100th listed company for Jamaica Stock Exchange

Jamaica Stock Exchange Junior Market will soon have its 46 listed company on its board soon, and the 100 listed company on the overall exchange, with the latest offering to the public set to open on August 12 and comes to market, solidifying and highlighting the change taking place in Jamaica’s economy where a young team of individuals with a bright idea can raise funds in the market with minimal fixed assets.
OneonOne Educational Services comes to market the prospectus states to sell 380 million shares to raise around $359 million net of cost. In reality, the issue is really for 271 million shares if the lenders convert their loans to shares. Only 121.25 million will be available to the bulk of applicants as the rest is earmarked for selected groups including 108.7 million due to investors currently holding convertible loans as such no new funds will be coming from this group of investors resulting in just $279 million in fresh capital being raised before expenses estimated $30 million. The offer will raise the number of issued capital from 1.52 billion shares to 1.9 billion.
The company has a lot in common with the recent listing of EduFocal both being in the education area using technology to deliver the service to customers thus keeping cost low and profit margins high, but it is more slanted currently in serving the corporate sector. The company that started operating in 2015 is highly profitable and benefitted from the lockdown of the economies in the Caribbean region in the aftermath of the discovery of covid-19 that resulted in schools and many businesses being closed or operating at a lower capacity.
The service is a fully remote educational technology which delivers personalized education primarily to enterprises, governments, and individuals across the Caribbean and Latin American region. The company appears to be a provider of technological infrastructure for itself and clients as opposed to be the primary supplier of learning information, as opposed to what the name suggests. In keeping with the change in service offering, the name seems set to be changed from that of educational services to one that is less restrictive in perception.
The founders have been able to win the support of some heavy hitters within the business community, with Michael G. Bernard, former CEO of Carreras holding the position of Chairman, Douglas Orane as the mentor.

Ricardo Allen CEO of One to One

The Company was founded by Ricardo Allen, Rory White, Stephen Barnes and Christopher Rochester, to deliver large-scale personalized education through the utilization of advances in learning technology which employs sophisticated statistical algorithms, the prospectus states. They were later joined by R. Danvers Williams, Michael Bernard, Douglas Orane, John Bailey, Ian Forbes and the C.B. Facey Foundation and Sagicor Group through the Sagicor Sigma Funds.
As the date of this Prospectus, it is the intention of the Company to use the proceeds to further capitalize on the demand for its services across the region and to deliver on key long-term strategic contracts by continuing to invest in software development to meet the demand for their services.
In the past, the company provided contracts that involved one-time income and recurring annual income that have an average contract length of three years – which continued to generate revenues in 2021 along with a new product “Class-room in a Box” to provide offline content to individuals and schools. As of August 2021, 63 percent of the Company’s revenue was gained through these Business to Business contracts, and 37 percent through the Company’s end user consumers business line.
For the financial year 2020, a net profit of $55.4 million was generated compared to a loss of $9.7 million in 2019. The increase in profits the company states was due to new contracts acquired in response to the COVID-19 pandemic by providing services to the education sectors in Jamaica and other Caribbean territories. For 2021 net profit increased 21.75 percent to $67.5 million over 2020. The Company says it was able to negotiate long-term contracts with clients which provide stability in revenues.
Revenues moved from $27.8 million in 2017 to $269 million in 2021 with the latter rising a significant $104 million over the $128.5 million in 2020. Revenues for 2019 ended at $36 million. For the nine months to May this year, revenues rose 24 percent to $194 million over the similar period in 2021, with a profit of $49 million pretax, up from $15 million in 2021.
The company projects revenues to hit $334 million by the end of the financial year to August with pretax profits of $105 million which would equate to earnings per share of 6.9 cents, with profits being free of taxation when listed on the Junior Market. The company states that the projected fourth quarter revenues of $140 million include existing contracts that are scheduled to produce $101 million in revenues over the 3-month period to August 2022 and an additional $39 million in revenues which are expected from the conversion of deals that are within the sales pipeline, from all indication the company seems on track to achieve this target with the fourth quarter appearing to reflect seasonality in revenues.
The earnings work out at a PE ratio of 14.5 just above the market average of 12.9 Based on where recent IPOs are valued investors can look for a price after listing around $1.50 but investors have priced many of them closer to 30 times 2022 earnings in which case a price of $2 is not out of the reckoning.
A highly welcomed feature of the prospectus is the projected income statement that shows figures for the 2025 fiscal year. Looking further ahead, the Company projects to retain $160 million in current contracts and recurring users, representing 37 percent of 2023 projected revenue, which suggests revenues of $433 million and a profit of $141 million for earnings per share of 7.5 cents with a PE of 14.2. For the fiscal year 2025, revenues are projected to reach $662 million, with a profit of $180 million, but the outcome may be vastly different than forecast. The forecast ICInsider.com gathers may be conservative, with Junior Market IPO candidates in the past enjoying a big jump in business flowing from the publicity associated with the IPO. ICInsider.com expects the IPO will provide a bounce to the company’s business.
Negatives, at the end of May, receivables amounted to $127 million 65 percent of revenues or close to eight months of revenues, which is not good and could lead to a high level of bad debts in the future, there are no comments in the prospectus to explain the high level of debt due, but the audit statements shows very little provision for expected credit loss, suggesting that management and the auditors consider the amounts to be collectable. Information gleaned by this publication suggests that there is an amount of around $60 million of the amount that the payment is differed based on certain conditions being met.
Another negative is amounts due from directors of $22.5 million, which is up from $14.5 million in August 2021 and $8 million in 2020, increased each year since 2017 when it was at $994,627. The audited financial statements state that the amount “is unsecured, interest free and have no fixed repayment terms.” The income tax law will treat these amounts as liable to taxes as they could be regarded as a distribution, there is no indication of arrangements that are in place to have the amount repaid mentioned in the prospectus.
ICInsider.com does not see the reason for the loans being converted to shares being a part of the IPO rather than for the shares being issued prior to the IPO and therefore reflects a more publicly acceptable picture of the wider public getting a higher percent of the issue than how it is currently presented. All of the above presents a picture to the discerning public, a view of a board with the majority being young and inexperienced and a sign of weakness going forward if not addressed early.
The directors of the company are Michael Bernard, chairman, Ricardo Allen, John Bailey holds a University of South Florida MBA degree in Business Administration, Karen Vaz has a BA degree and is vice president of HR and Information Technology at PanJam Group, Andrew Tyrone Wilson has BSC in Banking and Finance, Mischa McLeod-Hines has an MBA degree and is Vice President Capital Markets – Sagicor Investments and Andrew Dr Carol Granston, Instructional Designer and has served in the field of Education and Training for over thirty years.
The listing of the shares will be within a week from the closing of the issue. The broker for the offer is Sagicor Investments.

Weak demand to affect ICreate stock

Subscribers for shares in the public offer of 74,062,500 Ordinary Shares in iCreate received a high percentage of the amount applied for, except for applications with more than 400,000 units.
According to Sagicor Investments, the lead broker for the issue, all the applications received, the first 400,000 units in full with those with balances in excess of 400,000 units for the General Public Pool was allocated approximately 1.32 percent of the excess.
This is not great news for many of the investors in the issue as they could see a fall in the price of the stock as there seem to be inadequate demand for the stock at the issue price of $1.01 before it moves higher.
The stock is scheduled to be listed on the Junior Market of the Jamaica Stock Exchange.

ICreate prospectus is here

The prospectus, for ICreate initial public offer of shares, is now out. The company seeks to raise $70 million to help fund expansion.
The offer opens on Thursday, January 31 and scheduled to close February 14, with 74,062,500 ordinary shares offered to the public at $1.01 each. The company will list on the Junior Market of the Jamaica Stock Exchange, if the issue is successful. Applications are to be made for a minimum of 1,000 shares and multiples of 100 thereafter. If the issue is successful, the share capital will be 197,592,500 units, with 123.5 million units owned by EMedia and Sagicor Investments.
iCreate says “it is a creative learning institute developed with the aim of filling the gap in skills training and development of creatives in the Caribbean and North America. We provide students with a wide range of career opportunities in the Creative Economy while being a key partner of the Advertising Industry, Film Production Companies, Animation and Gaming Companies, and Creative Outsourcing initiatives.”
Existing locations are Kingston, Montego Bay, and Miami. Kingston is currently the only location that offers the full suite of courses. In Montego Bay, the company currently offer our flagship course (Professional Diploma in Digital Marketing) with the remainder to come on board once they built out the infrastructure required to deliver the courses based on our iCreate standards. “Our projected timeline for this is by or before the end of the first quarter of 2019. Miami is in the early business development stage,” the company stated in the prospectus.
The company reported a loss of $4 million for the six months to September from revenues of $18 million and projects profit of $8 million from revenues of $147 million for the year to December 2019 with profit of $62 million from revenues of $250 million in 2020.  Shareholders equity is negative $1.3 million dollar at the end of September.
The company is small, has only recently started business and is at a risky stage of development. Investors need to bear this factor in mind. While the forecast for 2020 appears attractive, the income generated in 2018 does not show a trajectory to support the high income growth, that the above forecast reflects. The business will benefit from the exposure that the IPO and listing will bring and that could help drive revenues. The positive is that current operations show signs of profit with at least two quarters last year, enjoying a profit.
The board is extremely large with nine members for a small company when seven seems more appropriate. The board comprise, Sandra Glasgow, Chairman, Tyrone Wilson, Rhys Campbell, David Wan, Mischa Mcleod-Hines, Sheree Martin, Devon Lawrence, Dr. Jennifer Bailey and Kenneth Benjamin.
The majority shares are owned by EMedia Limited, with Sagicor Investments, holding a minority position. Broker to the deal is Sagicor Investments.

ICreate ipo opens January 31

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The ICreate initial public offer of shares will open on Thursday, January 31.
The issue is scheduled to close on February 14, with the prospectus set to be released this week, word reaching IC Insider.com reveals.
The issue is a sale of 74,062,500 ordinary shares to the public at $1.01 each. The shares will be listed on the Junior Market of the Jamaica Stock Exchange, if the issue is successful. Revenue is said to be running in the region of just under $50 million per annum with prospects for strong growth going forward. Already the company is making a small profit, IC Insider.com gathers. The business is the training of students in graphic designs and animation.
The majority shares are owned by EMedia Limited, with Sagicor Investments, holding a minority position. Broker to the deal is Sagicor Investments.

ICreate to open January

The ICreate initial public offer of shares is expected to open on January 4 with the prospectus set to be released either later this week or next week.
Information gleaned by IC Insider.com is that 74 million ordinary shares will be offered for sale to the public at approximately $1 each and is slated to list on the Junior Market of the Jamaica Stock Exchange. Revenue is said to be running at just under $50 million per annum with prospects for strong growth going forward. Already the company is making a small profit IC Insider.com gathers. The business is the training of students in graphic designs and animation.
The majority shares are owned by EMedia Limited with Sagicor Investments holding a minority position in it.

Barita proposes $15.50 rights issue

The directors of Barita Investments on December 13, passed a resolution for a Rights Issue of 10 shares for each 17 owned at the record date, to take effect in early January which if taken fully will results in 258 million new shares and bring the capital issued to 707 million units.
The board resolution states:- The Board approves the issue of 258,064,516 ordinary shares (in this resolution “New Ordinary Shares”) part of the authorised capital, the same to be offered to the holders of Ordinary Stock Units by way of a Non-Renounceable Rights Issue on the following terms:
(i) Offer Price of J$15.50 per New Ordinary Share. (ii) Offer to Stockholders of the Company as at a Record Date of December 31, 2018. (iii) Offer to Open on January 8, 2019
(iv) Last date for splitting to be January 15, 2019. (v) Offer to Close on January 22, 2019 for acceptance by Existing Ordinary Stockholders/Renouncees
(vi) Offer to Close on January 25, 2019 for acceptance by applicants for Excess Shares (not taken up by Allottees under the Letter of Provisional Allotment).
2. The Directors are hereby authorized to dispose of all such New Ordinary Shares not taken up by Allottees on terms and conditions as the Directors may consider expedient in their absolute discretion, in consultation with the Arranger for the Rights Issue, Sagicor Investments. BIL further advised that the share ratio allocation for the Rights Issue will be as follows: Ten (10) additional shares for every seventeen (17) shares owned by existing stockholders of Ordinary Shares in Barita Investments.
Apart from a rights issue, the above resolution speaks to the last date for splitting being January 15, which raises the question if a stock is to be considered as well.
Barita stocks that trades on the Jamaica Stock exchange at $33.45 on Friday and is up 346 percent for the year to date.

Scotia Premium Growth up 37% in 2017

Scotia Investments was the top performing unit trust in 2017.

The Jamaica stock market enjoyed strong growth between 2015 and 2017 with several stocks recording more than 100 percent gains in each of the years. The vast majority of Jamaicans have not participated in the gains offered by the market.
The vast majority of Jamaicans have not enjoyed the benefits of investing directly in the stock market because they do not fully understand it while some are just scared to lose their money. Many investors have taken the hassle or concerns out of investing directly in stocks by investing in equity based unit trust schemes that have delivered better gains than those in the fixed income market.
For while the combined market index of the Jamaica Stock Exchange racked up gains of 43 percent in 2017, the top performing equity based fund, Scotia’s Premium Growth Fund recorded gains of 37 percent for their investors in 2017 on top of a 25 percent gain in 2016. The Scotia Fund displaced Barita’s Capital Growth Fund, the 2016 front runner that ended at number 6 in 2017, delivering a 21.5 percent return, down slightly from 26.7 percent in 2016
Many investors have benefit from the strong performance of the local stock market in a number of ways. Pension funds that a large number of Jamaicans are members of, hold shares of many companies on the Jamaica Stock Exchange (JSE). There are also insurance company funds that rely on the shares as part of their investment portfolios. The National Insurance Scheme also invests in these companies and many more Jamaicans benefit from the market’s performance than they may be aware of. Others persons invest through unit trusts to enjoy the growth in the market and thus lower their risk. How does this work?

Barita Unit Trust equity drop from #1 in 206 to 6th spot in 2017 with a gain of 21.5%

A unit trust is a pooled investment scheme that allows anyone without expert knowledge and time to invest in a diverse portfolios of most stocks, to invest in them and therefore benefit from the gains that the funds can deliver. The investments, which comprise local and foreign equities, bonds, corporate paper, government securities, real estate, among others, are professionally managed to optimize gains for the investor.
Investing in a unit trust is an attractive option as the portfolios are not only diverse but they also cater to those with or without an appetite for risk. A few of the benefits to be derived are tax free gains, depending on the portfolio, lower levels of market volatility given the mix of securities in each portfolio as well as other perquisites.
From year to year, the performance of investments in equity based unit trust funds may in part reflect the highs and lows of the economy, the percentage share of investments in the local stock market shares and fixed income funds. Most importantly, the management of the funds can make a big difference as can be seen from the varied performance of funds in Jamaica. Additionally, in recent years there have been new players entering the market and new products being offered, thereby creating greater diversity so as to capture new investors and a greater share of the market of the non-investing market.
At present, there are eight schemes managed locally, namely Barita Unit Trust, JMMB Fund Managers, JN Fund Managers, NCB Capital Markets, Proven Fund Managers, Sagicor Investments, Scotia investments Jamaica and  Victoria Wealth Management. All offer varied slate of funds denominated in Jamaican dollars and US dollars. Sagicor Investments has fifteen (15) portfolios, the most diverse of all, followed by Barita Unit Trust, JMMB and NCB, VM, Scotia and newcomer Proven.
Funds under management as at October 2017 stood at $229 billion with Sagicor still commanding the lion’s share with Scotia and NCB holding their double-digit portion while the others shared the remainder of the pie.
In the next article, IC Insider.com will look at the performance of the unit trust equities’ portfolio in 2017 compared to previous years to give investors a better view of the best performing funds.

Elite shares start trading on Tuesday

The latest initial public offer to hit the capital market, Elite Diagnostic,will be listed on Tuesday on the Junior Market of the Jamaica Stock Exchange and will bring the number of listed companies to 35.

The issue that was heavily oversubscribed could see trading taking place at the maximum allowable on the first day which is 30 percent above the IPO price of $2 up to $2.60.
On Wednesday, the price could surged above 30 percent if the bid were to close above $2.60 on Tuesday but not exceeding $3.38 which could result in the price hitting $4.39.
The company offered 70,680,000 Ordinary Shares to the public which were aggressively taken up by investors with applications for 614,190,600 units were received from 3,346 investors with a value of J$1,228,381,200. The public offer was oversubscribed by more than 10.5 times.
A total of 3,257 Application for Shares were received from the general public who will receive the first 15,000 units with the balance in excess, allocated 3.383 percent.
IC Insider.com forecasts profit of 22 cents per share for the current year to June and 35 cents for 2019. With the heavy demand for the stock and the sharp fall in Treasury bill rates the prospects of the price reaching $4 should not be ruled out.
Sagicor Investments and NCB Capital Markets were the brokers to the issue.

$1.22 billion chased 71M Elite shares

Elite Diagnostics could be in the Junior Market TOP 10 by the end of 2018.

Elite Diagnostic initial public offer of 70,680,000 ordinary shares were aggressively taken up by the General Public and place the issue as the one to have attracted the largest number of subscribers.
Applications for 614,190,600 units were received from 3,346 investors value of J$1,228,381,200.
The public offer was oversubscribed by more than 10.5 times and only one category of reserved shares was fully subscribed to, with 6,160,000 shares reserved for Medical Practitioners, receiving 54 applications. Applications from this group covered 19.046 million shares valued at $38,092,600, the first 70,000 units were allotted in full with balance getting 10.062 percent.
A total of 3,257 applications for shares were received from the general public who will receive the first 15,000 units with the balance in excess, receiving 3.383 percent.
A total of 12 applications for shares valued at approximately 1.555 million shares were received from Directors and Employees of the Company for the 4,060,000 shares reserved.
Five Affiliated Doctors applied for 142,000 out of the 700,000 shares reserved for them, two Affiliated Entities applied for just 56,000 of 420,000 shares reserved for them. Eight Referring Doctors Tier 1 applied for 2,240,000 of the 6,160,000 shares reserved. Applications from Referring Doctors Tier 2 applied for 1.011 million shares from the 1,900,000 shares reserved for them.
Sagicor Investments and NCB Capital Markets were the brokers to the issue.

Elite IPO fully subscribed

Elite Diagnostics could be in the Junior Market TOP 10 by the end of 2018.

Word reaching IC Insider.com from usually reliable sources, is that the much delayed Initial Public Offer for Elite Diagnostics was oversubscribed before the revised prospectus was posted on the Jamaica Stock Exchange on Monday. 

The company is issuing just over 70 million shares at a price of $2 each and a PE ratio around 9 times estimated 2018 earnings and just under 6 times 2019 estimated earnings. The shares were to have officially opened on Monday January 22, but was put off until Wednesday 24, following amendment to include depreciation that was omitted from interim results to September, and then was pulled to correct errors in the interim results balance sheet and cash flow statement. The issue will now officially open on Monday February 5 and is expected to list on the Junior Market of the stock exchange that will see profit being tax free for 5 years and at half the regular rate for the second 5 years. Brokers for the issue are NCB Capital Markets and Sagicor Investments.