Another Junior Market listing now looms on the horizon with Regency Petroleum Co. Limited based on Westmoreland offering up to 287,157,354 Ordinary Shares for sale at $1 each. The offer opens on Thursday, November 24 and should bring the total junior Market listings to 48 and the number of companies to 47.
Only 115,196,354 shares will be available for subscription by the public, with the rest of 171,961,000 shares reserved as follows – 55.5 million for Employees & Key Strategic Partners, 100 million for GK Investments to convert loan balance and 16.46 million for Associates Loan Conversion.
The company half year results to June show revenues of $332 million up from $248 million in 2021 with profit after tax of $51 million versus $35 million in 2021 and put the earnings per share for this year at 98 cents, with the PE at 10 times this year’s pretax earnings versus the Junior Market average of just over 12, but below the peak of recent new issues of 15 to 20. ICInsider.com expects the offer to close quickly after opening.
Revenues in 2021 amounted to $607 million compared with $194 million in 2020 and just $45 million in 2019, with a profit of $59 million in 2021 after taxation of $18 million up from $14 million with tax or $3 million in 2020.
The company’s operations span Jamaica as a petroleum marketing company licensed to distribute bulk petroleum products. The company was founded by Andrew Williams, Chief Executive Officer. Revenues are currently generated revenue from sales of LPG Cooking Gas, Automotive Petroleum and Transportation of gasoline.
Shareholders’ Equity amounts to $111 million at the end of June this year.
Regency IPO opens next week
Edufocal lists on Tuesday
Trading of shares in EduFocal that offered 129,689,219 ordinary shares to the public on March 3, will commence on Tuesday as the company shares will be listed on the Jamaica Stock Exchange Junior Market on that day and will bring the total listings on the market to 45.
The offer was oversubscribed, with Key Strategic Partners in this reserved pool will receive all their predetermined amount.
Applicants who applied for more than their predetermined amount will receive a pro-rata allocation of approximately 59.67 percent of the excess shares for which they applied, with any excess transferred to the General Public Pool.
All applicants from the General Public received 10,000 shares and approximately 16.57 percent of the excess shares.
Although the offer was handily oversubscribed, ICInsider.com gathers there were applications that came in after the close just after the issue opened and closed minutes after opening so there is added demand that should provide a bounce for the stock.
General public oversubscribed GWest 100%
GWest complex in Montego Bay,
The level of oversubscription by the general public is amazing for company that is its infancy and generating a loss in its current fiscal year, with limited data on which to judge future earnings. Details of the level of subscription for the IPO was released by the broker for the issue, JMMB Securities.
Applications totaling 1334, were received for shares valued at $599,310,000. All the shares that were reserved were fully taken up, while General Public for which 69.7 million shares at $2.50 each, were available to purchase, received the first 10,000 shares applied for and 45.941 percent of the balance.
Dr. Konrad Kirlew, chairman of GWest.
Elsewhere, IC Insider.com gathers that VM Investments received applications in the range of more than 3,000, but less than 5,000, with the basis of allocation to be considered by the board on Thursday.
Big Carib Cream’s profit hike
Caribbean Cream may not have officially landed the 60 cents per shares that IC Insider forecasted last year, following release of their 2015 full year results. That was due to two main factors, one is the writing down of assets amounting to $31.4 million and exceptional cost incurred, with waste water disposal which IC Insider estimates cost around $80 million during the year.
The 2016 profit of 40 cents per share is coming from just 15 cents per share for 2015 following the writing off of assets amounting to $31.4 million, the equivalent of 8 cents per share. The company that produces the Kremi brand of ice cream for the local market, delivered profit 0f $151 million for the year an increase from only $56.77 million for 2015 and from sales revenues that were up 12 percent to $1.13 billion compared to $1 billion in 2015. Importantly, final quarter revenues climbed 16.57 percent to $317 million, from $272 million, an acceleration from sales in the November quarter that grew 9 percent to $258 million.
The growth in revenues is “due to our ongoing aggressive sales, marketing and promotional efforts. We continue to expand our wholesale and retail segments” the company stated in a release accompanying the financials.
The improved results flowed from what IC Insider stated towards the commencement of 2015, “going forward the benefits of installation of the blast freezer will be reflected for the full year, while it only partially impacted the last quarter of the just concluded 2015 fiscal year. They increased prices around 15 percent ahead of the Christmas period and may have seen some cut back in volume in the quarter as a result. They should be able to recover volumes going forward and even expand on it as the shock effect of the price increase wears off and more retail outlets are added.”
“Importantly, electricity cost will fall from two standpoints one is the lower electricity cost around 20 percent from the peak last year (2015 fiscal) and lower cost due to the faster freezing of ice cream thus using less energy. The cost of milk powder is down quite sharply as well. Going forward, the margin should improve even more with the blast freezer installed in November, which management says will reduce utility cost and create capacity for greater production to enhance sales volume.”
Based on the recently released 2016 results, the company benefited from the above developments.
For the 2016 fiscal year, gross profit jumped by 62 percent over the 2015 full year’s performance and 72 percent for the fourth quarter. For the 2016 fiscal year, gross profit margin climbed to 40 percent in the last quarter, from 27 percent in the 2015 period, for the full year, the margin jumped to 39.67 percent compared to 27.2 percent for the 2015 period.
Administrative cost excluding the onetime asset write off, rose 29 percent to $210 million for the full year and by 78.7 percent to $58.2 million for the quarter. The last quarter reflects moderate increase in marketing cost from $6.4 million in 2015 to $7.6 million and $42.75 million for the full year versus $38 million in 2015. Finance cost in the quarter declined from $10.6 million in the prior year, to $4 million and to $17.76 million from $27 million in the prior year.
Borrowings declined from $155 million to $125 million and will result in reduced interest cost in the year ahead.
Kremi generated gross cash flows of $230 million for the year compared to $97 million and ended with cash funds of $153 million up from just $2 million in 2015. Equity capital at year-end amounted to $437 million.
Cash flows for 2017 fiscal year should be in the order of $436 million if the projected earnings of $1 per share are met. These numbers suggest that the payments of a dividend cannot be far off. The environment is looking positive for increased sales with the planned tax break for a large number of workers that will increase spending and expected pickup in economic growth.
The stock last traded on the junior market of the Jamaica Stock Exchange at $4.02 for a PE of 8.4 based ongoing profit for the fiscal year to February, or 4 times 2017 estimated earnings and compares with 12 times 2015 earnings for the junior market and 9.5 times estimated 2016 earnings for the top half of the market.
Tissue paper to push AMG sales
Sales at AMG Packaging fell in the November quarter but profit jumped sharply as raw material input cost declined, pushing gross profit from $34.3 million in 2014 to $51.5 million while net profit rose to $28.8 million for the quarter, up a strong 87 percent over the $15.5 million 2014.
Sales fell slightly from $151.5 million to $149.3 million but with the new paper tissue plant likely to be fully on stream in March, sales could start to rise quickly again.
Administrative and other costs were held in check very well, with some falling below the amounts incurred in 2014 while the company incurred $5.9 million in cost relating to the new paper tissue plant operation.
The company indicates that change in product mix helped in the reduction of sales and seems to have pushed up profit margins. “Changes in product mix played a major role in reducing volumes. During the year, we were able to negotiate discounted prices for cash payments of raw materials” Managing director Michael Chin informed IC Insider. Going forward “we are still targeting the import market, as well as increasing our clients’ product base” Chin further stated.
The new paper tissue operation seems poised to deliver further growth with indication that profit margins could be as much as 100 percent. Information obtained by IC Insider suggests that at this early stage, the toilet tissue is well received by the market, with the prices being very competitive. The company management stated that the output will be sold through by third party distributor.
Earnings per share ended at 28 cents u from 15 cents in 2014. IC Insider expects earnings for the full year to be around $2 per share with profit coming from the new operations. The performance of profit for the quarter and expected new business encouraged investor to push the stock price to a high of $21.50 with a nearly a 200 percent gain for the year.
The company closed the quarter with cash flows from operating activities amounted to $32 million for the year versus $19 million in 2014 and ended with cash funds of $87 million, up from $33 million in 2014. The company has equity of $406 million and borrowings of $146 million.
