The Main Market and JSE USD stocks plunged on the Jamaica Stock Exchange on Wednesday as the Junior Market closed moderately higher as trading ended with the number of stocks changing hands falling, with the value and volume of stocks traded falling from the previous trading day, resulting in prices of 27 shares rising and 43 declining.
At the close of trading on Wednesday, the JSE Combined Market Index dived 3,639.94 points to 39,676.83, the All Jamaican Composite Index plunged 4,423.34 points to end trading at 366,211.78, the JSE Main Index dropped 3,917.90 points to lock up trading at 326,885.56. The Junior Market Index rallied 3.93 points to conclude trading at 3,780.58 and the JSE USD Market Index dipped 8.85 points to settle at 247.53.
At the close of trading, 27,700,537 shares were exchanged in all three markets, from 42,523,060 units on Tuesday, with the value of stocks traded on the Junior and Main markets amounted to $172.24 million, down from $289.25 million on the previous trading day and the JSE USD market closed with an exchange of 110,543 shares for US$13,237 compared to 2,937,043 units at US$118,791 on Tuesday.
Trading in the Main Market was dominated by Carreras with 5.35 million shares followed by General Accident with 4.01 million units, Wigton Windfarm with 3.76 million units, Transjamaican Highway with 2.44 million shares and Scotia Group with 1.01 million units
In the Junior Market One Great Studio led trading with 1.91 million shares followed by Stationery and Office Supplies with 1.87 million units and JFP Ltd with 855,299 stocks.
The market’s PE ratio, the most popular measure used to determine the value of stocks, ended at 21 on 2022-23 earnings and 14. times those for 2023-24 at the close of trading. ICInsider.com PE ratio chart and the more detailed daily charts provide investors with regularly updated information to help decision-making.
The PE ratio chart covers all ordinary shares on the Jamaica Stock Exchange, grouped by industry, allowing for easy comparisons between the same sector companies and the overall market. The EPS & PE ratios are based on 2023 and 2024 actual or projected earnings, excluding major one off items.
Investors need pertinent information to navigate numerous investment options successfully in the 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 decisions when 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 place them 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 net asset value of each company is reported as a guide for investors 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 paid or payable and yields for each company are shown in the Main and Junior Markets’ daily report charts, along with the closing volume pertaining to the highest bid and the lowest offer for each company.
Profit climbs 22% at Stationery & Office Supplies
Profit climbed in 2023 at Stationery and Office Supplies an under the radar company until listing on the Jamaica Stock Exchange transformed it into one of the leading companies peddling office supplies in Jamaica. For the quarter ending September this year, profit after tax climbed 22 percent to $96 million from $79 million last year and for the nine months $294 million up 14 percent from $252.5 million.
Stationary & Office Supplies – Montego Bay office.
The year-to-date figures include a gain on the sale of assets amounting to $7.1 million and $30 million in 2022 as such this year’s ongoing profit performance is greater than the net figures suggest.
Year to date, the operating profit before finance charges and gains or loss on the sale of fixed assets is up a solid 38 percent for the nine months and 12 percent for the quarter.
For the September quarter, revenues inched up from $473 million to $488 million. A fair bit of the slowdown is due to price discounts granted based on originally listed prices following falling input costs. For the year to date, revenues climbed 16 percent to $1.53 billion from $1.32 billion in 2022.
Administrative and general expenses rose 23.5 percent to $138 million from $112 million in the September quarter of 2022 and for the year to date, it climbed 20 percent to $378 million from $314 million. Selling and promotional costs fell to $29 million for the September 2023 quarter from $35.8 million last year, with the year to date figures being almost flat at $97 million in 2023 versus $96 million in 2022. Depreciation charges were slightly down from $8.7 million in the September quarter of last year to $8.4 million this year and year to date the numbers are flat at $26.4 million.
Earnings per share for the third Quarter was 4 cents compared to 3 cents in 2022 and for the nine months end September this year, 13 cents per share, up from 11.33 cents.
ICInsider.com projects 19 cents per share for the year, from revenues of just over $2 billion and 30 cents for 2024. The stock last traded at $1.72, with a PE of 8.9 times current year’s earnings, well below the market average of 12.
Operations produced cash inflows of $356 million, up from $259 million in 2022 and at the end of the period with a surplus of $189 million that brought the total to $320.8 million up from just $99 million at the end of September. The 2023 growth in Cash inflows is after spending $72 million on acquiring property, plant and equipment, $50 million in dividend payments and $40 million used in repaying loans. Some of the amount on hand is earmarked to fund the acquisition of properties to be used for storage to allow for continued expansion of the business.
Current assets closed the period at $1 billion, with Receivables rising from $194 million to $317 million and inventories at $349 million compared with $356 million in 2022. Current liabilities rose to $305 million from $148 million in 2022.
Shareholders’ equity stands at $1.35 billion which is up from $884 million from a year ago and borrowed funds used in its operations is only $65 million.
Going forward, the Seek manufacturing division is to get new machines to help meet growing demand as the current facility is said to be at its peak. The distribution of 3M stationery products has been added to the company’s line in the latter months of 2023 and will boost revenues in 2024, with a full year of sales.
Junior Market stocks dominate half year
At the midway point in the year, the Jamaica Stock Exchange Main Market is down 7 percent, with the Financial Index down a much larger 15 percent, but the Junior Market is flat, as the JSE delivered 35 price gains for the ordinary shares and 59 losses as Junior Market stocks dominated the top positions for the first half of 2023.
Expectations are that the Junior Market will continue its upward movement in the second half of the year with technical indicators pointing to a big upward push in the market. The market gained 75 percent the last time these indicators flashed a buy signal.
The Main Market remains under some selling pressure and is not signalling a sustained rally in the short term. But June is never the month of recovery for that market following sell in May and go away. July is the month that is historically the period in the past the Main Market usually starts to rally and sometimes as late as August fueled by mid year results that will mostly be in by the middle of August.
There are only two Main Market stocks in the TOP10 with Transjamaican heads Stocks to Watch coming on top for that market with a 77 percent gain, year to date, with it being the second highest performer for the overall market for the year so far. Ciboney is up 59 percent and the fifth highest performer, and the second best Main market stock, thanks partially to a change in the majority ownership to IEC Energy Company Ltd, with the new directors being Nigel Davy, Jennifer Davy, Klyle Davy, Wycliffe Cameron Conley Salmon Donald Patterson and Wayne Wray.
The top performing stock is Main Event with a rise of 89 percent, with more gains expected with the PE ratio of just 10 times this year’s earnings, while Stationery and Office Supplies doubled after an announcement to consider a stock split at a directors meeting on June 21 ended with a gain of 37 percent for the half year as the price pulled back after the directors announced a recommendation for a 9 for 1 split to be voted on at the company’s AGM on July 25.
The Junior Market has the majority of stocks, six, in the worst performer grouping, with Fosrich being the worst with a loss of 45 percent as the price corrected sharply from an overbought position last year, followed by iCreate down 34 percent from excessive speculation from a number of announcements the company made last year.
SOS to split stocks into 9 units
Shareholders of Stationery and Office Supplies seem set to enjoy the benefit of splitting existing stock into nine ordinary shares for each they own to take effect and will result in the total number of shares jumping from 250.12 million units to 2.251 billion effective on July 25.
To accommodate the split, shareholders will be asked to vote on a resolution to be tabled at the company’s annual General meeting of July 25 to effect the split and will also be asked to vote to increase the number of shares to 500 billion units, with effect from July 25.
The shares of SOS that hit a record high of $34.98 on Wednesday closed at $33.89 on Thursday on the Junior Market of the Jamaica Stock Exchange.
Stock split news lift SOS to a record $26
Investors in office supply Junior Market listed company Stationery and Office Supplies are having a grand time, with the company reporting two highly profitable years with 2023 starting off on a promising note for another year of record profits.
Stationery & Office Supplies hit a new high after the proposed stock split announcement.
Over the past year, shareholders will receive dividends amounting to 38 cents per share with the second payment in July. To add icing to the cake, the announcement on Monday that the board of directors will meet on Wednesday to consider a stock split has pushed the share price to a record high of $26 in early trading on Tuesday, with an increase of 52 percent for the year to date on top of 179 percent gain in 2022. Up to late May, the stock was trading in the $15 region, a level that it was at for weeks.
In premarket trading there were several bids amounting to over 306,000 units at $26, the maximum the stock will trade at initially, against 23,811 on offer up to $26. Trading in the stock is halted until 10:30 but currently, there are 21 bids at $26 to buy 282,981 shares. On the other hand, the lowest offer is at $30.50 with 23,000 units, followed by 575 shares at $34.96 and 28,774 units at $35.01 and then 42,277 stock units at $44.97.
Is SOS the next stock Split?
Business has been great for Stationery and Office Supplies (SOS) over the past two years, with sales rising 55 percent over 2021 last year and 16 percent over the covid-19 affected 2020 in 2021 and is up 22 percent for the first quarter to March this year.
The surge in sales drove pretax profit excluding one-time income, up 34 over last year on top of a 151 surge in 2022 over 2021. While the company has started 2023 positively, reports are that its first shipment of goods to Cayman Island, which is expected to be an ongoing trade, has been sent off and that, in addition to its connection with Trinidad and Tobago that started in the latter part of 2022 and reports indicate that arrangement is in place for regular shipments to a third Caribbean country.
The stock had nearly two million units on offer up to June 5 at just under $16, but investors aggressively bought 1.5 million on that day and the stock has since seen limited supply on offer. The $20 price level is believed to be the trigger point for the directors to seriously consider recommending splitting the stock to shareholders. The stock price hit a 52 weeks’ high on Monday when it traded a small quantity at $21 and closed there again on Tuesday after 10,230 shares were traded. The stock price is up 22 percent this year and trades at a PE of 11 times 2023 earnings, but has more room to grow, with a PE of 15 putting the price within reach of $30.
SOS executives
More than 91 percent of the issued share are in the hands of the top 10 shareholders, thus reducing the potential supply that can come to the market with only 250 million shares issued. At the close of Tuesday’s trade, stocks on offer below $25 amount to 7,200 units, with 80,000 on offer at $25. After that, the bids start at $35.
Stock splits are popular among investors in Jamaica, with each announcement accompanied by a hike in the price of the relevant stock.
The door is left open for a resolution to be put to the company’s upcoming AGM for a stock split, as the annual report filed with the JSE stated that the date of the AGM was to be determined.
169% surge in profit at SOS
Stationery and Office Supplies (SOS) enjoyed a blow year in 2022, with earnings hitting a record high, after profits jumped 169 percent before tax to $284 million and $257 million after tax from a 55 percent jump in revenues to $1.75 billion from $1.12 billion in 2021. SOS benefitted from one time income from a Gain on disposal of property, plant and equipment of $30 which was partially offset by unusually large impairment losses of $11.5 million.
Income tax on the year’s profit amounts to $27 million compared with a tax credit of $1 million in 2021. Net profit in 2021 was $107 million but gross profit jumped 59 percent from $574 million in 2021 to $912 million for 2022, as gross profit margin slipped during the year to 47.8 percent from 49 percent in 2021.
Administrative and general expenses rose 25 percent to $399 million from $320 million in 2021. Selling and promotional costs rose 64 percent to $132 million from $80 million in the prior year, Impairment loss on financial assets jumped 698 percent to $11.5 million up from $1.4 million and Depreciation and amortisation costs rose 13.7 percent to $30 million up from $26.4 million. There were cost savings during the year with Loss on foreign exchange falling 85 percent to $1.2 million from $8 million in 2021 and Finance costs dropping 22 percent to $8.7 million from $11 million in 2021 as loans were partially repaid.
Allan McDaniels CEO of SOS
Gross cash flow during the year brought in $336 million, which was used to fund increased working capital needs of $84 million, capital expenditure amounting to $50 million, loan repayment of $49 million and dividend payment of $45 million, leaving $97 million to add to cash funds.
At the end of the year, shareholders’ equity grew to $1.1 billion with long term borrowings at $67 million and short term at $43 million. Current assets ended the period at $737 million inclusive of trade and other receivables of $200 million versus $124 million in the prior year. Cash and bank balances rose to $132 million from $34 million in the previous year and inventories climbed to $369 million up from $296 million in 2021. Current liabilities ended at $181 million and resulted in Net current assets of $556 million.
Earnings per share came out at $1.03 cents for the year up from 43 cents in 2021. IC Insider.com forecasts $2 per share for the current fiscal year, with a PE of 7.3 times the current year’s earnings down from 14.5 based on 2021 results, compared with 11.3 for the market based 2023 earnings at $14.50 the stock traded at on Friday on the Jamaica Stock Exchange Junior Market.
Stationary & Office Supplies – Montego Bay office.
Of note is a 37 percent increase in fourth quarter revenues, which was at a slower pace than the 63 percent increase for the nine months to September and a 45 percent rise in the 4th quarter of 2021, suggesting that the pace for 2023 should be strong, but most likely slower than that of 2022. The pace in 2023 will be helped by a deal struck with a company in Trinidad to cross sell products as well as the possibility that other deals may be struck with others.
SEEK division produced receipts and other ruled books as well as graph paper for the first time in June last year, using machinery that was purchased from the former operators, they will enjoy increased production for the entire year in 2023 compared with approximately six months in 2022 and contributed $43 million to gross profit for 2022.
With improving profits and shrinking supplies outside of the TOP 10 shareholders, who control 91 percent of the issued shares, the stock is setting up for a stock split that cannot be far off and when given will catapult the stock price upwards.
Going forward, with the Jamaican economy recovering and now growing, the stage is being set for SOS to continue to grow at an attractive pace for a while and deliver above average returns for investors in cash dividends and stock price gains.
3 new ICTOP10 stocks after week’s gains
The Main Market gained 1.3 percent and the Junior Market 2.4 percent over the previous week, the first sign that stocks may be coming back to life, following the end of earning season with a mixed bag of results and the sounding of prospects for a better period ahead, with cost pressures that existed last year in stockpiling supplies to meet demand that squeezed margins have started to recede, with the promise of higher profit margins ahead.
Everything Fresh tops ICTOP10
The period saw many companies reporting solid gains in profit that investors are yet to award with better prices than the results demand, which is not expected to last for long as supplies of many stocks have been declining in recent weeks.
ICTOP10 has three new additions to the Junior Market TOP10 while the Main Market remains steady.
The week closed with rising stocks dominating the Junior Market TOP10. Paramount Trading fell 9 percent in the prior week, led rising stocks this past week, with a gain of 18 percent to $2.35, followed by Main Event, put on 15 percent to land at a new high of $12.39, Lasco Distributors and Lasco Manufacturing rose 8 percent to $2.81 and $4.30, respectively. Iron Rock Insurance fell 13 percent to $2.08 and Tropical Battery dipped 4 percent to $2.20.
Six stocks rose in the Main Market TOP10, with 138 Student Living rising 10 percent to $5.50, the price of Jamaica Broilers rose 9 percent to $36 as investors warmed to the stock following release of outstanding second quarter numbers and the price having a long way to run. Caribbean Producers, that is undervalued, rose 6 percent to $10 as selling pressure eased somewhat.
Price changes resulted in Paramount Trading, Main Event and Lasco Manufacturing exiting the Junior Market TOP10 and replaced by AMG Packaging, Everything Fresh and Stationery and Office Supplies.
AMG Packaging enjoyed improved profit margin in the November quarter compared with that in 2021, even as sales fell slightly in the latest quarter to November, which augurs well for increased profit in the current year, with revenues projected to rise in the year with more business opportunities as the economy continues to grow at a healthy pace. Everything Fresh and Stationery and Office Supplies (SOS) earnings reflect that for the current year. Everything Fresh now heads the Junior market TOP10, having reported profit for an entire year in 2022 for the first time since they released a depressed $16 million profit in 2018. Profit came in at $48 million before tax for 2022, a modest change from $47 million reported for the nine months to September after finance costs rose 43.5 percent in the December quarter over the nine months to September. With 2023 setting up to be the strongest tourist season since 2019, the company is set to see a big jump in business from that sector and profit in 2023, that should see the company earned 30 cents per share, that is why it is in ICTOP10. SOS posted record profits for 2022 with a 169 percent increase before tax from a 55 percent jump in revenues. Of note are a 35 percent increase in fourth quarter revenues and a deal struck with a company in Trinidad to cross sell products that should add to revenues in 2023 and push earnings to $2 per share for the year. With improving profits and shrinking supplies outside of the TOP 10 shareholders, who control 91 percent of the issued shares, the stock is setting up for a stock split that cannot be far off and, when given, will catapult the stock price upwards.
At the end of the week, the average PE for the JSE Main Market TOP 10 is 5.5, well below the market average of 13.9, while the Junior Market Top 10 PE sits at 6.1 compared with the market at 11.8. The differences are important indicators of the level of the undervaluation of the ICTOP10 stocks. The Junior Market is projected to rise by 240 percent and the Main Market TOP10 by an average of 284 percent to May 2024, now that TOP10 stocks earnings are based on 2023 profits.
The Junior Market has 13 stocks representing 27 percent of the market, with PEs from 15 to 26, averaging 19.5, well above the market’s average. The top half of the market has an average PE of 17. The above average shows the extent of potential gains for the TOP 10 stocks.
The situation in the Main Market is similar, with the 12 highest valued stocks priced at a PE of 15 to 115, with an average of 32 and 23 excluding the highest valued stocks and 21 for the top half excluding the highest valued stocks.
ICTOP10 focuses on likely yearly winners, accordingly, the list includes some of the best companies in the market, but not always. 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 up to the end of May 2023 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, resulting 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.
138 Student Living jumps 41%, Purity 34%
Last week’s stock to watch, Everything Fresh, climbed another 12.5 percent on top of the solid 43.5 percent last week to close the week at $1.89, while Consolidated Bakeries, added to the list last week, surged 34 percent to close at $1.99 as investors aggressively sucked 837,932 shares out of the market, leaving just eight lots of stocks amounting to 71,000 units on offer.
New to the list this week is Lumber Depot, that is undervalued with good potential to expand. ONE on ONE Education Services should list soon and will enjoy a significant price hike a few days after listing.
138 Student Living delivered a 41 percent jump in the week and should move even higher in the weeks ahead, while Stationery and Office Supplies picked up a bit as some demand came in for the stock. Expect more gains in the months ahead.
Investors should continue to watch Caribbean Assurance Brokers, Caribbean Producers, Dolphin Cove, Express Catering, Guardian Holdings, Jamaica Broilers, Lasco Distributors, Lasco Manufacturing, NCB Financial and Paramount Trading.
Dolphin Cove, Caribbean Producers, Express Catering and Everything Fresh will be significant beneficiaries of the strong rebound in tourist arrivals, now back to 2019 levels.
Everything Fresh jumps 44% last week
Last week’s stock to watch, Everything Fresh, climbed 43.5 percent from $1.17 to close the week at $1.68 and should move higher and Future Energy Source, that reported fabulous results for the first quarter, was one to watch. The stock added to the $5.29 price it closed the previous week at and closed on Friday at $5.63, with a PE ratio of 22.5.
Everything Fresh traded at $1.68 on Friday to gain 43.5% for the week.
This week, Consolidated Bakeries is added to the list, following excellent half year results, with prospects of more gains ahead, but General Accident is out following a bump in claims in the second quarter that squeezed profit. Also added to the list is ONE on ONE Education Services, which should list this month and enjoy a significant price hike.
138 Student Living reported strong June results but hardly moved in a week that the markets suffered declines. Meanwhile, Stationery and Office Supplies pulled back a bit as demand weakened following good half year results.
This week’s other ICInsider.com watch listings are Caribbean Assurance Brokers, Caribbean Producers, Dolphin Cove, Express Catering, Guardian Holdings, Jamaica Broilers, Lasco Distributors, Lasco Manufacturing, NCB Financial and Paramount Trading.
Dolphin Cove, Caribbean Producers, Express Catering and Everything Fresh will be major beneficiaries of the strong rebound in tourist arrivals, now back to 2019 levels.
Refunds should start returning to investors from ONE on ONE Education Services this week now that allocations in the recent IPO are determined. That could make a big difference to the market as investors deploy those funds in the market.
