Results help junior activity Wednesday
There were only 2 stocks closing with bids that were higher than their last selling prices and 3 ended with lower offers.
At the end of trading, Access Financial lost 10 cents in trading 30,500 shares to close at $16.60. AMG Packaging rose 62 cents in trading 108,100 units at $13.12, as investors welcomed the 65 percent increase in profits for the for the six months, to $52 million after charging out $16 million for the start-up cost of the new tissue operation. Caribbean Cream traded 123,630 shares and gained 10 cents, to end at $4.10, after the company released full year results on Tuesday, with 40 cents per share earnings, following writing off of assets amounting to $31.4 million or 8 cents per share. Caribbean Producers traded 40,500 units and lost 7 cents to end at $4.03, Derrimon Trading closed with a gain of $1 at $5 with 18751 units changing hands, Honey Bun jumped $1.50 on news the board will be considering a subdivision of its shares to close at $12.50 while 21,550 shares changed hands. ISP Finance slipped 2 cents to close at $2.50 after trading 25,500 units, Jamaican Teas rose 1 cent to close at $3.81 after 25,000 shares changed hands, KLE Group traded 270,000 shares and fell 5 cents, to end at $1.65, Knutsford Express closed with 1,601 units changing hands at $19. Lasco Distributors gained 4 cents to end at $5.04 with 59,000 units trading, Lasco Financial lost 10 cents to close at $2.90, with 40,889 shares changing hands, Lasco Manufacturing lost 10 cents and ended with 126,350 shares changing hands to close at $3.50, Medical Disposables fell 5 cents in trading 1,000 shares to close at $3.15 and Paramount Trading ended with 3,460 shares trading to end at $11.
Eppley up 26% in a week to Tuesday
Eppley surged $46 to hit an all-time high of $505 in trading on the Jamaican Stock Exchange junior market on Tuesday while trading 8,337 shares. The stock is now up 26.25 percent since last week with latest price putting the PE at 7.2 times last year’s earnings of $70.43 per share and comes ahead of the company exploring the raising of added equity capital for expansion.
The junior market closed slightly lower on Tuesday with a fall of 5.07 points to 1,819.09. Trading ended with 15 active securities, 5 of which advanced and 4 declined as 1,258,428 units valued at $7,440,298, changed hands.
There were 5 stocks closing with bids that were higher than their last selling prices and one ended with a lower offer.
At the end of trading, Access Financial had 500 shares trading to close at $16.60, Caribbean Producers traded 27,210 units and rose 5 cents to end at $4.10, Consolidated Bakeries had 782,175 units changing hands but fell 15 cents to $1, Honey Bun had 80,402 shares trading and ended unchanged at $11. ISP Finance slipped 3 cents to close at $2.52 after trading 11,000 units, Jetcon Corporation rose 10 cents to close at $2.70 after 49,157 shares changed hands, Key Insurance closed at $3 with 1,000 units changing hands. KLE Group traded 4,231 shares and gained 1 cent to end at $1.70, Knutsford Express dropped $3 with 9,631 units changing hands at $19, Lasco Distributors ended with 30,890 units trading at $5. Lasco Financial closed at $3 with 17,962 shares changing hands, Lasco Manufacturing lost 5 cents and ended with 199,772 shares changing hands to close at $3.60 and tTech traded 2,000 shares and gained 22 cents to end at $4.22.
More gains for juniors on Monday
The junior market close slightly higher on Monday with an increase of 9.79 points to close at 1,824.16. Trading ended with 17 active securities, 4 of which advanced and 3 declined as 1,018,853 units valued at $4,061,844, changed hands.
There were 5 stocks closing with bids that were higher than their last selling prices and none ended with a lower offer.
At the end of trading, Access Financial had 6,220 shares trading to close at $16.60, Caribbean Cream lost 50 cents in trading 17,450 shares at $4, Caribbean Flavours rose 55 cents with 5,698 shares trading at $8, Caribbean Producers traded 57,130 units, to end at $4.05, C2W Music had 1,000 units changing hands at 33 cents. General Accident ended trading 59,420 units and closed at $2.59, Honey Bun had just 30,500 shares trading but ended unchanged at $11, ISP Finance rose 20 cents to close at a 52 weeks’ high of $2.55 after trading 6,031 units. Jetcon Corporation lost 24 cents to close at $2.60 after 8,680 shares changed hands, Key Insurance closed at $3 with 8,050 units changing hands. KLE Group traded just 1,485 shares to gain 3 cents to end at $1.69, Knutsford Express jumped $4.50 with just 100 units changing hands at $22, Lasco Distributors ended with 319,314 units trading at $5. Lasco Financial closed at $3 with 127,872 shares changing hands, Lasco Manufacturing ended with 160,969 shares changing hands to close at $3.65, Eppley 10% preference share traded 10,000 units at $6.10 and Derrimon Trading preference share fell 15 cents to end at $2.25 with 198,934 units changing hands.
Cost hurts Lasco Distributors’ profit
Revenues for the nine months ended at $10.9 billion, 36 percent higher than in 2014 while revenues for the quarter were up 36.4 percent to S4 billion. Profit after taxation came in at $213 million and is up from $193 million in 2014, mainly driven by growth in new business.
Gross profit grew by only 20 percent for the quarter to $644 million and 23 percent for the year to December to $1.77 billion as profit margin declined. Gross profit margin slipped sharply from 19 percent in the December 2014 quarter to 16 percent in 2015 and for the nine months, gross margin ended at 16 percent from 18 percent in 2014.
Other operating income, inclusive commissions from principals and interest on investments generated $82.5 million, an increase of 19 percent compared to the prior year’s $69 million for the nine months and was up 47 percent for the quarter to $53 million.
Operating expenses incurred in the period were S1.2 billion, an increase of 10.7 percent. For the December quarter, operating cost climbed by a much higher 21 percent to reach $458 million reflecting inflationary increases as well as costs related to growth strategy for new principal lines of business.
Total assets at the end of the period stood at $7 billion, an increase of S2.5 billion or 54 percent over prior year. Growth was driven mainly by increased inventory of $950 million arising from new business lines and capital expenditure of $550 million relating to the warehouse expansion. Receivable balances grew by 25 percent over prior year to close at S2.7 billion, while Payable balances grew by 81 percent to $3.4 billion. Short term Investments, Cash and bank balances at the end of the period were $1.076 billion up from $600 million. Shareholders’ equity stood at S3.4 billion, or 26 percent growth and the return on equity for the nine-month period was 27 percent compared to 22 percent in the same period last year.
IC Insider’s forecast is for per share earnings of 27 cents after tax for the March 2015 fiscal year and 50 cents for 2016 from ongoing operations. The stock last traded at $5 on the junior market of Jamaica Stock Exchange, with a PE of 18.5 times 2016 earnings but 10 times 2017 estimated earnings. The likelihood of a large settlement for the claim against Pfizer could enhance the attractiveness of the stock.
2 new BUY RATED stocks
Jetcon Corporation and ISP Finance have been added to the IC Insider BUY RATED list. The list continues to sport selections that have some room to grow before they reach the stage of maturing. Some have reached levels that look like they may be close to the top and stay there for a while and the may be just be rated hold than BUY RATED at this stage of the market’s rally in Jamaica.
The Trinidad based companies appear to be saddled by the effects of the recession on their performance.
There are now a few that were previously listed as BUY RATED have moved to Watch, as these stocks are likely to be market underperformers. If these are already owned then investors may want to hold on a little longer, buying into them now, while such a move could be profitable such investment may not be the smartest move at this time. At this stage of the Jamaican market it has become more challenging to continue to back some of the strong performers to date, as their valuation has risen and future gains will most likely come from gain in profit, unless the market revalues the PE ratios higher, a factor that is expected with lower interest rates likely in the months to follow.
Knutsford Express has been to Market Watch as it close to our target price of $24 at this time and while there is more growth to come with increased frequency slated for the north coast routes, increased profits going forward could slow considerably from recent strong gains. Sagicor Group has done well since we selected it, with an increase close to 150 percent plus dividends, the immediate future looks like the gains are going to slow compared to the growth since the start of 2015. In past bull market, investors gave it a big premium over the rest of the market. That is not so now, but could change as the current bull market continues it run.
Lasco Distributors that was moved to a hold is now back to a buy, since the price has pulled back to $5, the company will benefit from taking over the overseas distribution of all of the manufacturing company products. The inflows expected from the lawsuit with Pfizer should add to the company’s value when the courts agree the amount, which management puts at more than US$300 million.
AMG Packaging, Caribbean Cream and Paramount are all up more than 300 percent but expansion into new products should give revenues and profit a kick in the not too distant future for AMG and Paramount. Caribbean Cream full year results are due shortly and should exceed 55 cents per share as the company benefited from sharp drop in raw material cost.
Jamaica Stock Exchange is now a Watch as it seems close to fairly valued currently, but dividend yield could well push it higher. In addition, of note is that while trading levels have improved they are still well off from historical highs, so there could still be much more gains ahead later on.
Trinidad is in recession and the results of companies are showing it with pressure on profit particularly for companies that earn the bulk of their income in the twin island state. As a result prices have been declining for many of the companies on the Trinidad market with a few exceptions. With the exception of Trinidad Cement that is undervalued, a hold has been placed on Trinidad based listed stocks for the time being but investors should wait for TCL to settle before buying.