Review of 2018 stock market forecast

Palace hits a new high of $1,500 to be top performer in 2018 so far.

“ Assessment of the market, suggests that 2018 could be a grand year, with overall price gains likely to be in excess of 40 percent”, a quote from IC Insider.com in February, this year.
“Based on projected earnings for 2018, the average PE ratio suggests that main market stocks should grow by 26 percent. Falling interest rates could add another 20 percent to gains during the year, bringing overall gains in excess of 40 percent.”
“Technical readings of the market have the main market heading initially to around 390,000 points or 23 percent ahead of the December close, for the all Jamaica Index, before resistance sets in and then moving much higher, later on’ the IC Insider.com forecast for 2018 stated.
With almost three more months to go, before the year ends, the main market is broken through the 390,000 points mark to be up 31.7 percent for the year to date, there seems no stopping it for now.
The report in February stated that the main market was caught in a wedge formation, trading just below the upper end of channel that can be traced to late 2015. The wedge could hold the market in consolidation mode for a short time, a month or two, before breaking out, most likely to the upside.
IC Insider.com projects that many of the main market heavy weights will find it tough to repeat the strong gains they enjoyed in 2017, if that is the case, their impact on the market index is likely to be less than for 2017. Another factor that could make a repeat of 2017 tough, is the movement of interest rates. Last year, Treasury bill rates fell 29 percent from 6.56 percent to 4.83 percent, that level of decline, is unlikely to happen in 2018, even as some of the decline in the latter part of 2017 is yet to be fully reflected in the prices of stocks to date and should positively affect prices in 2018. IC Insider.com is forecasting rates on 182 days Treasury bill  hitting 3 percent by the end of the 2018 first quarter. Treasury bill rates in 2018 at 1.7 percent, have fallen more sharply than in 2017.
The original piece stated that “there are a number of other factors at play that are set to impact the market. Increasing employment is taking place with the highest number of persons employed in the country’s history. Attendant with that is the sharp fall in unemployment from more than 16.3 percent in 2013, to just over 10 percent in 2017. The annual net employment is growing around 30,000 persons per year and that could rise as the economy gains steam. This will mean more spending and increased tax collection for government. Alpart resumption of Alumina production is a big positive for the overall economy, for increased government revenues and more demand for local goods and services, some of which are provided by listed companies. The tourism sector is enjoying strong growth, apart from increasing foreign exchange intake for the country, will have direct impact on Jamaica Producers and Sagicor X Fund. Jamaica seems to be going through a construction boom with several new buildings under construction, Caribbean Cement and Berger Paints should benefit considerably from such developments.”
“More listings on the stock market will result in increased fee income for JSE and brokerage houses, from increased trading volumes.”
The TOP 10 stocks include a few surprises while there are others that sit just outside the top stocks that investors may still want to keep a keen eye on. Investors should be looking beyond 2018 as medium term gains beyond 2018 could be strong for stocks that will benefit from current developments, long term.
The TOP 10 selection is selling well below the average PE of the Main market of the Jamaica Stock Exchange at just over 6.3 versus nearly 12 at the end of 2017.

Barita last traded on the JSE as high as $20 on Friday.

Barita Investments moved more into fee based income and that is working well for them, with sharp growth, while net interest income stagnates. The prospects for continued strong growth in fee income continues with more investors seeking better returns than in the fixed interest market. The company should see a change in ownership soon and that could see a more aggressive approach to management that could optimize returns from exiting business and newer lines. Unrealized gains on investment ought to be factored into its earnings in valuing the stocks and that would boost its value considerably, the market is not paying attention.
Berger Paints is set to be a big winner with increasing sales coming from a buoyant construction sector resulting in increased profit and what IC Insider.com expects to be a healthy dose of dividend payments. It could become the next Carreras from a dividend yield standpoint but with growing profits. The company will benefit from lowering of overhead cost which was evident in 2017.
Jamaica Broilers continues to grow organically and from new business being acquired. Growth will continue as the Haitian market deliver greater returns form a growing market while the poultry demand in Jamaica continues to grow.
Caribbean Cement will benefit from lower operating cost, increased sales and a planned cut in financing of the lease which is said will cut hundreds of millions of dollars out of it cost that could come close to $2 per share per annum.
Palace Amusement Company, currently enjoying sell out cinemas with block buster hit, is one of those unusual choices. It enjoys minimal trading but it could surprise on the upside if all goes well. Growth in the economy and increased employment will help to boost patronage going forward and will aid in profit growth as well.
JMMB Group put out outstanding Q3 results with a 39 percent increase in profit and strong gains in revenues, auguring well for 2019 outcome.
The growth potential remains strong and investors in the stock will reap rich rewards down the road. Just one stock that requires patience. By the way fees and commission income jumped an impressive 71 percent to $512 million in the quarter and 53 percent in the nine months, over the similar period in 2016 and should continue to do so going forward.
Radio Jamaica continues to disappoint with below expected revenues and profit. It could return to favour but needs to generate more income from advertising. This is one to accumulate for a payoff down the road.
The other three stocks, Sterling Investments, Grace Kennedy and Sagicor Group are undervalued and could deliver some decent returns to patient investors.
Below the TOP 10 are strong candidates to deliver decent returns this year and beyond, the list includes NCB Financial that is on a strong growth trajectory and recently listed Wisynco Group that should generate earnings around $1.10 for the 2019 fiscal year that starts in July.

Record profit for Palace Amusement

Carib Cinema, the flagship for Palace Amusement.

Black Panther delivered record profit for Palace Amusement Company, the full year’s results show. Palace reported profit after tax of $152 million up from just $33 million for the full year in 2017 and earnings per share of $96.58.
For the final quarter the company posted profit of $102 million compared to just $28 million in 2017 but a $61 million gain on sale of the Harbour View property added $61 million to the company’s bottom-line. Revenues climbed nicely by 17 percent to $1.67 billion that flowed from a 25 percent rise in patronage income at Carib in Kingston 27 percent increase at Cineplex located in Kingston and just 11.5 percent at Montego Bay Multiplex.
The major contributor to the rise, was the blockbuster film Black Panther that ran from February to May this year. In the June quarter revenues rose 10 percent to $330 million and would have been generated form increase patrons coming to the movies. Cost rose with direct expenses climbing 13 percent for the year and 7 percent in the quarter while administrative cost was up 19 percent for the quarter and 10 percent for the year.
Palace ended the year with cash and bank balances of $284 million up from $141 million in 2017. The stock last traded on the main market of the Jamaica Stock Exchange at $1,500 at a PE of almost 15.

The Escape Plan 2 – Survive & GET OUT!

Palace Amusement Company brings another summer release to the big screen at it cinemas in its three movie houses in Montego Bay and Kingston.
in the latest offering, Ray Breslin (Academy Award ® nominee Sylvester Stallone) manages an elite team of security specialists trained in the art of breaking people out of the world’s most impenetrable prisons.
But when one of his team members goes missing inside a computerized techno-terror battle-maze known as HADES, Breslin together with Trent DeRosa (Dave Bautista) and Hush (50 Cent) must now decipher a way to break into the world’s best hidden prison, release their kidnapped team, and make it out alive. Written by Miles Chapman and directed by Steven Miller, this action thriller is a sequel to the 2013 film; The Escape Plan.

Another record close for JSE on Friday

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Trading on the Jamaica Stock Exchange main market ended at a another record close, with JSE All Jamaican Composite Index increasing by 763.78 points in a record closing high of 326,087.70 and the JSE Index gaining 695.89 points to a record closing high of 297,102.76.
At the close with only 28 securities traded versus 29 on Thursday. Trading ended with the prices of 7 stocks rising, 12 falling and 9 trading firm, in the main and US dollar markets.
Securities closing with sizable price changes include, Grace Kennedy lost $1 to end at $48, Kingston Wharves declined by $1 to $39, Palace Amusement dropped $150 on top of the $200 fall on Thursday to end the week at $750 and Scotia Group fell $1.50 to $52.
Main market activity ended with 5,136,325 units valued at over $124,111,209 compared to 11,332,892 units valued at over $423,780,603. JMMB Group closed trading with 1,575,126 units accounting for 30.67 percent of the overall market volume followed by Carreras with 819,568 units or 15.96 percent of total volume traded and Jamaica Broilers Group with 550,887 units with 10.73 of traded volume.
Trading resulted in an average of 190,234 shares valued at $4,596,711, for each security traded, compared to 419,737 shares valued at $15,695,578 on Thursday. The average for the month to date is 1,240,308 shares with a value of $6,425,698 and previously 1,510,327 shares with a value of $7,058,809. In contrast, March closed with an average of 626,526 units with an average value at $20,492,207 for each security traded.
The US dollar market closed on Thursday with 109 units valued at just US$24 as Proven Investments was the sole stock traded and ended unchanged at 22 US cents, leaving the market index unchanged at the close at 173.30.
IC bid-offer Indicator| At the end of trading, the Investor’s Choice bid-offer indicator reading shows 6 stocks ended with bids higher than their last selling prices and 2 with a lower offers.
For more details of market activities see – JSE trading levels fall on Friday

Palace is much more than Black Panther

Carib Cinema, the flagship for Palace Amusement.

Revenues and profit are getting a big lift from the strong showing of the Black Panther movie currently playing at the Palace Amusement cinemas in Jamaica.
The stock jumped sharply in March, more than doubling the previous price of $560. Some investors are of the view that interest in the stock is purely as a result of the movie. While it may be a factor, Palace’s story goes well beyond that.
Although in the public eyes daily, the shares of Palace are not the focus of attention for many . One main reason is the 1,437,000 shares issued by the company, resulting in limited liquidity in the stock. The other is that historically profit can be a bit erratic. Management’s failure to split the stock for greater liquidity only adds to investors’ concerns.
Palace is reminiscent of Lascelles deMercado back in 1983 when the stock hardly traded due to liquidity issues and a lousy dividend policy. Asked then why the stock was so cheap, around $6, a broker responded —no one buys

A seen from Black Panther

Lascelles’ shares. That of course was a terrible error by investors as the stock went on to deliver one of the best returns on the local market with Campari ultimately buying out the company.
Stocks that are not sexy don’t get much attention from investors, but in many cases, these are the ones to record massive gains when the story is fully told. A reader of IC Insider.com indicated that a look at the last two years’ results revealed flat revenues. That prompted a review of the numbers. The history may not be spectacular but closer examination shows a high degree of attractiveness that is not based solely on the pile of added income Black Panther will rake in.
Revenues have been climbing since 2014 when it reached $833 million, rising to $916 million in 2015, with a slight dip in 2016 to $909 million. Revenues rose 9 percent in 2017 to $990 million and for the half year to December 2017, growth was 11 percent to $493 million with profit rising 138 percent.
Revenues will hit the billion mark for the first time in the company’s history, for the current fiscal year and remain over that level going forward. The performance of the economy is critical to the future fortunes and to a lesser degree, the quality of films. Data indicates that with a tight economy, patronage in Kingston suffered badly with the downturn in the economy from 2008 onwards. At the same time, strong growth, said to be around 7 percent per annum in the Montego Bay economy, showed up in strong revenue gains there compared to Kingston for a number of years. With the overall economy recovering and employment growing, Palace is benefitting and it’s reflected in the numbers to December 2017.

Palace Multiplex in Montego Bay.

Segment results tell the story of the strong impact of the economy on operations. For the six months to December, Box office patronage at Carib Cinema in Cross Roads rose 14 percent to $147 million, while at Palace Cineplex, the gains were 10 percent to $55 million and 8 percent at Palace Multiplex in Montego Bay to $77 million. Sales from the concessionaires surged 29 percent to $80 million at Carib, 22 percent at Cineplex to $27 million and 21 percent to $34 million at Multiplex. The fact that Carib has outgrown the other two cinemas is not an accident but is reflective of the recovery in disposable income of a large number of Jamaicans.
While revenues are on the rise, cost has been kept under control. Direct operating cost increased by 6 percent to $190 million for the quarter and 8 percent for the half year.

Another Palace movie – Bruce Willis and Cole Hauser star in Acts of Violence.

Administrative Expenses rose just 4 percent to $37 million in the December quarter and 7 percent for the six months to $76 million. Depreciation for the six months period rose just 5 percent to $17 million. If the trend continues into 2019 fiscal year earnings should be close to $100 per share range. Prior to Black Panther, earnings were set to reach around $45 per share but the phenomenal success of Black Panther is Projected by IC Insider.com to push 2018 earnings to be well over $100 per share when the fiscal year closes in June.
The company concluded the year with equity capital of $343 million, borrowings at just $25 million with cash funds of $130 million helping to push Current assets to $242 million as Current liabilities stand at $110 million.
The stock traded at $1,300 earlier in the month is poised to fall back with the lowest offer being $1,000. Palace trades on the main market of the Jamaica Stock Exchange at a PE around 10 times projected 2019 earnings and much lower based on the 2018 earnings.

Investor bids $1,300 for Palace shares – Thursday

Palace Multiplex in Montego Bay.

IC Insider TOP 10 stock – Palace Amusement, jumped $540 to $1,100 in trading on the Jamaica Stock Exchange on Wednesday, did not trade on Thursday but closed with the bid at $1,300 and an offer at $1,500.
The sharp increased price, comes as investors responded to the strong patronage of the Black Panther movie, that is expected to raise revenues and profit sharply for Palace.
Main market activity ended with 29 securities changing hands, with 3 securities rising, 14 falling, 12 trading firm. Trading closed with 14,969,349 units valued at $264,028,466 being exchanged.
At the close of trading, the JSE All Jamaican Composite Index dropped 4,700.74 points to 319,507.99 and the JSE Index dived 4,282.91 points to 291,107.90.
In main market activity, Barita Investments closed at $9, with 3,600 shares, Berger Paints ended at $17, with 100 stock units, Carreras finished with a loss of 12 cents at $10.78, with 362,023 shares, Caribbean Cement settled 1 cent higher at $32.61, with 58,148 shares, Ciboney Group ended trading at 14 cents, with 145,700 shares. Grace Kennedy traded at $52, with 12,451 stock units, Jamaica Broilers finished trading with a loss of 48 cents at $19.51, with 342,660 units, Jamaica Producers closed with a loss of 49 cents at $15.01, with 326,924 shares, Jamaica Stock Exchange ended at $6.50, with 112,036 shares. JMMB Group concluded trading with a loss of 44 cents at $26.06, with 623,884 shares, Kingston Properties finished with a loss of 65 cents at $6, with 7,500 stock units, Kingston Wharves settled at $39.50, with 5,950 units, Mayberry Investments ended trading 2 cents higher at $5.17, with 2,000 shares. NCB Financial Group traded with a loss of 99 cents at $98.50, after 893,212 shares changed hands, 1834 Investments finished trading with a loss of 12 cents at a 52 weeks’ low of $1.03, with 3,000 shares, 138 Student Living ended with a loss of 29 cents at $5.51, with 150 shares, PanJam Investment finished $42 higher at $42, with 58,886 stock units, Pulse Investments concluded trading at $1.85, with 33,735 shares, Radio Jamaica finished with a loss of 2 cents at $1.06, with 3,570 shares. Sagicor Group settled with a loss of 90 cents at $35.60, with 225,268 shares, Sagicor Real Estate Fund settled with a loss of 10 cents at $15, with 16,636 shares, Salada Foods ended trading at $12.05, with 8,474 stock units, Scotia Group traded with a loss of $2 at $54, with 124,930 units, Seprod finished trading at $30.25, with 48,955 shares. Supreme Ventures ended with a loss of 50 cents at $11.50, with 1,767,895 shares, Victoria Mutual Investments concluded trading with a loss of 7 cents at $4.50, with 732,219 stock units and Wisynco Group finished at $10.50, with 9,043,043 units. In the main market preference segment, Jamaica Money Market 7.25% ended trading at $2.55, with 400 shares, JMMB Group 7.5% closed at $1.02, with 6,000 shares changing hands.
Prices of securities trading for the day are those at which the last trade took place. For more details of market activities, see “4,700 points drop for JSE – Thursday.”

$2,800 per share for Palace Amusement!

Palace Amusement seems set to be a big surprise as the stock could exceed $2,000 this year with enormous success that Black Panther is forging.
At the close on Friday the bid had moved up to $730 and should be heading higher based on the good fortune being enjoyed with the Black Panther movie. IC Insider.com projects big rise in revenues for the current quarter a sizable jump in profit as well to levels never before seen by this company. Profit for the year to June should be well into the $100 per share range as the company increase showings of the extremely popular movie but is still booked out into the future. Cable & Wireless should be the number one choice for main market TOP 10 stocks based on a nearly $2 billion reduction in interest cost this year resulting from the fall in local interest rates and increasing revenues. But uncertainty lies about continued listing on the Jamaica Stock Exchange in a year when the company is likely to see significant profit for the first time in nearly a decade.
The number one remains with Barita Investments on the basis that management will start to seriously extract the benefits of the assets that it manages. Despite the fall in profits in the December quarter for Berger Paints, from slightly lower  revenues compared to 2016, the stock is still expected to benefit from improving demand for paints as economic improvements take deeper root.
Caribbean Cement continues to struggle to break out of the $35 region but investors may have to wait until around mid-April just ahead of the first quarter results to witness a break out. Grace Kennedy results when the prior year’s one off gain from sale of investment is factored out showed continued progress in increasing profit. The stock has become scarce and seems headed for the over $50 range.
The PE ratio of the TOP 10 is 6.6 times 2018 earnings compared to 12 currently for the main market and an expected 20 by March 2019, this means these stocks have lots of room to grow.

Young Marx Sunday at Palace Cineplex

Rory Kinnear as Karl Marx and Oliver Chris as Friedrich Engels in the Young Marx

Rory Kinnear (The Threepenny Opera, Penny Dreadful, Othello) is Marx and Oliver Chris (Twelfth Night, Green Wing) is Engels, in this new comedy written by Richard Bean and Clive Coleman.
Broadcast live from the Bridge Theatre, London, the production is directed by Nicholas Hytner.
It is 1850, and Europe’s most feared terrorist is hiding in Dean Street, Soho. Broke and restless, the thirty-two-year-old revolutionary is a frothing combination of intellectual brilliance, invective, satiric wit, and child-like emotional illiteracy. Creditors, spies, rival revolutionary factions and prospective seducers of his beautiful wife all circle like vultures. With his writing blocked, his marriage dying, his friend Engels in despair at his wasted genius, his only hope is a job as a Railway Clerk

There’s still no one in the capital who can show you a better night on the piss than Karl Heinrich Marx. Nicholas Hytner’s comedy of political visionary will be showing this Saturday March 11, 11:30 AM at Palace Cineplex.

The Met: Live in HD Semiramide (Rossini)

Angela Meade in the title role of Rossini’s Semiramide.

The world famous Met will transmit live this Saturday another of its wonderful entertainment and art series at Palace’s at Carib 5 – Semiramide.
Rossini’smasterpiece of dazzling vocal fireworks, makes a rare Met appearance, its first in nearly 25 years—with Maurizio Benini conducting.
The all-star bel canto cast features Angela Meade in the title role of the murderous Queen of Babylon, who squares off in breathtaking duets with Arsace, a trouser role sung by Elizabeth DeShong. Javier Camarena, Ildar Abdrazakov, and Ryan Speedo Green complete the stellar cast. Set in ancient Babylon, now modern-day Iraq, Semiramide follows the battle for the Babylonian throne in the wake of its fallen monarch. The opera marks the culmination of the Italian phase of Rossini’s monumental yet unusual career and is often considered one of his finest works. Semiramide will be transmitted live this Saturday March 10, 12:55 PM at Carib 5.

Samson – A hero chosen by GOD

Taylor James as Samson, in the biblical drama- Samson

The whole story is revealed in Pure Flix’s interpretation of the famous biblical story of Samson – a young Hebrew with supernatural powers.
Samson is the biblical Hercules, a man of incredible strength who nonetheless could not escape tragedy. Palace Amusement Company is now carrying this incredible story, in one of its cinema houses this week and next.
His supernatural strength and impulsive decisions quickly pit him against the oppressive Philistine empire. After being betrayed by a wicked prince and a beautiful temptress, Samson is captured and blinded by his enemies. Samson calls upon his God once more for supernatural strength and turns imprisonment and blindness into final victory. Directed by Bruce Macdonald and inspired by the story of Samson in the Book of Judges, Samson stars Taylor James in the titular role.