JSE stocks retreat from Thursday’s record

Mayberry Jamaican Equities traded 1M shares & the price hits a new high of $10 but retreated by Friday’s close.

The All Jamaican Composite Index of the Jamaica Stock Exchange and the JSE index fell more than 2,000 points as main market stocks retreated from Thursday’s record close as the market set its sight on breaking through the 350,000 mark this coming week.
At the close, the All Jamaican Composite Index dropped 2,312.28 points to 346,726.53 and the JSE Index dived 2,106.75 points to 315,907.02. Market activities resulted in 31 securities trading including 3 in the US dollar market compared to 27 securities trading on Thursday.
At the end of trading, the prices of 12 stocks rose, 12 declined and 7 traded unchanged. Trading in the main market ended with 12,389,267 units valued $54,066,117, compared to 7,549,926 units valued at $378,631,059 on Thursday.

The day’s volume was led by, JMMB Group 7.5% preference share concluded trading at $1.03, with 8,590,090 shares with 69.3 percent of the traded volume, followed by Mayberry Equities that closed at $9 in trading 1,046,000 shares, for just 8.4 percent of the day’s volume after trading at an intraday high of $10 and Supreme Ventures with 604,043 units and 4.9 percent of the main market volume.
Stocks with major price changes| Caribbean Cement jumped $2.50 and finished at $47.50, trading 73,872 shares, Grace Kennedy rose 85 cents and ended trading at $59.50, with 41,775 shares, JMMB Group lost $1 and ended at $29, exchanging 120,176 shares, Mayberry Investments gained 39 cents to settle at $7.89, with 10,100 units, PanJam Investment fell 80 cents and concluded trading 42,221 shares and closed at $51.60, Portland JSX lost 50 cents and ended at $8 trading 2,700 units, Sagicor Real Estate Fund dived $2.90 to $12, with 11,200 shares, Salada Foods shed $1 to close at $17, in exchanging 48,271 units, Scotia Group rose 50 cents in traded 113,232 shares to close at $53,  Seprod finished trading 4,500 shares, and gained 59 cents to close at $36.10, ended at $15, with 21,164 shares after losing 30 cents, Victoria Mutual Investments lost 42 cents in concluding trading at $3.51, with 604,043 stock units and Wisynco Group fell 25 cents and finished trading 105,450 shares to end at $9.05.
Trading in the US dollar market closed with Margaritaville traded 9,700 shares and ended at 18 US cents Proven Investments trading 44,500 shares, falling 0.09 cent and closed at 19.01 US cents and Sygnus Credit Investments traded 9,000 shares and rose 0.03 cent to 10 US cents. The JSE USD Equities Index slipped 0.12 points to end at 159.24.
Trading resulted in an average of 492,474 units valued at over $1,930,933, in contrast to 290,382 shares valued at $14,562,733 on Thursday. For the month to date an average of 231,530 shares valued at an average of $4,665,985 versus 211,092 shares valued at an average of $4,956,066 on Thursday. July closed with an average of 169,022 units valued at $3,514,756, for each security traded.
IC bid-offer Indicator| At the end of trading, the Choice bid-offer indicator reading shows 5 stocks ended with bids higher than their last selling prices and 4 closing with lower offers.

More records for JSE main market

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.

Stocks to Watch this week

Caribbean Cream’s Kremi product

There are clear signs that the usual summer rally has started on the Jamaica Stock Exchange, with the main market hitting new highs on all five trading days during the past week, and ending at record closing highs on all, except on Friday.
The main market entered record territory, minutes after opening on Friday with the All Jamaican Composite Index climbing 1,082.40 points to an intraday record of 340,315.50 and the JSE Index rising 986.19 points to a record 310,065.85. The 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 for the main market and the Junior Market is being steered by an upward rising long term support line.
The market saw many developments that confirm that a bull market is in place. Mayberry Jamaican Equities initial public offer, opened and closed on Monday, having been oversubscribed and Indies Pharma public offer opened on Thursday and closed on Friday but Stanley Motta remains opened after more than a week since the offer opened.
Elsewhere in the secondary market, Jamaica Broilers traded briefly at a record high of $33, others trading at 52 weeks’ high in the main market are Kingston Wharves trading at $52.03, PanJam Investment at $58.99 and Pulse Investments trading up to $3.50, but 138 Student Living, having fallen to a 52 weeks’ low of $4.40 the previous week fell even lower in this past week to $3.85,
Former TOP 10 Junior Market listing, Derrimon Trading ordinary share, hit at an all-time high of $23 during the week. Current TOP 10 listing, CAC2000 hit a new record high of $10 as well as C2W Music climbed to $1.60, while recently listed Everything Fresh traded at an all-time low of $1.95 since listing in June. US dollar market listings, Margaritaville and Proven Investments both traded at a 52 weeks’ lows during the week as investors seem to lose interest in the US dollar listed shares.
The main market is exhibiting strong bullish signals while the Junior Market seems more subdued apparently waiting on the release of results.

Stationery & Office Supplies new book making operation.

Against this back drop there could be some interesting developments in in the market in the coming days. Based on demand and supply of stocks and trading activities last week the stocks worth watching this week include, Caribbean Cream that jumped sharply on Friday after the company reported improve first quarter results, NCB Financial pulled back in the past week but may be constrained by the $100 mark until the group reports third quarter results by month end. PanJam Investment could move higher again, as there continues to be buying but there is very limited supply of the stock on offer. Radio Jamaica that came for increased buying recently seems to be seeing supplies coming to market at $1.20 or higher and could get more attention as the weeks roll on. Others worth watching include Caribbean Cement, Berger Paints with little selling, Grace Kennedy for which there is also limited supply. In the Junior market, some demand exists for Derrimon Trading, with a resolution to be voted on at the upcoming AGM to split each share into 10 units, but the price may be stuck around the $20-23 range with the PE more than 20 times 2018 earnings compared to the market average of 11.4. Stationery and Office Supplies continues to trade around the $8 mark, with limited supply on offer, the stock is worth watching but may require second quarter results to kick the price to another level. With the directors stating that they have discussed the possibility of a stock split in the past, the stock can be expected to be one to see a split probably by the next AGM, investors should be stock piling this one with the price being undervalued. Jamaican Teas pulled back in the past week from $5.50 to $5 this week, but with limited stocks being offered for sale, is worth watching. Wisynco seems to have found support just above $9 and is one to watch over the next few weeks as the release of full year result nears, the Jamaican Stock Exchange is another to be watched along with JMMB Group and Seprod.

Record run for IC TOP stocks

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Kingsley Cooper Chairman of Pulse that gained 67% during the past week.

Pulse Investments, in the main market TOP 10, up to the week starting June 25, jumped 67 percent this past week, to close at $3. Current listings, Caribbean Cement traded at $45 and Grace Kennedy at $56 both at 52 weeks’ highs during the week.
Former listing, Derrimon Trading ordinary share traded at an all-time high of $20.50 during the week while, the preference share traded at $2.45 for at a new high. The week closed out with 138 Student Living, falling to a 52 weeks’ low of $4.40 but C2W Music climbed to a 52 weeks’ high of $1.30 as the main market moved within just 300 points of the record high reached on June 13, while the Junior Market traded at the highest level during the week, since December last year.
There is just one change to the TOP 10 listings at the end of the week, with Stationery and Office Supplies that just slipped off the Junior Market list at the end of the previous week returning after Caribbean Producers that dethroned it in the previous week was squeezed it out, as Carib Producers rose to $5.50 from $5.10 at the end of the previous week.
With the average PE ratio for Junior Market Top stocks at 6.2 compared to an average PE for the overall market of 11, based on 2018 estimated earnings and the main market PE at 7.9 for the top stocks, compared to a market average of 13, suggest that the rest of the year should deliver better returns than the first half. A look back on the markets shows that they made noticeable rise in August last year, a pattern that goes back several years and could well do so again.
The sharp reduction in Bank of Jamaica policy rate to an unprecedented 2 percent and Treasury bill interest rates to record lows of 2.5 percent, is set to push stocks values much higher unless profits for most of the listed companies decline. The shortage of supply of many listings continues and is set to result in a big rise in prices going forward before supplies will be able to satisfy what is likely to be a rising demand.
Last week prospectuses for Stanley Motta and Mayberry Jamaican Equities were published and this week Indies Pharma is released. The first two are not priced to bounce based on the underlying nature of these companies. Stanley Motta is a real estate play that will provide income that is better than most fixed interest securities with moderate capital appreciation going forward, while Mayberry Jamaican Equities is a closed end mutual fund, growth is going to depend of appreciation in the investments held or to be acquired. Indies Pharma, with IC Insider.com preliminary earnings estimate for 2018 of 16 cents per share, could get a bounce sometime after listing and could reach $2.40. The stock sits in the mid-range of IC Insider.com’s ranking of Junior Market stocks with a PE of 10 just a bit less than the average of 11 for the market but most IPOs have traded around 15 times the current year’s earnings.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 45 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 39 percent to the market.
Stocks to Watch The stocks to watch this week include, NCB Financial. PanJam Investment could move higher again, as there continues to be buying but there is very limited supply of the stock on offer. Radio Jamaica that came for increased buying recently seems to be seeing supplies coming to market at $1.20 or higher and could get more attention with the network broadcasting the popular world cup matches as adverting revenues should climb from the coverage. Others worth watching include Caribbean Cement, Berger Paints with little selling, Grace Kennedy for which there is also limited supply and Pulse Investments. In the Junior market, Demand for Derrimon Trading should continue with a resolution to be voted on at the upcoming AGM to split each share into 10 units. Supplies for Stationery and Office continue to trade around the $8 mark with limited supply, the stock could move higher in coming days or weeks. Jamaican Teas pulled back in the past week from $5.50 to $5 this week, but with limited stocks being offered for sale, is worth watching.

IPO facts investors should know

“Hello my dear client, the day we have been waiting for to increase your wealth is here. The Mayberry Jamaican Equities IPO has finally arrived, the stock is a must have at this time. Attached are the Prospectus and Application Form for your attention. The official opening date is Monday, July 9, 2018, the demand is high so please don’t delay,” Kind regards, a MIL wealth adviser.
The above was a message sent out by one of Mayberry’s wealth advisor. A group of investors stated in 2017 that investors cannot go wrong with Junior Market IPOs, all that has to be done is just buy, buy, buy and the investor cannot fail to make money. Some investors in the last two IPOs, Sygnus Credit and Everything Fresh bought into the issues heavily, hoping to catch an early bounce and pocket the profit. That the initial bounce did not last, should be a lesson to speculators.

%8 Half Way Tree Road owned by Stanley Motta.

Laden with 6 main and Junior Market stocks, Mayberry Jamaican Equities is issuing 120,114,929 ordinary shares to the public, at a price of $7.57 each. Investors really ought to know what they are buying into when IPOs are being issued, rather than thinking that the price of each IPO can only go in one direction – up. As the stock market matures and more persons come to the party of stock ownership, the valuations that new IPOs come to the market at, will continue to rise and less immediate potential gains will be priced in. In some cases, investors will need to look long term for the payoff from their investment.
Everything Fresh, Sygnus Credit, Stanley Motta and Mayberry Jamaican Equities fall into this category. GWest was another company that many investors got carried away with, in pushing the price to $4 with many buying at inflated values, now the stock trades in the low $2 range. A reminder of an adage, that successful trading starts at buying at the right price. GWest business model is based mainly on generating most income and profits coming from operating mini hospital and other patient care. Real estate income going forward was going to be secondary and would not contribute much to profit. Profit made in the year before listing was mostly from sale of real estate and that was not something that would continue for any prolonged period. Without a track record in providing healthcare, investors who bought the stock in the high $3-4 level must have been hoping that the forecast in the prospectus was going to be achieved on a timely basis. The results to March show revenues well below forecast from the new operations. The company projected medical income to March this year, at $86 million but only generated $17.4 million and that puts the issue of generating the forecasted $710 million for fiscal year 2019, in doubt. Admittedly, the company had projected a loss to March of $110 million but came up sharply lower with a loss of $88 million.
Investors should recognize that not all IPOs are equal. They should also realize that there is a clear pattern that prices then to move up for strongly demanded issues and the undergo some correction. The data shows that the best time to buy after the IPO closes is on the first day or two or a few weeks after when demand falls off and supply increases as short term investors try to offload.
Data for listings in 2016 to 2018 show and average of 31 percent correction for Junior Market stocks from the highest point to the lowest, after listings which tends to occur within 4 weeks of listing. IPOS from Mayberry seem to have a lower pull back in price, around an average of 23 percent while most others, average around 33 percent. Three main market stocks pull back from their highest point, range from just 15 percent for Victoria Mutual Investments to 31 percent for Wisynco and 29 percent for Sygnus Credit Investments.
Based on how investors have gone about pricing IPOs at their peak it seems likely that Indies Pharma will peak around $2.40 based on projected earnings in 2018, of 16 cents per share. It could even go higher if the number of investors who apply for shares exceed those Junior Market listings IPOS from those going back to 2018.