Paramount Trading dropped out of ICInsider.com following an earnings downgrade to 12 cents per share, with half year results continuing to fall coming from a fall off in revenues. Express Catering joins the ICInsider.com TOP 10 following an earnings upgrade to 55 cents per share and the stock price closing down at $3.61 on Friday in a week that the Main and Junior markets fell one percent during the week but there were some stocks with relatively sizable price changes.
There was just one stock with a notable gain in the Junior Market TOP 10 and four with sizable losses while in the Main Market, only one stock rose with a gain of three percent and 7 declined, with sizable moves by five. Junior Market listed Access Financial, rose 11 percent to $22.68 but Caribbean Cream fell a hefty 23 percent to close at $3.41 followed by a 7 percent fall by Jamaican Teas to $2.40, while Lasco Distributors lost 6 percent to close a $3.85 and Paramount Trading fell 4 percent to $1.54.
The Main Market General Accident dropped 17 percent to $4.75, followed by a 12 percent fall in Margaritaville to $15.50, 138 Student Living fell 11 percent to $3.50, while Key Insurance is down 6 percent to $2.19 and Caribbean Producers slipped 5 percent to $8.60.
The average PE for the JSE Main Market ICTOP 10 stands at 5.3, well below the market average of 13.6 and the Junior Market TOP10 sits at 7.2, just over half of the market, with an average of 13.
The Main Market ICTOP10 is projected to gain an average of 311 percent by May 2024, based on 2023 forecasted earnings, providing better values than the Junior Market with the potential to gain 185 percent over the same time frame.
In the Main Market ICTOP 10, a total of 15 of the most highly valued stocks representing 31 percent of the Main Market are priced at a PE of 15 to 110, with an average of 31 and 21 excluding the highest PE ratios, and a PE of 25 for the top half and 18 excluding the stocks with overweight values.
In the Junior Market, there are 13 stocks, or 27 percent of the market, with PEs from 15 to 50, averaging 21, well above the market’s average. The top half of the market has an average PE of 18, possibly the lowest fair value for stocks, currently.
Of great import is that the averages of both markets are now converging around a PE of 20 for close to a third of the market, as the year is coming to a close and with more information available on the full year’s earnings.
ICTOP10 focuses on likely yearly winners, accordingly, the list includes some of the best companies in the market, but this is not always so. ICInsider.com ranks stocks based on projected earnings, allowing investors to focus on the most undervalued stocks and helping to remove emotions in selecting stocks for investments that often result in costly mistakes.
IC TOP10 stocks will likely deliver the best returns on or around May 2024 and are ranked in order of potential gains, computed using projected earnings 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 are ongoing, based on receipt of new information.
Persons who compiled this report may have an interest in securities commented on in this report.
TOP 10 Stocks, Daily Trading, Jamaican Stocks, Junior Market, Jamaican Stock Exchange,
Profit drops at Pulse
A near $300 million drop in the surplus on revaluation of investment properties in the 2023 fiscal year pushed profits down by $200 million for Pulse Investments to $1.57 billion from $1.77 billion in 2022 but the company generated positive cash flows from operations of $145 million compared to $170 million in the previous year.
The company expended $489 million on investment property and $169 million on development expenditure during the year, reducing the overall cash on hand to just $90 dollars compared to $217 million in the prior year. According to the audit report, three apartment units were contracted for sale which should result in a loss of $32 million and realise $117 million in total cash, data from the audited statement suggests.
Revenues as reported by the audited financial statements are $949 million, up marginally from $931 million in 2022 and reflect amounts due on barter agreements of $741 versus $743 million in 2022. Model agency generated income of $63 million versus $56 million in the previous year and rental income brought in $154 million versus $132 million in the prior year. Unrealised fair value adjustment on investment Properties amounts to $972 million down from $1.26 billion in 2022.
Pulse incurred Administrative and other expenses of $321 million during the year and $271 million in 2022, with impairment on receivables jumping from $39 million to $53 million, insurance moving from $5 million to $13 million and legal and professional fees up from $11 million in 2022 to $16 million in the latest financial year. Finance cost ended at just $13 million during the latest financial year, down from $45 million in 2022 while taxation dropped sharply from $97 million in 2022 to just $18 million in the latest financial year.
Shareholders’ equity climbed to $9 billion in 2023, up from $7.44 billion in the previous year. The current year’s results pushed net asset value (NAV) to $1.39 per share, with the stock price trading at a premium to NAV. Borrowings ended the year at just over $719 million versus $632 million in the previous year. Amounts due to related parties rose to $1.3 billion from just over $1 billion in 2022. Current assets stand at $255 million versus $265 million in 2022 and Current liabilities amount to $135 million at the end of June this year, up from $112 million at the end of June 2022.
At the end of the June 2023 financial year, advertising entitlements amounted to $2.3 billion versus $1.8 billion in 2022 and investment property amounts to $7.77 billion at the end of June this year versus $6.4 billion at the end of the previous year.
Pulse pushed trading to $1.39 billion on Thursday
The Jamaica Stock Exchange continues to struggle even with strong signals that inflation locally is well below the Bank of Jamaica’s upper limit of 6 percent and much closer to its lower end of 4 percent since October last year suggesting that interest rates are close to their peak. The market closed with modest changes in the various indices, resulting in the JSE Combined Index slipping 60.20 points to 379,141.23 but only after Pulse Investments traded 350 million shares for $1,268 billion.
The All Jamaican Composite Index declined 414.17 points to 414,436.77, the JSE Main Index dipped 122.66 points to 365,745.97, the Junior Market Index added just 5.98 points to 4,132.94 and the JSE USD market Index climbed 5.99 points to 214.33.
Trading ended, with 370,414,710 shares changing hands with the value jumping to $1.389 billion, from $230 million, with 18,982,711 shares traded in the overall market on the prior trading day. The JSE USD market ended with the value of stocks traded at US$23,319, versus US$286,936 on the previous day of trading.
The market’s PE ratio ended at 23.6 based on 2021-22 earnings and 12.7 times those for 2022-23 at the close of trading.
Investors need pertinent information to successfully navigate many investment options in the local stock market. The ICInsider.com PE ratio chart and the more detailed daily report charts provide investors with regularly updated information to help decision-making.
Investors should use the chart to help make rational investment decisions by investing in stocks close to the average for the sector and not going too far from it unless there are compelling reasons to do so. This approach helps to remove emotions from investment decisions and put in on fundamentals while at the same time not being too far from the majority of investors. Investors who buy when the price of a stock is close to the average will find that they are not inclined to overpay for a stock.
The ICInsider.com PE Ratio chart covers all ordinary shares on the Jamaica Stock Exchange. It shows companies grouped on an industry basis, allowing easy comparisons between the same sector companies and the overall market.
The net asset value of each company is reported as a guide to assess the value of stocks based on this measure quickly. The chart also shows daily changes in stock prices and the percentage year to date price movement based on the last traded prices. Dividends payable and yields for each company are shown in the Main and Junior Markets’ daily report charts that show the closing volume for the bids and offers.
The EPS & PE ratios are based on 2021 and 2022 actual or projected earnings, excluding major one off items. The PE Ratio is the most popular measure used to determine the value of stocks.
The top profit performers for 2020
Its earnings season for Jamaican stocks and usually most companies would have posted first-quarter results already. The Jamaica Stock Exchange has permitted companies to publish results later, due to the Coronavirus outbreak and the disruption caused to businesses.
Some results have been lower than for last year’s first quarter, but a number of them have posted robust increases. Outstanding results published last week were led by Grace Kennedy with a 50.6 percent spike in profit before tax, to $1.99 billion for the March quarter, while profit after tax attributable to shareholders of the group rose an impressive 47 percent, to $1.32 billion. tTech’s profit for the March quarter climbed 5,375 percent from $758,000 to $4.15 million as revenues rose a healthy 32 percent. Revenues grew 33 percent to $149 million at Caribbean Flavours while profits before tax rose 31 percent to $19 million from $14.4 million, profit after tax rose 19 percent to $14.2 million. The first-quarter profit is 45 percent of the 2019 full-year results.
Revenues at 138 Student Living climbed 29 percent to $278 million for the February quarter and 71 percent to $734 million for the half-year, with profit ending at $87 million, for earnings per share (EPS) of 21 cents for the quarter, up from a loss of $68 million in 2019. Profit for the half-year to February was $270 million, with EPS of 65 cents, up from a loss of $67 million in 2019. Profit at Eppley jumped 541 percent over the 2019 outturn of just $6 million after-tax to $40 million, with EPS of 21 cents.
Kingston Wharves results for the quarter ended in March rose two percent to $1.9 billion, over the corresponding period in 2019 while net profit attributable to shareholders increased 22 percent or $101 million over the prior year, to $554 million. Sterling Investments reported a profit of US$4.6 million, versus a loss of US$7.2 million in the March 2019 period as a significant swing around in exchange gains pushed earnings higher for the March 2020 period.
Prior to this past week, Barita Investments reported a 25 percent rise in March quarter profit and 96 percent increase in the half-year results, profit for the first quarter at Derrimon Trading rose 34 percent to 91.6 million from a 5.5 percent rise in sales revenues, a rise of $18 million in other revenue and a drop in finance cost from $58 million to $49 million. iCreate increased revenues by 106 percent to $24.5 million for the three months to March with net Profit of $1.25 million, up from a loss of $1.48 million made in 2019. Pulse Investments profit rose 136 percent for the March quarter profit and 121 percent for the, nine months to March, Seprod profit for the March quarter increased 103 percent and Mailpac Group reported 71 percent increase in first-quarter profit
4 for 1 stock split for Pulse Investment?
Investors in Pulse Investment can look forward to a stock split that is likely to see each existing stock split into four units when it becomes effective.The directors have not yet met to determine the exact amount of the split or the total number of shares that likely to be offered for sale later, but at Tuesday’s annual general meeting, the Chairman gave shareholders some sense as to what the outturn could be.
At the general meeting, shareholders approved a resolution “That the company be authorized to issue any or all of new shares pursuant to a Rights Issue or Stock Split or both, as the Directors may determine.” The company is not only planning to split the stock but is likely to come to the market for fresh capital to assist with its venture into residential development and investments into other companies. The meeting was told of the progress being made in the hospitality sector with occupancy said to range from 30 percent up to 100 percent at various times of the year. Rental of commercial space had very high occupancy rates. The modeling segment continues to add new talent with good demand coming from overseas for some of the models.
The Chairman explained to shareholders that the sum of $377 million shown in the financial statement as income represents amounts covering production expenses relating to TV shows and advertising entitlement sold or used by the company. For the 2019 fiscal year, Pulse reported profit of $688 million up from $315 million in 2018. For the six months to December 2019, the company reported profit of $230 million for the quarter versus $102 million and $473 million for the six months compared with $229 million in 2018. Operating revenues were $163 million for the December quarter and $312 million for the half-year. Fair value gains on investment property contributing $145 million to profit in the second quarter and $291 million for the half-year. Earnings per share ended at 14 cents for the quarter and 29 cents for the six months. Pulse is trading at $11.30 on Wednesday morning on the Jamaica Stock Exchange.
Sygnus US$ stock hits IC TOP 10
The JSE Main Market TOP 10 had just stock leaving with Sygnus Credit Investments Jamaican dollar listing replaced by the US dollar listed stock, with the price of the latter at 14 US cents or just under J$19 equivalent.
The Sygnus Jamaican quoted stock climbed to a record high of $30 on Friday, but ended at a record closing high of $27 at the end of trading and moved down to 12th spot in the overall market ranking.
The recently listed Lumber Depot closed trading at $1.91 on Friday and moved out of the TOP Junior Market listing. Also, leaving the TOP 10 was Honey Bun, with the price rising to $8.39 with a limited supply of the stock.
Coming into the Junior Market listing, are Lasco Distributors and Paramount Trading as investors beat down their prices.
The targeted PE ratio is now 25, with several stocks trading at that level or around 22 currently. The average projected gains for the IC TOP 10 stocks are 179 percent for Junior Market and 154 percent for JSE Main market Top 10 shares.
The top three Junior Market stocks currently are the Main Event with projected gains of 243 percent, followed by Medical Disposables with a potential increase of 238 percent and Jamaican Teas with 220 percent likely capital growth.
Radio Jamaica still holds on to the lead for Main Market stocks, with an expected increase of 236 percent, followed by Pulse Investments in the number two spot with projected growth of 205 percent and Sygnus US dollar-denominated stock with likely gains of 186 percent, is next.
The JSE Main Market closed the week, with an overall PE of 20.6 and the Junior Market at 14.3, based on current year’s earnings. The PE ratio for Junior Market Top 10 stocks averages 9.1 with the Main Market PE at 10.1.
The TOP 10 stocks now trade at a discount of 36 percent of the average for Junior Market stocks and the Main Market stocks trade at a discount of 51 percent to the overall market.
IC TOP 10 stocks are likely to deliver the best returns to March next year. Projected earnings, along with the PE ratio for each company’s current fiscal year, are used in determining potential gains with the likely gains ranked in descending order with highest-ranked being the most attractive. Forecasted 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 as new information is received that can result in changes in and out of the list.
This report is compiled by persons who may have an interest in securities included in the commentary.