Investors shun Junior stocks for the oldsters

Black Panther mash up Palace bottom-line with a huge increase in profit that pushed to stock to no 1 for 2018 in the main market.

Investors shunned Junior Market stocks in 2018 for the older more established Main market stocks. At least that is what the data from the exchange is showing.
According to the Jamaica Stock Exchange report of trading to the end of July, volume and value on the main market is up while that on the junior market is well down on 2017 figures, even as the gains in the overall market shows juniors up 14 percent for the year to the end of July and 9 percent for the main market.
Junior Market volume is down year to July by a stunning 69 percent to 571 million units while the value fell 64 percent to $2.69 billion, less than half of the $6.6 billion traded for all of 2017. In contrast main market stocks traded 1.57 billion units, up 28.5 percent over 2017, for a total value of $32 billion, a strong 79.4 percent increase over 2017 and just shy of the $35.7 million traded for all of 2017.
The big winners for the year to July are, Palace with an increase of 154 percent, that was helped by the huge success of the Black Panther film that ran for several months, Pulse Investments up 67 percent, Kingston Wharves 60 percent, Jamaica Broilers 45 percent and Salada Foods 41 percent, as investors responded to improved profit. In the Junior Market, C2W Music and Derrimon Trading beat all others by huge margins, rising 233 percent after it announced a 10 to 1 stock split and 197 percent respectively. Express Catering climbed 86 percent, Stationery and Office Supplies up 65 percent and CAC 2000 up 51 percent.
The big losers in the main market are, Ciboney, having sold off the property it owned and paid out most of the proceeds as a dividend is down 68 percent, 138 Student Living fell 35 percent, Kingston Properties 31 percent, Wisynco Group 24 percent, Portland JSX 20 percent and in the Junior Market, GWEST Corporation down 36 percent, AMG Packaging 33 percent, tTech 23 percent, Knutsford Express 23 percent and Eppley 17 percent.

Profit jumps 77% at Lasco Manufacturing

Profit jumped a strong 77 percent at Lasco Manufacturing, in the June quarter to, $238 million from $134 million in 2017, from sales revenue that rose just 14.8 percent to $1.73 billion, up from $1.5 billion in 2017.
The results follow the 2018 fiscal year, when profit fell from $707 million to $560 million, after rising 73 percent in the December quarter, to $195 million from $113 million in 2016. For the nine months to December, profit fell 24 percent to $533 million from $700 million in 2016.
Profit margin climbed to 35 percent from 31.7 percent in the 2017, as input cost climbed much slower than revenues, with an increase of 9 percent, to $1.1 billion. The effect, operating profit rose an impressive 27 percent to $607 million, from $478 million.
Depreciation cost rose 5 percent to $55 million but administrative, marketing and sales expenses declined by 1 percent to $252 million from $256 million. Finance cost rose to $31 million from $30 million in 2017.
“The positive out turn reflects growth in volumes, improved operational efficiencies and streamlining and cost control”, Managing Director, James Rawle, stated in his report accompanying the quarterly.
Gross cash flow brought in $293 million but growth in receivables, inventories, addition to fixed assets offset by loan inflows and increased payables resulted in a decline in cash of $110 million, leaving cash on hand and bank at $261 million.
At the end of June,shareholders’ equity stands at $5.16 billion with borrowings at just $1.6 billion. Net current assets ended the period $1.7 billion well over payables of $937 million. The company has so far incurred $731 million on work in progress that includes 65,000 feet warehouse expansion, scheduled for completion in September. According to managing director, James Rawle, “the facility will help to simplify logistics and result in important cost savings.”
Earnings per share came out at 6 cents for the quarter and is projected to end the fiscal year ending to March 30 cents. The stock traded at $4 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 12 times 2019 earnings and is in line with the market average.
The company will pay a dividend of 3.8 cents per share on August 31, resulting a total payment of $155 million.

AJI crosses 345,000 mark

The main market of the Jamaica Stock exchange jumped to a new record high in early morning trading on Thursday with All Jamaican Composite Index crossing the 345,000 points mark for the first time.
Having traded at a number of record intraday highs on Friday and closing at a new end of day record, with more than 3,000 points rally, the All Jamaican Composite Index advanced by 1,257.21 points to a record high of 345,208.15 and the JSE Index gained 1,145.46 points to close at 314,523.59, a new record high as well. The Junior Market was down by 7.16 points to 3,094.98.
On Friday, the All Jamaican Composite Index jumped 3,071.05 points to close at a record of 343,950.94 and the JSE Index climbed 2,798.07 points to close at 313,378.13.

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Mayberry Jamaican Equities traded for the first time after a successful IPO at $9.82 and NCB Financial traded at $102, for a gain of $1.48 to help to main market to new record high in early trading on Tuesday.
The Mayberry Jamaican Equities trade was for 1,000 units and resulted in a gain of $2.26 or 29.89 percent gain on the IPO price of $7.56. NCB traded just 35,991 shares.
With just 45 minutes of trading elapsing, the All Jamaican Composite Index advanced by 1,476.90 points to a record high of 342,356.79 and the JSE Index gained 1,345.62 points to close at 311,925.68. The Junior market was down by 17.75 points to 3,088.81.

JSE trades at record high

The Jamaica Stock Exchange main market, trades at a new intraday high in the morning session on Monday and could be heading for another record close, if prices hold up substantially at the the end of trading.
Just before Mid-day the All Jamaican Composite Index climbed 1,552.05 points to 341,987.04 and the ;JSE Index rose 1,414.10 points to 311,588.81. the new record follows the record reached on last Friday. When the All Jamaican Composite Index climbed a strong 2,697.06 points to 341,378.20 and the JSE Index surged 2,457.33 points to 311,034.08 as NCB Financial jumped over $3 and ended the day at $100.01 following release of the group’s nine months results.
Currently, the Junior Market trades down, 15.08 points to 3,078.02.

NCB jumps out Indies in IC TOP 10

The main market of Jamaica Stock Market ended at a record close on Friday with NCB Financial jumping $3.01 to $100.01 as Jamaica’s largest financial group dropped out of the IC Insider.com’ Top 10 main market stock list.
NCB price jumped on Friday, as investors responded positively to the group’s June results and was replaced by Carreras at 9th position. NCB remains an excellent stock to hold for long term growth and increased dividends. In the Junior market Caribbean Producers rose to $5.80 and Medical Disposables to $5.51 to ease out of the top listing and were replaced by recent Initial Public Offer, Indies Pharma at number 9 and Jetcon at 10.
The PE ratio for Junior Market Top stocks averages 7.4 compared to an average PE for the overall market of 12, based on 2018 estimated earnings and the main market PE stands at 7.8 for the top stocks, compared to a market average of 13, a good indicator of the level of undervaluation of these stocks.
The TOP 10 stocks now trade at an average discount of 37 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 40 percent to the market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.

Iron Rock improvement continues

IronRock Insurance reports vastly improved results for the second quarter and the six months period to June from rising revenues and stable administrative cost.
A loss of $4 million was incurred for the June quarter and $8.6 million for the half year compared to a loss of $19 million and $46 million in June quarter and half year in 2017 respectively.
The vastly improved bottom-line flowed from gross written premium for the half year rising 63 percent to $282 million, from $173 million in 2017 and net earned premium increasing 248 percent to $80 million, up from: $23 million in 2017. For the second quarter premium rose at a slower pace of 14 percent to $127 million and net premium income moved 213 percent from $13 million to $42 million.
Operating expenses rose to $74 million from $65 million in 2017 and moved from $33 million to $36 million in the June quarter. Insurance damages claimed $38 million for the half year, up from $21 million in 2017 and increased claims from $9 million in the June 2017 quarter to $21 million in 2018, leading to reduced underwriting loss of $30 million versus $61 million in the corresponding in 2017. Other income for the period rose to $22 million from $14 million for the 2017 period and for the June quarter, moved from $8 million to $11 million. Shareholders’ equity inched up from $512 million to $514 million helped by unrealised gains of $10 million in the equity portfolio. Total assets stood at $988 million and comprise cash and investments of $602 million, while liabilities include $360 million for claims provision.
The stock last traded at $3.10 and could enjoy some gains going forward as company extend the improvement in both the top and bottom-lines.

Stocks to Watch this week

The main market pulled back on but blasted to a new intraday high on Friday confirming that the bull run is in its early stages, while the Junior Market continues to bounce around.
The main market has gained nearly 3,600 points for July, thus mirroring the start of the usual summer rally on the Jamaica Stock Exchange.
The main market is being steered higher by an upward sloping support line as well the 45 and 125 day moving averages, lending support just below the index and the Junior Market is being steered by an upward rising long term support line and the start of a golden cross.
The market saw many developments that confirm that a bull market is in place with all three initial public offers closing ahead of the scheduled close.
The past week saw a few strong results being posted and more are expected this week that should include NCB Financial and Proven Investments. Barita Investments got the offer to buy 75% of the shares at $9.20 each. IC Insider.com is of the view that the stock is worth much more with good prospects to build on the strong foundation that it has. Jamaican Stock Exchange released strong gains in profit and announced a dividend as well, and could benefit from both, with eyes focused on even greater improvement in 2019. Caribbean Cement stock is another to watch, with the annual general meeting on this week and results for the June quarter due. Margaritaville had a bid of 16.9 cents versus a last sale of 15 cents and is being offered at 18 cents to sell 43,795 units, Proven Investments had a bid of 16 cents versus a last sale of 15 cents and is being offered at 18.5 cents to sell 1,050 units.
Medical Disposables came in for strong demand in the past week with the price going as high as $5.50. Trading during the week removed supplies that was overhanging the market leaving little supply at the end of the week and could go higher in the coming week. Caribbean Cream after posting a 59 percent increase in profit for the 2019 first quarter saw no more continuation of the demand that lifted the price into the $6 region but could well make some increased interest this week.

2 new IC TOP 10 listings

This weeks’ review comes against the back drop of the main market hitting a record high on Friday in the morning session and the Junior market continuing to eke out modest gains.
Unlike last week when there are several changes to the TOP stocks, there are only two new additions this week. Victoria Mutual Investments and Jamaican Teas are out of the TOP 10 with Berger Paints that fell in price to $18.76 and Caribbean Cream are back in the TOP 10 lists.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.
The past week saw a few results being posted and more are expected this week, including NCB Financial and Proven Investments that entered the TOP 10 last week, both are expected to report positive gains with NCB continuing from increases seen up to the second quarter and Proven that President, Christopher Williams informed IC Insider.com is performing well in all divisions, see Collapse of the JSE US market.
The PE ratio for Junior Market Top stocks averages 7.4 compared to an average PE for the overall market of 11.8, based on 2018 estimated earnings and the main market PE stands at 7.5 for the top stocks, compared to a market average of 12.5, this is a good indication of the level of undervaluation of these stocks.
IC Insider.com last week stated that there are warning signs of a tsunami that is on the way for the market. During last week one more sign came to the fore with a sharp drop in Treasury bill rates again, this coupled with scarcity of supply for many stocks. Investors seem to be going about their business as if prices will remain around current levels for a prolonged period. Late comers to buying stocks who try to join the party will find get stocks but at a much higher prices as the year rolls on and that is confirmed by technical indicators in both the Main and Junior markets.
The TOP 10 stocks now trade at an average discount of 37 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 40 percent to the market.

All Jamaica nears record 341,000 points

NCB Financial climbed to $99.80 and Jamaica Broilers at a record $30 after just after 11 on Friday morning and pushed the main market to a new record high, surpassing the record reached last week Friday.
At minutes after 11, the All Jamaican Composite Index jumped 2,522.73 points to a record 340,798.92 surpassing the record of 340,315.50 reached last Friday with the JSE Index rising 2,298.49 points to 310,506.28 versus a record 310,065.85 last week. . The Junior Market added 23.66 points to trade at 3,064.01. the main market rose further to 340,893.72 points on the All Jamaican Composite Index and the JSE Index climbed to 310,624.04 at 11:15 am.
Carreras traded 612.643 shares at $9.20 and NCB Financial traded 274,733 units and now trades at $95. In the Junior Market C2W Music traded at a 52 weeks’ high of $1.70.