Investors pushed Caribbean Cream down to $6.16 on Friday to surge to the top of the list this week, while Stanley Motta was pushed down to $4.50 to reenter this Top 10 stock list.
JMMB Group jumped sharply to close at a new record high of $37 on Friday and was pushed out of the top tier main market list while Iron Rock shot to a record $5 and dropped out of the Junior Market listing. The market could be making a big mistake with Stanley Motta that is clearly undervalued. IC Insider.com upgraded Caribbean Cream earnings to 85 cents from 70 cents with a sharp fall in the price of milk solids since May by nearly 24 percent that should cut the direct input cost of producing ice cream.
Gains in the two markets are driving the PE ratio of the market higher with the overall PE for the Junior and main market, both rising to 15.8 as of Friday, up from just over 15 last week, as the valuation multiple grows with historically low interest rates and high liquidity abounding in the financial market.
The PE ratio for Junior Market Top 10 stocks average 9.2 and the main market PE is now 9.4, just marginally lower than the prior week’s level, even as the market continues to see an upward revaluation of the multiple.
The TOP 10 stocks now trade at an average discount of 42 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. The main market stocks trade at a discount of 40 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential 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 based on new information received that can result in changes in and out of the list as well.
Sygnus Credit IPO rakes in $3.8B
Some 3,200 applications with more than $3.8 billion chased after the Sygnus Credit Investments offer of 90,909,091 ordinary shares preliminary data out of the company is indicating.
The company went to the market to raise J$1.3 million but can upsize the amount it takes in case of oversubscription of the offer.
The offer is expected to close on Wednesday, May 16 received applications from Jamaicans and persons from overseas, including the wider Caribbean, ICInsider.com was informed. The company is likely to take up approximately 60 percent of the excess demand in keeping with the terms in the Prospectus that gave them the right to uplift the take in case of oversubscription.
With the oversubscription, the total issued shares projected to be just over 250 million units should end up at just over 300 million ordinary shares.
Sygnus Credit Investments is a specialty private credit investment company dedicated to providing non-traditional financing to medium-sized firms across the wider Caribbean region. These companies typically have revenues between US$5 million and US$25 million.
The investment objective of the Company is to generate attractive risk adjusted returns with an emphasis on principal protection by generating current income, and to a lesser extent capital appreciation, through investments primarily in Portfolio Companies using private credit instruments.
The company’s capital structure and the choice of investing the funds will tend to result in a return closer to fixed interest levels, but likely higher than some bank lending rates. In short to medium term, investors should be looking for steady growth but relatively high dividend payments in the medium term. The falling interest rates on Jamaican dollar money market instruments will make the dividend payment a very attractive source of income.
The company intends to pay out up to 85 percent of its net income as dividends to shareholders, payable on a quarterly basis. The target dividend yield is over 7 percent on the IPO price.
In December 2017, SCI had US$16.7 million in assets and generated net profits of US$660,855. The value of the investment in Portfolio Companies was US$11.6 million, generating a yield of 10.3 percent.
Earnings for the 2019 fiscal year could be around J$1-1.2 per share and that could see the stock trading between $15 and $20 within twelve months. Returns could be greater if they use borrowed funds to meet some of their demand for funding.
The Company currently has a robust pipeline of US$31.4 million in deals to finance, of which US$3.2 million has been approved, US$12.3 million has been mandated and US$15.9 million are at various stages of prospecting.
Sygnus Credit priced for a bounce
Sygnus Credit Investments is offering 90,909,091 ordinary shares in two classes in the the company at J$13.72 for shares denominated in Jamaican dollar and 11 US cents for the US dollar ordinary shares.
The issues are to be partially underwritten up to the equivalent of US$5 million by Sagicor Investments. If all shares are taken up in the IPO there will be 250,178,614 ordinary shares issued. The prospectus list the current yield on the portfolio of invested funds at 10.3 percent. In the event that of oversubscriptions, the issuer has the right to upsize the amount to be accepted.
Subscription list opens 9 am on May 2 and is scheduled to close on May 16 if not closed earlier.
The capital structure of the company and the choice of investing funds will tend to result in a return closer to fixed interest levels, but likely higher than some bank lending rates, in the short to medium term as such investors should be looking for steady growth but relatively high dividend payments in the medium term. The falling interest rates on Jamaican dollar money market instrument will make the dividend payment very attractive source of income.
Sygnus Credit Investments is a specialty private credit investment company, dedicated to providing non-traditional financing to medium-sized firms across the wider Caribbean region. These companies typically have revenues between US$5 million and US$25 million.
The investment objective of the Company is to generate attractive risk adjusted returns with an emphasis on principal protection, by generating current income, and to a lesser extent capital appreciation, through investments primarily in Portfolio Companies using private credit instruments.
In 2017, the Company raised US$16 million in equity from 44 investors, with more than half the capital raised from institutional investors. The top 5 largest institutional holders invested $8.5 million and owns 52.9 percent of the Issued Shares. The fund raised was used to capitalize the company and invest in Portfolio Companies. The targeted investment types include bilateral notes and bonds, preference shares, asset backed debt, mezzanine debt, convertible debt and other forms of structured private credit instruments. These types of financing are typically more aligned with the growth and expansion plans of Portfolio Companies.
The company intends to pay out up to 85 percent of its net income as dividends to shareholders, payable on a quarterly basis. The target dividend yield is over 7 percent on the IPO price.
At December 2017, SCI had US$16.7 million in assets and generated net profits of US$660,855. The value of investment in Portfolio Companies was US$11.6 million, generating a yield of 10.3 percent.
Sygnus Capital Management, the Investment Manager, seeded SCI with US$540,000 and owns 3.4 percent of the issued shares. In total, Sygnus Capital Management and Sygnus related parties invested US$1.04 million and owns 6.5 percent of the Issued Shares.
Earnings for 2019 fiscal year could be around J$1-1.2 per share and that could send the stock to between $15 and $20 within twelve months. Returns could be greater if they use borrowed funds to meet some of the demand they have for funding. According to Jason Morris they intend to use borrowed funds once they have used up the equity now being raised. Book Value per Share was 10.5 US cents at the end of 2017.
Thirty-eight-point-nine percent of the fair value of the Company’s investment in Portfolio Companies was denominated in Jamaican dollars. For the period ending December 31, 2017, appreciation of the Jamaican dollar versus the US dollar resulted in Net Foreign Exchange Gains of US$247,705, this gain which flows through the income statement, may be reversed in future periods, and may affect Net Profit.
The Company currently has a robust pipeline of US$31.4 million in deals to finance, of which US$3.2 million has been approved, US$12.3 million has been mandated and US$15.9 million are at various stages of prospecting.