Investors’ attention turned to the Junior Market in both 2020 and 2021 as that market provided better values for stocks and therefore greater opportunities to make higher profits. Projected earnings of the listed companies suggest that the situation is unlikely to change in 2022.
The Main Market of the Jamaica Stock Exchange eked out a modest gain of 1.1 percent in the All Jamaica Composite index at the end of 2021, the index was 21.7 percent lower than the end of 2019.
The PE for the Main market is 14 times 2022 earnings compared to 16 based on 2021 earnings, that does not suggest a big uptick for the market with just a 14 percent increase expected in 2022 over 2021 that would push the index to 499,694 points, still well below the 559,853.26 points the market closed out 2019 at.
There are several stocks in the market, data suggest could more than double in 2022 and investor would be wise to not only pay attention but pick up some of these undervalued stocks in preparation for long term growth as the Jamaican economy rebounds and move into a new stage of long term positive growth that a number of these companies will benefit from.
Banks could be amongst the big performer as they shed the need for continued heavy provisioning of loans as well as grow their book of loans to deliver more income to profits. Added the increase in interest rates will help improve their net interest income.
ICInsider.com data indicates that there are 8 stocks that can double in the Main Market in 2022 into early 2023. 2021 finished with several stocks trading at or above 20 times earnings in the Main Market if that level of valuation continues into 2022 and is more widespread, then the gain in the market could exceed the above potential gains. In the final analysis, the market index is just a simple measure as to how the overall market is doing. It comes down to individual stocks that can do well and that is the case for ICInsider.com TOP15 stocks.
VM Investments buying Mutual funds
VM Investments (VMIL) has entered into an agreement with Republic Bank (Barbados) to acquire all the ordinary shares in Republic Funds (Barbados) Incorporated, the owner and operator of the Republic Bank Barbados family of Mutual Funds.
VM Investment to acquire Mutual funds.
The funds comprise Republic Property, Income and Capital Growth Funds. The transaction completion is subject to the approval of regulators in Barbados and Jamaica. “VMIL is in an unprecedented growth mode, and we continue to be keen on strategically expanding our footprint throughout the region,” said Rezworth Burchenson, CEO of VMIL.
“VMIL was selected as the preferred bidder following rigorous pre-defined criteria,” VMIL stated. The required regulatory approval process is expected to be completed within six to nine months but could be extended depending on various factors.
ICInsider.com gathers that the total assets under management by the fund could be in the region of J$1.55 billion.
VMIL, a publicly listed company on the Jamaica Stock Exchange since 2017, reported a 69 percent increase in nine months profit to $612 million over the same period in 2020. Profit after tax for the September quarter jumped 82 percent to $348 million, over 2020 out turn of $191 million.
Growth in profits flowed from a 33 percent surge in revenue for the nine months to $1.77 billion, from $1.3 billion in 2020 and a 33 percent increase in the September quarter from $615 million to $818 million. The “performance was primarily driven by the improved investment climate which contributed to significant growth in gains from investment activities which increased by $520 million (270.71 percent) compared with the same period in 2020. These activities generated revenues of $712.17 million for the period,” VMIL informed investors in the release of the results.
Shareholders’ equity increased by $668 million from $3.9 billion at the end of September 2020 to $4.56 billion at the end of September and net book value per share ended at $3.04, up from $2.60 in 2020.
The company reported earnings per share of 41 cents for the nine months and 23 cents for the quarter and could hit 70 cents for the full year with a low PE of 8.6, well below the average for the Main Market of 15.4 at the last traded price of $6.10. the stock is one of ICInsider.com TOP10 stocks.
Medical Disposables back in IC TOP 10
Medical Disposables back in IC TOP 10
The main market of Jamaica Stock Exchange ended at a record close on Friday and the Junior Market closed at a 9 months’ high as the markets keep moving higher resulting changes to the IC TOP 10.
At the close on Friday, Proven Investments ended at 19 US cents and fell out of the top list and is replaced by Victoria Mutual Investments. Jetcon Corporation and Paramount Trading dropped out of the top flight, to be replaced by Fosrich Group and Medical Disposables. IC insider.com lowered profit forecast for Paramount with the company showing only a small profit of less than a million
dollars in the fourth quarter compared to nearly $11 million in 2017 after gross profit rose 29 percent or $28 million. Jetcon squeezed out by price changes, elsewhere Medical Disposables rose to $5.80 but made it back in the list with strong profit out turn for the first quarter to June and an upgrade of earnings for the full year, of 65 cents per share from 60 cents.
The PE ratio for Junior Market Top stocks averages 7.4 compared to an average PE for the overall market of 12, based on 2018 estimated earnings and the main market PE stands at 8 for the top 
stocks, compared to a market average of 13, a good indicator of the level of undervaluation of these stocks.
The TOP 10 stocks now trade at an average discount of 38 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 and main market stocks traded at a discount of 40 percent to the 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.
Over 1,000 applicants push FosRich IPO over
Mark Croskery Managing director of Stocks & Securities brokers fro teh IPO speaking to Cecil Foster, Managing director of FosRich.
Stocks and Securities advised the Jamaica Stock Exchange that the “Invitation for Subscription” in the Initial Public Offering for FosRich Company Limited is “Now Oversubscribed and Closed”. The Offer closed at 9:01 am today after its official opening this morning.
Reports reaching IC Insider.com is that applications for the issue exceeds 1,000, with more than $350 million accounted for so far, with the full amount still be counted up to late Monday evening.
The company went to market to raise $200 million from sale of just over 100 million shares at $2 each. The general public were allocated just 10,070,111 units, Stocks and Securities, brokers for the IPO was allocated 50 million units and key partners and staff shares has 40,385,000 allocated to them. At this stage it is unknown if any shares from the reserves allocations were not taken up and therefore became available to boost the minuscule amount allocated for the general public.
If the general pool is not boosted by much than the general public will end up only a very small sum.
FosRich is one of five IPO issues coming to market in December as VM Investments announced their issue and released the prospectus to sell 300 million shares up to $2.45 each and Elite Diagnostics is expected to issue their prospectus this week, while Wisynco and GWest both officially opens for subscription this week.
300M IPO VM Investments shares next week
VM Investments Limited, the immediate parent company of VM Wealth Management (VMWM), will offer just over 300 million shares for sale, on Monday December 11 at $2.45 per share, to raise $689 million.
A total of 225,003,750 Ordinary Shares in the Offer are initially reserved for staff and customers of the VMBS Group, discounted at $2.08 to $2.33 each, and 75 million for the general public, at $2.45 each.
The offer which opens on December 11 is scheduled to close on December 18. It is the intention to list the company on the main market of the Jamaica Stock Exchange, after the issue closes.
The company intents to use the proceeds to build its capital base, to enable it to provide financing solutions and to capitalize on new business opportunities. In this regard the CEO Devon Barrett stated that they intend to allocate $1 billion per year to meet the needs of the small business sector, where data shows that there is an annual demand for $20 billion in financing.
The Directors expect to distribute up to 75 percent of the after-tax earnings as cash dividends, up from 55 percent on average to date.
VM Investments press conference for launch its IPO. from left is Michael McMorris – Chairman of VMBS, Courtney Campbell Group CEO, Devon Barrett CEO of VMIL and Janice McKenley – Group Chief Financial Offer.
Over the last five years, the revenue stream has evolved from predominantly, fixed income and securities trading, with approximately 70 percent of its total revenues coming from net interest income. Since 2011, VM Wealth has diversified its revenue streams, becoming active in the asset management and capital market space, with a comprehensive range of products and services. This has resulted in VM Wealth earning approximately 70 percent of its revenue from non-interest income sources.
The company reported after taxes profit of $326 million, surpassing $310 million in 2015. Up to September this year, profit of $273 million was achieved, putting in on track for $360 for the year or 30 cents per share. VMWM’s total operating revenue for 2016 was $1.28 billion, down from $1.37 billion in 2015. To September this year, $1.1 billion in revenue was generated. Revenues in 2016, comprised mainly of Net Interest Income of $251 million, gain from investment activities of $279 million and net fees and commissions of $280 million. Up to September, Net Interest Income came in at $191 million, gain from investment activities of $171 million and net fees and commissions of $370 million.
Devon Barrett CEO of VMIL addressing invitees at the formal announcement of the IPO, Beside him is Janice McKenley.
Shareholders’ equity stands at $2.12 billion as of September this year, with 1.2 billion shares issued and assets that include mostly investment securities. Third party assets under management increased by $4.4 billion or 55 percent, from $8 billion in 2015 to $15 billion in 2016 and assets under custodian arrangements amounts to $23 billion up from $20 billion in 2015. This was due mainly to increased promotion and the introduction of new unit trust product with 6 new portfolios – three US$ bond portfolios, one J$ bond portfolio, one local equities portfolio and a real estate portfolio.
The strong growth in net fees and commissions is very appealing as it will provide the base for good consistent growth in revenues and profits going forward.
DEVON BARRETT, MBA, is the Group Chief Investment Officer & Chief Executive Officer, Victoria Mutual Wealth Management.
With the 1.2 billion shares now in issue earnings per share is 30 cents for 2017 giving it a PE of 8. At a price of $2.45 and a PE of just 8 times 2017 earnings, the stock is price to enjoy a decent bounce ahead of 2018 earnings that should be higher than that of the current year’s, making it even more attractive.
The nature of the earnings can result in higher or lower profit from year to year but the longer term trend ought to be up, all things being equal especially as the more predictable fee income is growing at a faster pace that the others.
VM Investments IPO December 11
VM Investment parent of VM Wealth Management planning to list.
The Initial Public Offer of shares in VM Investments Limited the immediate parent company of VM Wealth Management (VMWM) will open on Monday December 11 and is priced at $2.45 per share.
The annual report of Victoria Building Society stated that 2016 turned out to be another record breaking year for VM Wealth Management, as net profits after taxes of $326 million surpassed the previous record of $310 million in 2015. VMWM’s total operating revenue was $808 million, virtually the same as in the previous year. Revenues comprised mainly of Net Interest Income of $248 million, gain from investment activities of $279 million and net fees and commissions of $280 million. Third party assets under management increased by $4.4 billion or 55 percent, from $8 billion in 2015 to $12.4 billion in 2016. 
This was due mainly to increased promotion and the introduction of our new unit trust product with 6 new portfolios – three US$ bond portfolios, one J$ bond portfolio, one local equities portfolio and a real estate portfolio.
DEVON BARRETT, MBA, is the Group Chief Investment Officer & Chief Executive Officer, Victoria Mutual Wealth Management.
The VM Investments issue is adding to a very busy December, for IPOs and this is likely to be followed January with another busy slate of Initial Public Offerings. Planned issues by Mayberry Investments that were expected in December, may be put off until January, IC Insider.com has been informed. Sygnus Capital Investments is the other that could be listed in January.
