Mayberry Jamaica Equities sold off their remaining shares in Lumber Depot to the Paul Scott controlled Musson Investments, our sources indicate, helping to swell trading in the stock to 141.23 million units, accounting for 98.2 percent of total market volume on Friday.
The trade pushed the volume of stocks traded by 4,622 percent and the value 1,842 percent higher than on Thursday on the Jamaica Stock Exchange Junior Market.
Market activity led to 34 securities trading compared to 36 on Thursday and ended with 15 rising, 10 declining and nine, closing unchanged. The Junior Market Index shed 9.66 points to settle at 3,337.47.
The PE Ratio, a measure used to compute appropriate stock values, averages 14.3. The PE ratio of stocks in the chart below is based on earnings forecasted by ICInsider.com for companies whose financial year ends up to August 2022.
A total of 143,917,891 shares changed hands for $397,658,745 compared to 3,047,909 units at $20,478,634 on Thursday. Lumber Depot led trading, followed by AMG Packaging contributing 0.6 percent with 810,660 units and Blue Power exchanged 499,518 units for a 0.3 percent market share.
Trading averaged 4,232,879 shares at $11,695,845 in contrast to 84,664 shares at $568,851 on Thursday and month to date, averaging 1,386,894 units at $3,972,320, compared to 79,279 units at $423,673 previously. November closed with an average of 160,358 units at $581,730.
Investor’s Choice bid-offer indicator shows four stocks ended with bids higher than their last selling prices and one with a lower offer.
At the close, AMG Packaging lost 21 cents after ending at $1.90, trading 810,660 shares, Blue Power popped 43 cents in closing at $3.63 after exchanging 499,518 stock units, Cargo Handlers fell 89 cents to $7.01 in trading 300 units. Caribbean Assurance Brokers spiked 58 cents to a 52 weeks’ high of $2.98 after transferring 70,936 stocks, Express Catering lost 19 cents to close at $5.70 in an exchange of 1,000 units, General Accident shed 47 cents to end at $6 with 11,579 stocks clearing the market. GWest Corporation rallied 8 cents to $1 in trading 202 stock units, Honey Bun shed 32 cents to $9.65 with an exchange of 200,468 shares, Iron Rock Insurance climbed 47 cents to $3.58 in switching ownership of 445 units. Jetcon Corporation lost 8 cents in ending at $1 with the swapping of 1,200 stocks, Knutsford Express rose 30 cents to finish at $8 with 112 stock units changing hands, Lasco Distributors lost 5 cents in closing at $3.05 with the transfer of 60,265 shares. Limners and Bards popped 10 cents to $3.55 in exchanging 15,000 stocks, Lumber Depot shed 15 cents to close at $2.75 with 141,232,699 shares clearing the market, Medical Disposables jumped 68 cents to $6.30 in trading 8,678 stock units and tTech gained 40 cents to end at $4.50 with 11,077 shares changing hands.
Prices of securities trading are those for the last transaction of each stock unless otherwise stated.
This stock is a must for Xmas buy list
Profit after taxation surged 455 percent to $21.5 million for the second quarter to September from a loss of $6 million in 2020 at Medical Disposables. For the year to date, profit after tax spiked 458 percent to $47 million, up from a loss of $13 million in 2020.
Income from sales jumped 49 percent to $936 million for the September quarter, up from $630 million in 2020 and climbed 42 percent for the six months ended September 2021 to $1.62 billion, from $1.14 billion in the prior year.
The increase in sales in the second quarter “is due to increased business activity as well as the consolidation of the operations of the new subsidiary Cornwall Enterprises Limited. There has been a significant improvement in the movement of pharmaceutical and medical disposable items, especially with fewer lock-down periods when compared to last year,” Kurt Boothe, Chief Executive Officer, reported to shareholders in the report accompanying the financials.
Gross profit after selling and distribution expenses jumped 74 percent in the quarter to $184 million, up from $106 million in 2020 and climbed 85 percent for the half year to $303 million from $164 million in the prior year. The period’s gross profit percentage rose to 25 percent compared to 23 percent in 2020 for the six months and from 24 percent in 2020 to 25 percent for the September quarter.
Finance and other income added $8 million to profit in the September 2021 quarter versus $1.5 million in 2020 and for the half year $10 million versus $3 million in 2020.
Selling and promotional expenses increased 26 percent from $46 million in the 2020 second quarter to $59 million and rose 14 percent from $103 million in 2020 to $117 million for the six month period.
Administrative expenses jumped 80 percent from $63 million in the 2020 second quarter to $112 million and surged 55 percent from $113 million in 2020 to $175 million for the six months. Depreciation charge moved 90 percent from $7 million for the September 2020 quarter to $13 million in 2021 and rose 45 percent for the half year from $14 million to $20 million.
Finance cost fell 26 percent from $38 million to $28 million in the quarter and dipped 9 percent to $45 million $50 million for the half year. Foreign exchange losses amount to $1.75 million in the latest quarter from $4 million in 2020 and $5.4 million for the year to date versus a slight loss of $76,823 in 2020.
Gross cash flow generated $75 million for the six months, but growth in working capital drove it down to a negative $119 million versus negative $190 million in 2020. The cash flow deficit was financed by net loan inflows of $225 million. The company paid a dividend of $18.4 million during the half year. At the end of the quarter, Current assets ended with $1.79 billion, including cash of $95 million, inventories of $944 million and receivables of $745 million. Current Liabilities amounts to $1.24 billion and includes Payables of $741 million and short term loans of $486 million. Net current assets ended the period $549 million. Shareholders’ equity stands at $1.05 million, with long term borrowings at just $284 million.
Earnings per share came out at 8 cents for the quarter and 18 cents for the half year. ICInsider.com forecasts earnings of 70 cents per share for the current year and $1.50 per share for 2023. The stock traded at $5.62 on the Jamaica Stock Exchange Junior Market on Wednesday with a PE ratio of 8 times, current earnings well below the average of 14.5 currently for the Junior Market. The stock gets the coveted ICInsider.com BUY RATED seal.
Abolish the useless circuit breaker rule
Trading was halted in five Junior Market stocks this morning as a result of the stock exchange circuit breaker although, all are halted at prices they frequently traded at in recent weeks.
Caribbean Assurance Brokers was frozen at $2.95, the stock traded at that price on Monday, Consolidated Bakeries was frozen at $1.53, iCreate is frozen as the price dropped to 75 cents, Jetcon Corporation freeze took place at $1.08 and KLE Group at $2.30 from $3.10 on Monday but it traded as low as $2 on the 25th of the month. None of the stocks traded outside the recent range, so what is the Stock Exchange preventing these stocks and many others from trading freely as there is no information that is not already known to the market.
Leaders are supposed to lead as such when things they control is no longer meaningful, they should adjust them, the leaders at the helm of the Jamaica Stock Exchange don’t seem to get it.
Stock exchanges are markets that allow companies to raise capital and owners of shares to give a reasonable view that if they want to sell their stock there is an organised market to do so. Today’s modern stock markets are listed companies and the frequency of trading allows them to make money.
Some years ago, in response to the global market sharp decline, several stock exchanges put in place a circuit breaker rule that resulted in a halt to trading if a stock or the market moved too fast in a session. The JSE put one in place and modified it a few years ago. The rule has not done anything to protect investors since its introduction. In fact, it made investors worse off as they are prevented for traded stocks during the hour of halting of trading that takes place.
Two changes to ICTOP10 listings
The two major Jamaica Stock Exchange markets meandered all week, closing the past week with the Junior Market rising moderately and the Main Market recovering 5,228 points of the more than 12,000 lost on the last two trading days in the previous week as prices of Caribbean Cement, NCB Financial and Scotia Group rose.
Against the above backdrop, there were few changes to the ICTOP10 stocks at the week’s close. Scotia Group jumped 9 percent to end at $37.97 for the week and gave way to Carreras to return to the Main Market TOP10 after a long absence, with the price at $8.10 and projected earnings at 80 cents. The Junior Market lost Medical Disposables with the price closing at $6.72, up 29 percent for the week, allowing General Accident came in to replace it with the price at $6.60 and just edging out Fontana, with both having similar potential gains of 97 percent.
Big TOP10 movers for the week are AMG Packaging lost 6 percent in closing at $2.25 from $2.40 last week, Caribbean Cream fell 4 percent to $5.60, Elite Diagnostic dropped 8 percent to $3.20, Caribbean Assurance Brokers rose 6 percent to $2.47 and Dolphin Cove rose 3 percent to land at $12.90 after it a 52 weeks’ high of $14 on Thursday, new coronavirus making the news seemed to have induced selling on Friday. In the Main Market, Caribbean Producers jumped 15 percent to close at $10, up from $8.61 and Radio Jamaica gained 8 percent to $3.30.
The top three Main Market stocks are Guardian Holdings, Caribbean Producers and JMMB Group, projected to gain between 214 to 254 percent expected versus last weeks’ 212 to 283 percent.
The top three stocks in the Junior Market are AMG Packaging, followed by Caribbean Assurance Brokers and Access Financial Services. All three can gain between 150 and 211 percent, down from 154 percent and 207 percent previously.
There are many undervalued stocks in the market, with the average gains projected for the TOP 10 Junior Market stocks moved from 145 percent last week to 142percent and Main Market stocks moved from 163 percent to this week’s 159 percent.
The Junior Market closed the week with an average PE 14.5 based on ICInsider.com’s 2021-22 earnings and is currently well below the target of 20 and the March 2020 historical average of 17, based on 2020 earnings. The TOP 10 stocks trade at a PE of a mere 8.4, with a 42 percent discount to that market’s average PE.
The Junior Market can gain 38 percent to March next year, based on an average PE of 20 and 17 percent based on an average PE of 17. Ten stocks representing 25 percent of all Junior Market stocks with positive earnings are trading at or above this level, down from seven last week, indicating that many others will rise towards the 17 mark in the weeks ahead.
The average PE for the JSE Main Market is 16.1, which is 18 percent less than the PE of 19 at the end of March and 24 percent below the target of 20 to March 2022. The Main Market TOP 10 average PE is 8, representing a 50 percent discount to the market and well below the potential of 20. A total of 14 stocks or 30 percent of the market trade at or above a PE of 19, with most over 20, for an average PE of 25.5, suggesting that the accepted multiple could be around 25 times the current year’s earnings.
ICTOP10 focuses on likely yearly winners; accordingly, the list may or may not include the best companies in the market. ICInsider.com ranks stocks based on projected earnings to highlight winners from the rest, allowing investors to focus on potential winning stocks and helping to remove emotional attachments to stocks that often result in costly mistakes.
IC TOP10 stocks are likely to deliver the best returns up to March 2022 and ranked in order of potential gains, based on the possible increase for each company, considering the earnings and PE ratios for the current fiscal year. Expected values will change as stock prices fluctuate and result in weekly movements in and out of the lists. Revisions to earnings per share are ongoing, based on receipt of new information.
Persons who compiled this report may have an interest in securities commented on in this report.