 2019 but could enjoy a strong turnaround in 2020. 
The Investors’ Choice 80:20 rule based on 40 years of data, shows more stocks rising form the bottom 10 worse performers in a year and surge into the TOP 10 the following year, while an average of 80 percent of those in the TOP 10 fail to repeat in the following year and since 2016 the average is just one.
With the likelihood of twenty IPOs planned for 2020, investors can look for a series of disruptions in the upward trajectory of the market. For the past two years, there were signs that on each occasion of popular initial public offers, prices of existing stocks came under pressure. The most recent were the three issues for 2020 to date. This phenomenon is most pronounced in the Junior Market that is far less liquid than the Main Market. The pullback of prices caused by the sell-off to fund IPOs also provides opportunities for investors who may want to pick up existing listed stocks at bargain prices.
4 for 1 stock split for Pulse Investment?
Investors in Pulse Investment can look forward to a stock split that is likely to see each existing stock split into four units when it becomes effective.
The directors have not yet met to determine the exact amount of the split or the total number of shares that likely to be offered for sale later, but at Tuesday’s annual general meeting, the Chairman gave shareholders some sense as to what the outturn could be.
At the general meeting, shareholders approved a resolution “That the company be authorized to issue any or all of new shares pursuant to a Rights Issue or Stock Split or both, as the Directors may determine.” The company is not only planning to split the stock but is likely to come to the market for fresh capital to assist with its venture into residential development and investments into other companies. The meeting was told of the progress being made in the hospitality sector with occupancy said to range from 30 percent up to 100 percent at various times of the year. Rental of commercial space had very high occupancy rates. The modeling segment continues to add new talent with good demand coming from overseas for some of the models.
Kingsley Cooper Chairman of Pulse Investments.
The Chairman explained to shareholders that the sum of $377 million shown in the financial statement as income represents amounts covering production expenses relating to TV shows and advertising entitlement sold or used by the company. For the 2019 fiscal year, Pulse reported profit of $688 million up from $315 million in 2018. For the six months to December 2019, the company reported profit of $230 million for the quarter versus $102 million and $473 million for the six months compared with $229 million in 2018. Operating revenues were $163 million for the December quarter and $312 million for the half-year. Fair value gains on investment property contributing $145 million to profit in the second quarter and $291 million for the half-year. Earnings per share ended at 14 cents for the quarter and 29 cents for the six months. Pulse is trading at $11.30 on Wednesday morning on the Jamaica Stock Exchange.
Wigton erroneous EPS
Last year, IC Insider.com forecasted earnings for Wigton Windfarms at six cents per share after the posted excellent first-quarter numbers that initially suggested a significant surge in profits for the year. The latest report from the Company indicates that earnings will fall well short of this forecast.
Wigton posted a loss in the December 2019 quarter.
IC Insider.com stated that the Company’s earnings are seasonal and investors should be informed of it, in compliance, with general accounting policy, relating to interim results. The forecasted earning was criticized by some when we reported on the first-quarter results in 2019 and stated that earnings were seasonal and as such the quarterly revenues would be less for the rest of the year and by extension profits.
The latest report to December has made it clear that there is significant seasonality in revenues and earnings. Information on the seasonality of revenues is not in the current interim report. In addition, although notes accompanying the financial report states that it is prepared in accordance with International accounting standards relating to interim financial statements, it does not, in totality. Apart from the lack of reporting on the seasonality of operations, the earnings per share computations are wrong.
The company wrongly reports the earning per share in 2018 at $27,096 for the quarter and $56,701 for the nine months. That is incorrect. The company, in anticipation of the public sale of the existing shares, adopted a resolution on April 3, 2019, to sub-divide the Company’s 10,000 ordinary shares into 11 billion ordinary shares.
The effect of the increased share capital is that all previous periods’ earnings per share must use the increase shares. Accordingly, the comparison for the 0.2 cents loss in the December 2019 quarter is 0.25 cents and for the nine months to 2018, the earnings per share work out 5.15 cents. Year to date profit of $526 million works out at 4.78 cents and not 6 cents per share, this is a significant overstatement.
Wigton generated revenues of $363 million in the December quarter, compared with $465 million in 2018. For the nine months, revenues declined from $1.95 billion to $1.82 billion. Gross revenues fell from $279 million in the quarter to December 2018, to $159 million in 2019. In the 2019 nine months period, gross profit slipped to $1.24 billion from $1.4 billion. Other income fell from $290 million to $115 million for the quarter and the nine months, to $234 million from $465 million. While general expenses were steady at $85 million, in the latest quarter and slightly up to $266 million, year to date, finance cost rose to $210 million from $128 million in the quarter. It declined from $881 million to $512 million. The December 2019 quarter, recorded a loss of $16 million, compared to $271 million in the 2018 December quarter and $526 million in 2019, year to date versus $567 million.
IC insider.com full year’s original forecast called for earnings per share of 6 cents, but the latest numbers suggest that it is unlikely to exceed 5 cents. The stock price pulled back from $1 per share in Novembers and 97 cents towards the end of January to 80 cents at the close of trading on the Main Market of the Jamaica Stock Exchange on Tuesday for a PE ratio of 16.
Sweet River delisted from Junior Market
Sweet River Abattoir and Supplies became the first Junior Market company to have its shares delisted from the Junior Market of the Jamaica Stock Exchange.
The delisting is effective on Monday, February 10, 2020. According to the Jamaica Stock Exchange, “the delisting is in accordance with Junior Market Rule 505 (14) (a) (i) and the Company’s failure to remedy Board Level and financial requirements breaches.
Sweet River was listed in2014 and the shares were undersubscribed, leaving the company short of critical working capital to function properly, as it embarked on building out a new abattoir. The targeted in the IPO was to raise $180 million from the sale of 46.6 million shares to the public, but subscribers only applied for approximately 30.6 million shares amounting to $118 million. Recently, the company’s land and buildings were auctioned off and acquired by the purchaser for far less than the more than $300 million they are recorded on the books.
Sweat River ran up losses of $124 million up to June 2019, according to the last interim report the company released to the JSE and had a net worth of just $19 million.