Blog Page — Page 1457

Mining & Agriculture dent GDP badly

July 16, 2013 by IC Insider.com

Data from the Statistical Institute of Jamaica (Statin) is confirming what Jamaicans already know — the economy suffered a decline in the first quarter of 2013. According to the government body charged with the collection and compilation of data, the economy declined by 1.3 percent in the first quarter of 2013 compared to the similar quarter of 2012. The sectors that made a big dent to the economic performance were Agriculture, Forestry & Fishing industry which declined by 11.4 per cent, Mining & Quarrying industry which fell by 9.1 per cent. These of course were not the only sectors to suffer reduced output.

The report indicated decreased output in both the Goods Producing and Services industries which fell by 4.5 per cent and 0.1 per cent respectively. Continued macroeconomic challenges in the economic environment as well as the lingering effects of Hurricane Sandy, which affected the island in October 2012, were the factors posted by Statin for the poor performance of the sectors and the negative economic performance in the first quarter.

The Manufacturing sector declined by 1.6 per cent but there was improved performance in the Construction industry which grew by 0.7 per cent. There was mixed performance within the Services industries. Increased output was recorded by Transport, Storage and Communication (0.6 per cent), Finance and Insurance Services (0.2 per cent), Real Estate, Renting & Business Activities (0.4 per cent) and Other Services (0.1 per cent). Industries that experienced lower levels of output were Electricity & Water Supply (-3.0 per cent), Hotels and Restaurants (-2.3 per cent) and Producers of Government Services (-0.1 per cent). The Wholesale & Retail Trade, Repairs, Installation of Machinery & Equipment remained unchanged.

When compared with the fourth quarter of 2012, the real value added declined 0.5 per cent. Both the Goods Producing and Services industries recorded lower levels of output. The Goods Producing industries declined by 1.4 per cent while the Services industries declined by 0.2 per cent.

Filed Under: Economy Tagged With: Economy, GOJ

TTSE: TCL continues up

July 16, 2013 by IC Insider.com

Tuesday, 16th July 2013 | The total amount of trading took place in 9 securities of which 3 advanced, 1 declined and 5 traded firm on Tuesday as 1,172,484 units crossed the flo0r of the Trinidad Exchange with a value for $3 million.

Jamaica’s National Commercial Bank traded 677,000 shares, for a value of $812,217. IC Insider’s buy rated Trinidad Cement exchanged 448,600 shares for $515,890 as the stock continues to gain closing at $1.15 with a bid at $1.17 for 152,000 shares and the offer at $1.31 for 50,000 units, an indication of more gains ahead. Trinidad’s Scotiabank enjoyed 11,945 shares switching ownership with a value of $835,791, while Angostura Holdings added 3,000 shares valued at $27,169, losing 4 cents to close at $9.06. Clico Investment Fund was the only active security on the Mutual Fund Market, posting a volume of 28,636 shares valued at $644,310. Ansa Merchant Bank Limited enjoyed the day’s largest gain, increasing 7 cents to end the day at $38.60 as 550 units traded.

West Indian Tobacco has a bid at $117.51 for 20,869 shares. The offer is at $118 for a mere 691 units. Unilever has a bid at $54 for 22,980 units, the offer is 43 units at $54.14.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer market sentiment indicator shows that bids for 1 stock were higher with 4 stocks having offers lower than their last selling price.

Conversely, Angostura Holdings Limited suffered the day’s sole decline, falling $0.04 to end the day.

Filed Under: Stock Market, TTSE Market Tagged With: Daily Trading, Trading Activity, TTSE

IPO: What or who is Eppley?

July 16, 2013 by IC Insider.com

The English dictionary has no such word, much less the meaning for ‘Eppley’ and a Google search has it as a little-known surname. However, it’s a name that will be on investor’s minds over the next couple of weeks as the company seeks to raise $82.6 million as a prelude to listing on the junior market of the stock exchange. The shares are clearly not meant for the average investor due to the small number of shares on offer and the price of $377 per share, which is the same as the net asset value of the shares, represented primarily by liquid assets. The shares are also priced around 10 times earnings before tax.

Who are they? | Although the public knows nothing about Eppley, it was established in 1973 and has been operating for some time under the name, Orrett and Musson Investment Company Limited. The Company is also an affiliate of General Accident which provides the Company with the necessary infrastructure to monitor and manage its investments plus ancillary administrative services. In consideration for these services, General Accident receives an incentive based fee, which is calculated as 20% of the Company’s average return on equity that is greater than 12% per annum.

The Directors, who are associated with the Musson group as directors or executives, are Nigel A. L. Clarke, Melanie Subratie, Nicholas Scott, Sharon Donaldson, Jennifer Scott, Maxim Rochester, Keith Collister, Alexander Melville and Byron Thompson.

The offer opens on Monday, 22 July 2013 and is scheduled to close on Monday, 29 July 2013 with 218,999 shares offered to the public of which 145,999 are Reserved Shares. Applications from the general public is at a minimum of 20 shares and multiples of 10 thereafter. If any of the Reserved Shares in any category are not subscribed by the persons entitled to them, they will be available for subscription by the other Reserved Share Applicants, and thereafter, by the general public.

The proceeds are expected to be used to expand the capacity of the Company to provide credit facilities and to pay the expenses of the Invitation, which the Directors believe will not exceed $7.5 million. There will be no liquidity for these shares as the float is far too small.

Business profile | The Company manages a portfolio of loans, leases and other forms of commercial credit. In so doing, it provides a variety of credit products to corporate and professional customers, including insurance premium financing — the company’s main line of business, lease financing arrangements for equipment (mostly motor vehicles for commercial and professional clients), commercial loans, and other forms of credit.

Insurance premium financing involves the financing of insurance premiums for personal and commercial insurance contracts, generally for periods of less than a year. Leasing involves the provision finance leases and commercial lending involves a variety of loans products that in most instances differ in structure or collateral from loans the Directors consider to widely available in the marketplace.

The Directors anticipate that commercial lending and leases will comprise an increasing share of the Company’s business following the Invitation.

Eppley aims to provide more attractively priced credit to its clients with better service than what is currently available in the marketplace. It aims to do this by maintaining a lean and efficient organizational structure, making fast investment decisions based on common-sense credit standards, and exercising strict confidentially and privacy in its dealings.

The Company’s business strategy is to deliver high and consistent risk-adjusted returns to its shareholders. It believes that commercial credit offers more attractive risk adjusted returns than other available fixed income investment alternatives, including Government of Jamaica debt. The Company stated that the vast majority of its aftertax earnings will be distributed to shareholders as cash dividends subject its Dividend Policy. The policy may be revised by the Board from time-to-time with the distribution being not less than 50% of its after-tax earnings.

Eppley’s numbers | The Company’s average return on operating assets, which provides an indicator of the rates at which it is able to lend, has fallen from 28% in 2008 to 15% in 2012. This reduction occurred at a slower pace that the reduction of interest rates in Jamaica. At the same time, the Directors note that the average cost of the Company’s operating liabilities, an indicator of the rates at which it is able to borrow, had not declined as rapidly. As a consequence, the average net income spread has tightened from 15% in 2008 to 8% in 2012.

The Company has restructured its balance sheet moving way from greater reliance on debt financing to a greater use of equity funding. The restructuring involved repaying related party assets and borrowings subsequent to the last audited report at the end of 2012, as well as actual or planned conversion of some loans from related parties into equity.

The Company’s cash and deposits were $115.5 million higher on 30 April 2013 compared to 30 April 2012. In keeping with its business strategy, Eppley began its lease operations late in the first quarter of 2013 and recorded lease receivables of $18.7 million as at 30 April 2013.

Eppley’s net investment income declined to $14.9 million in the 4 months ended 30 April 2013 compared to $16.1 million in the 4 months ended 30 April 2012. This was a result of increased holdings of lower yielding cash and marketable securities in the period. The Company’s other operating income increased significantly, mainly as a result of foreign exchange gains on its holdings of hard currency. As a result, its profit after tax increased from $7.0 million in the 4 months ended 30 April 2012 to $12.1 million in the 4 months ended 30 April 2013.

Listing of the shares on the stock exchange will provide visibility for the Company and opens it up to borrow cheaper funds than if they were a non-listed company. Listing will also improve the return on equity as there will be no taxes for 5 years on profits.

IPO outlook | This one looks like a medium term investment but due to the listed number of shares, investors may want to acquire some in the IPO to ensure that they have them well ahead of when profits start to grow.

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: Eppley, JSE Company

Kremi up, hardly out of the blocks

July 16, 2013 by IC Insider.com

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Caribbean Cream’s 49 percent jump in revenues in the first quarter to May this year, melted down to just 24 percent in pre-tax profits as costs rose above the growth in inflows. The situation for the February quarter was even worse as a 48 percent increase in sales delivered just $1.5 million in profit, a collapse from $18.6 million in 2012. Profit after tax rose to $11.7 million, up from $5.4 million, thanks to a roughly $6 million turn around in taxation.

Costs rise faster | In the May quarter, direct labour cost climbed 69 percent to $11.4 million, electricity moved up by 86 percent, water jumped 106 percent to $1.2 million, machinery depreciation was up 117 percent. There were savings in packaging cost, down 53 percent to $725,000, factory rental was down by 44 percent to $1 million. IC Insider understands that the company underwent some major changes in how some aspects of the operations are done. The company used to purchase certain items from Scoops Unlimited, but this operation is now taken over, hence costs are structured differently than in the prior year period. The acquisition of their own warehouse means reduction in rental but a rise in finance cost. There was also a price adjustment in March for the products to help cover the increased production cost.

Admin cost | Administrative cost was fairly well contained having increased far less than sales. The increase most likely would have been partially impacted by added costs to facilitate the IPO which occurred in the quarter. As such legal and professional fees were up nearly $1 million and audit and accounting fees by $1 million. Utility cost were down as well as depreciation but these may be due to reallocation of charges to direct expense instead of administrative expenses as was shown in the prior period. Interest and finance cost also showed an increase of $1 million. There was also a loss of $937,000 on disposal of fixed asset. The growth in profits before tax would be 36 percent if the loss on fixed asset is excluded. With the increased level of revenue, far more would have been expected under normal circumstances. The next quarter will be the true test when one-off costs should not recur.

Caribbean Cream’s rapid sale growth is phenomenal and looks as it can continue for a while yet. This is the aspect that many investors should be looking at as the company expands its customer base and captures market share with good products at competitive prices. As sales continue to rise rapidly, cost is likely to grow at a much slower pace thus helping to boost profits at a rapid pace.

At the end of May, current assets stood at $131 million up from $102 million at the end of February. Increased cash which stood at $65 million and a $24 million reduction in inventories were the factors giving rise to current asset change. Current liabilities on the other hand stood at $75.66 million a decline from February’s $126 million as the amount for payables was cut from $100 million to $64 million. Borrowed funds stood at $81 million, just a bit lower than the amount due at February.

Capital spend | The company spent $100 million on capital prior to the IPO but more is to be spent as new cold room machinery is to be installed later this year. Management states that this will cut cost and increase efficiency in freezing the product.

Valuation | The stock is selling at roughly 30 percent of sales. This compares with AMG Packaging at 100 percent of sales, Blue Power 50 percent and Jamaican Teas is around 100 percent of sales. The PE on forward earnings for 2014 is only 2 and there is much room for the stock price to move upward.

Management | The report containing the results show signs of some management weakness that they need to correct. In the investment world, communication is key. The changes in the operations and the resulting changes in the line items of costs should have been addressed in the directors’ report to shareholders. Costs that were of a one-off nature should have been highlighted so that investors could get a clearer picture about ongoing costs and profits. Instead, investors have to dig into the numbers making assumptions that really should not be necessary.

Filed Under: Company News, Company Results Tagged With: JSE Company

FX: More buying than selling

July 15, 2013 by IC Insider.com

Monday, 15th July 2013 | In today’s forex trading, the Jamaican dollar closed at a selling rate of $101.71 to the US dollar, down 9 cents and authorised dealers purchased the US dollar for $100.99, an increase of 22 cents. The Canadian dollar closed at a selling rate of $98.62, an increase of 47 cents. Authorised dealers purchased the Canadian dollar for $95.37, $1.21 less than on Friday. The Pound sterling closed at a selling rate of J$153.67 up 2 cents, while buying took place by authorised dealers at J$150.53 for a decline of 83 cents.

The total amount of currency bought was US$34.1 million while $29.74 million was sold. While there was US$5.4 million more US dollars purchased than sold, more Canadian dollars sold than was purchased as sales jumped to C$2.79 million versus only C$1.34 million bought.

There was little change in the highest and lowest rates for US dollar but the rate climbed by 50 cents for the highest buying rate which ended at $98.80 and 66 cents for the lowest buying rate which closed at $78.68. The highest selling rate for the Canadian dollar moved up by $1.02 in closing at $101.60 and the lowest selling rate rose by $1.20 to $94.70.

Highest rates traded in Pound sterling was $153.90 buying reflecting a 60 cents fall, while the buying rate declined by just 5 cent. The lowest selling rate climbed $1.40 to $149.20 and highest selling rates increased by $1.39 to $160.29.

Filed Under: FX Market, Stock Market Tagged With: Daily Trading, FX Market, Trading Activity

JSE: Scotia Group pushes index but…

July 15, 2013 by IC Insider.com

Monday, 16th July 2013 | The all Jamaica Index climbed 1,673 points to close at 89,848.46 points as Scotia Group traded as high as $23.84 — the major factor pushing the index. However, the stock closed trading at $22, the same closing price as Friday, which suggests there could be a major correction in the upward move on Tuesday.

The JSE composite index closed at 87,894.71, up 950.57. Scotia was not the only stock to affect the indices as trading was low at only 5.9 million shares valued at $22 million. Sagicor Investments put on $1 to close at $18 and only traded 1,500 units. Carib Cement put on 20 cents as 4 million shares traded at $1 each for a total sum of $4 million. Scotia Investments put on 50 cents to close at $26.51 and Seprod put on 49 cents to close at $15 both with very insignificant volumes. Scotia Group was mostly gobbled up by Scotia Investments who traded 533,000 shares for a value of $12.65 million.

The advance decline ratio was slightly in favour of advancers with 9 advancing and 8 advancing.

Junior market | Junior market activity has cooled for the time being as 7 stocks traded with moderate price moves except for a 69 cents drop in Access Financial Services as the stock closed at $8.36 with 10,000 shares trading. Lasco Financial traded and closed at an all-time high of $1.40 cents, the volume traded was 59.700 units. Lasco Manufacturing traded as high as $1.70 but could not hold as the 653,878 shares landed the last selling price at $1.65. The junior market slipped again to 807.43 down 8.61 points.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice bid-offer market sentiment indicator shows a weakening in market momentum with bid for only 1 stock higher than the last selling price and one stock having an offer lower than the last selling price.

Filed Under: JSE Main Market, Stock Market Tagged With: Daily Trading, JSE Company, Trading Activity

TTSE: Citizens IPO main attraction

July 15, 2013 by IC Insider.com

Monday, 15th July 2013 | Trading on the T&T stock Exchange today was paltry with 170,869 shares trading valued at just $914,642 but the big news in the market is the opening of the Citizens Bank of Trinidad IPO, which went on sale at $22 per share at a PE of 11 in an attempt to raise $1.1 billion on behalf of the major shareholder of the bank. Some comments out of Trinidad suggest that the shares will be avidly taken up.

Market activity resulted in 11 securities trading of which 3 advanced, 2 declined and 6 traded firm.

One of IC Insider’s buy rated stock, One Caribbean Media moved to a new 52 week high as it closed up by 18 cents to end the day at $17.60 while trading 4,000 shares and another buy rated stock, Caribbean Cement, traded up by 5 cents to $1.15 as 79,581 shares changed hands for a value of $90,391.

Scotia Investments fell 3 cents to close at $1.87 with a volume of 50,414 shares being traded for $94,304. Guardian Holdings contributed 13,377 shares with a value of $214,032, while Sagicor Financial Corporation added 6,177 shares valued at $38,297.

Clico Investment Fund was the only active security on the Mutual Fund Market, posting a volume of 15,990 shares valued at $359,775.00 as the share closed at $22.50 without a change in price.

IC bid-offer Indicator | At the end of trading, the Investor’s Choice market indicator shows that bids for no stock was higher with 3 stock having an offer lower than the last selling price.

Filed Under: Initial Public Offers, Stock Market, TTSE Market Tagged With: Daily Trading, Trading Activity, TTSE

First Citizens’ $1B IPO opens today

July 15, 2013 by IC Insider.com

The government of Trinidad & Tobago, through the holding company for First Citizens Bank Group, launches a billion dollar Initial Public Offering (IPO) of shares to reduce its ownership in the bank. The issue opens today, Monday 15th July, and when completed will be listed on the T&T Stock Exchange. The offer of 48,495,665 shares, approximately 19.3 percent of the total shareholding of the bank, is expected to rake in $1.1 billion before expenses for the Government of Trinidad. The issue has an offer price of TT$22 per share for sale to the public. The proceeds will go to the holding company for Citizens and is expected to be paid over to the government.

Citizens, a banking and finance company, has total capital of $6 billion and total assets of more than $37 billion. When compared to the two other banks listed on the Trinidad Stock Exchange, Republic has capital of $7.94 billion and total assets of $55 billion while Scotia Bank has capital of $3.2 billion and total assets of $18 billion as of March this year.

First Citizens Brokerage & Advisory Services (a subsidiary of First Citizens Investment Services) is the Lead Broker for the Offer for Sale.

THE COMPANY | The First Citizens Group is a financial service organization headquartered in Trinidad & Tobago that offers a range of retail, corporate, capital markets, investment management, wealth management, asset management, trustee and brokerage services. The provision of corporate, commercial and retail loans, deposit and other retail services, including credit card accounts, internet, and telephone banking is conducted in Trinidad & Tobago via a network of 26 full service banking locations, one foreign exchange bureau, seven operations centres and 96 ATM machines. In Barbados, these services are provided via five branches, one lending centre and eight ATM locations. In Costa Rica, the provision of corporate loans is done via a centralised corporate banking team that covers both Costa Rica and the Central American region.

COMPANY HISTORY | First Citizens Bank was formed in March 1993 and acquired, The Trinidad Co-operative Bank, Worker’s Bank and National Commercial Bank. At that time, 62 percent of its loan portfolio was in arrears. In the 10 years to 2003, First Citizens Bank grew its profits to TTD233 million, doubled its asset base to TTD6.1 billion and had attained international credit ratings of BBB- and A-3 by S&P and Moody’s, respectively.

In 2009, First Citizens acquired Caribbean Money Market Brokers Limited, now First Citizens Investment Services Limited, a full service securities company with offices in Trinidad & Tobago, Barbados, St. Vincent and St. Lucia. In January 2012, a representative banking office was opened in Costa Rica as the Bank’s first entrance into Central America and in August 2012, the Group continued its expansion with the acquisition of Butterfield Bank in Barbados, now called First Citizens Bank (Barbados) Limited.

BALANCE SHEET & PROFITS | At the end of March this year, the bank loaned out $13. 8 billion, an increase over the March 2012 of $11.2 billion. Customer deposits climbed faster to $26.7 billion versus $22.9 billion. Profit before tax grew to $388.7 million, $40 million or 11.5 percent over the $348.7 million earned for the corresponding period last year. Profit after tax amounted to $306.4 million. For the 2012 fiscal year, the bank earned profits of $446 million giving a return on equity of 8 percent and return on assets of 1.58 percent. Return on equity is around 11 percent for 2013.

Citizens is underperforming its two major competitors in a number of areas. Importantly, two critical measures tell the tale as to where the bank sits with its peers. Scotia Bank’s return on equity is 18 percent and return on assets 3 percent while Republic Bank is 14.6 percent return on equity and 2.25 percent return on assets. Republic sells at a PE of 15 and Scotia Bank at 22.5 times 2013 earnings and Ansa Merchant Bank has a PE of 19. The lower numbers of PE for Citizens suggest there is much room for the stock price to climb after the shares list with their PE at only 11.

The performance of the loan portfolio is a matter of concern. Data shows that there is not much impairment in the loan portfolio. However, it is noted that the level of loans that are past due increased markedly in 2012 over 2011 from $1.96 billion to $2.99 billion. “Corporate past due amounts” increased by $800 million, an indication that things may not be a sanguine as the profit figures are suggesting even as the provision for loans losses in the March six months period was much less than what was provided for in the comparable half-year results in 2012.

DIVIDEND POLICY | The dividend policy of the Issuer will be to distribute funds surplus to the operating capital and strategic requirements of the Group, as determined by the Directors, with an annual target dividend pay-out percentage range between 45 to 55 percent of net profit after tax.

Filed Under: Company News, Company Results, Initial Public Offers, Stock Market, TTSE Market Tagged With: First Citizens, Trading Activity, TTSE

Watch and buy this week

July 15, 2013 by IC Insider.com

Monday, 15th July 2013 | What’s happening in the markets this week? We’ll be tracking the Stocks To Watch in our headlights for trading activity and price changes.

Our analysts’ Buy Rated seal of approval has been extended to Access Financial Services, a stock that trades on Jamaica’s Junior Market. Read our post dated 27th June, 2013 about this money maker ‘Big payoff for Access owners‘.

Meanwhile AMG Packaging has lost some of its sparkle and is no longer Buy Rated. Our post ‘AMG is investing for tomorrow‘ gives an in-depth report on their recent published results.

Better than a broker’s ‘buy’ recommendation, IC Insider has no vested interest in any stock transaction or conflict of interest. Our research is backed by published reports of the company’s performance and insights of future earnings that can be found at ICInsider.com. The final decision to buy, or not, is your personal choice.

To search for published company results on IC Insider, please use ‘Search IC Insider’ and enter the company name, in full or in part.

Filed Under: Company News, Stocks to watch Tagged With: AMG Packaging, Trading Activity

FX: Buying up, selling stable

July 12, 2013 by IC Insider.com

Friday, 12th July 2013 | Buying of forex on Friday was greater than amounts sold by $3.5 million as $27 million in US dollar equivalents was purchased by authorised dealers, US$2.7 million more than on Thursday. The equivalent of US$23.5 million was sold to end users, slightly more than the US$23.3 million sold on Thursday. The amount of US dollar currency purchased, was US$22.4 million while US$21.5 million was sold. There was moderately more Canadian dollars and a lot more Pound Sterling purchased than sold. In fact £1.87 million was purchased and only £349,000 was sold.

The selling rate for the US dollar inched up 3 cents to close at $101.80. At the same time the buying rate edged up by 1 cent, closing at $100.97. The highest buying rate for the US dollar fell by 80 cents to close at $102.40. There was no change in the highest selling rate nor the lowest buying rate, but the lowest selling rate decreased by $15.55, the same as the increase the day before and fell back to $83.50.

The buying rate of the Canadian moved up by 9 cents to $96.57 and the selling rate moved up by 55 cents closing at $98.15. The highest buying rate for the Canadian dollar climbed by 15 cents to close at $98.30 and the highest selling rate remained as it was on Thursday. The lowest buying rate moved up by 8 cents to $78.02 and the lowest selling rate move up by 10 cents to close at $93.50.

The buying rate of the Pound fell by 37 cents on the day to $151.36 and the selling rate rose by 7 cents to close at $151.66. The highest buying rate for the British Pound increased by 50 cents to close at $154.50. The lowest buying rate increased by $1.46 to $124.38, the highest selling rate moved up by 43 cents to $158.90 and the lowest selling rates increased by $1.00 to $147.80.

July and August are months for increased inflows as the number of tourists into the country rise well above the numbers for May and June. The likely increased inflows could impact the rates.