Lumber Depot buys 35% of Atlantic Hardware

Lumber Depot announced the acquisition of a 35  percent in Atlantic Hardware & Plumbing Company Limited, a 30 year old Jamaican company, engaged in the wholesaling and distribution of hardware, building materials, plumbing, electrical, tools, and supplies to hardware stores, contractors, and developers across Jamaica.

Lumber Depot acquisition announcement.

The business located on “Ashenheim Road in Kingston is led by Managing Director, Deanall Barnes, an experienced business leader in the trading and distribution of building materials”, the release from Lumber Depot states.
There will be no change to the business strategy of Atlantic. Accordingly, it will continue to operate as a dedicated hardware wholesaler and distributor. The acquisition’s purchase price is $210 million and was funded with internal funds.
The investment will account for from May 1, 2024 by Lumber Depot. The majority shareholder of Atlantic is Construct Group, a private investment company.
Lumber Depot did not disclose either revenues nor profitability of the company in which the shares were acquired. ICInsider.com projects the company to get a boost in profits as a result of the investment, that should exceed the returns they were getting on the liquid funds they held. The Lumber Depot netted a 25 percent per annum return on equity up to the February quarter as such, it is unlikely that they did not pay much more than 4 time earnings for the 35 percent acquired and that would boost profit for Lumber Depot around $70 million and earnings per share in the region of 36 cents for the current fiscal year. There are also prospects for economies of scale, particularly in the purchase and importation of goods for resale that could result in cost savings, in the future.

Profit surged 89% at NCB Group

Profit surged 89 percent at NCB Financial for the six months to March from a combination of higher revenues and reduced costs in some areas, driving profit 74 percent higher in the March quarter to $5.6 billion compared with the same period in 2023, with $3.2 billion and surged for the half year to March with $8.7 billion, from $4.6 billion in 2023.
Net interest income rose to $9.4 billion in the second quarter of this year, from $8.2 billion in the prior year’s second quarter and for the six months, jumped 15.6 percent to $18.85 billion from $16.3 in the 2023 half previous half year. Net fee and Commission income went from $5.3 billion in the $6 billion in March 2024 quarter and from $11 billion in the half year in 2023 to 12.5 billion in the current year.
Credit impairment losses jumped sharply to $1.9 billion in the March quarter from $1.2 billion last year to $2.77 billion in the half year, compared with $2.4 billion in 2023. Dividend income amounted to just $171 million in the March 2024 quarter, down from $488 million in the previous year. The half year is essentially flat, at $1.26 million. Insurance activities delivered profits of $11 billion for the latest quarter, up from $9.3 billion in the previous year. For the half year it surged to $25.2 billion from $16.7 billion in the comparative period in 2023.
Operating expenses slipped to $21.76 billion in the March 2023 quarter from $22.8 billion the previous year and for the half year rose to $47.9 billion from $45.8 billion in 2023. The major contributing factor to cost savings is staff costs, which fell from $14.3 billion in the 2023 March quarter to $13 billion this year and dropped to $26.6 billion for the six months, from $27.5 billion in 2023.
A loss of $3.4 billion is reflected in other comprehensive income in the March 2024 quarter compared with a surplus of $5.7 billion, with the six month period ending up with a loss of $1.2 billion compared to a surplus of $28.3 billion in 2023, effective reducing the quarterly overall profit to $1.4 billion compared to $5.2 billion in 2023 and for six months $7.7 billion versus $20.9 billion in the previous year that is attributable to the NCB Group shareholders.
While most eyes are on the profit statements, the results shown by the various segments are of critical import as they show details of revenues and profit for each segment, enabling investors to have greater insight into the overall results.
Results for the six months show the Consumer and Small Business Enterprise segment generating revenues from outsiders of $21.5 billion, up 17.5 percent from $18.3 billion in 2023 and net segment income of $7 billion in 2024, up 23 percent versus $5.7 billion in 2023. Payment Services delivered a solid 85 percent rise in revenues to $17.2 billion in 2024 with a net position of $4.5 billion in the 2024 half year up from $9.3 billion in revenues in 2023, with net results of $3.4 billion, before internally allocated costs.
Corporate and Commercial banking had a 7 percent growth in revenues to $8 billion and net segment results of $4 billion compared with revenues of $7.5 billion in 2023 as net results surged sharply over $1.18 billion in 2023. Treasury and Correspondent banking generated revenues of $11.77 billion up from $10.58 billion with a net position of $6.9 billion in 2024 compared with $5 billion. Wealth, Asset Management and Investment Banking generated a 38 percent growth in revenues of $14.85 billion and a net position of just $1.17 billion in 2024, with revenues of $10.7 billion in 2023 and net results of $3.5 billion. Life and Health Insurance and Pension Fund management produced a 32 percent increase in revenues to $58.58 billion in 2024 as net results surged to $15.5 billion compared with revenues of $44.4 billion in 2023 with net segment results of $5.76 billion while General Insurance accounted for revenues of $37.7 billion, up 27 percent over 2023 and net results of $3 billion compared with 2023, with revenues of $29.7 billion and profit of $4.3 billion.

NCB declared a dividend of 50 cents to be paid in June.

Loans grew moderately by 6 percent from $595 billion in March 2023 to $633 billion in 2024 while investment securities moved by 9 percent from $763 billion to $833 billion this year. Customer deposits grew 6 percent to $755 billion. Shareholders’ equity ended the period at 160 billion, up from $138 billion at the end of March 2023. Earnings per share for NCB Financial grew from $1.39 to $2.36 for the quarter and from $1.99 in the 2023 half year to $3.68. ICInsider.com projects earnings for the full year to September at $8.50 with a PE of 7.5 well below the market average of 12.6 at the last traded price of $64 on Friday. NCB is selling at a premium to Scotia Group with a lower PE of 6 times 2024 earnings and pays a dividend that provides a much better yield of 4 percent versus 3 percent for NCB. With NCB relative overvaluation compared with its nearest competitor, the current APO is going to provide added supply of shares on the market that is likely pressure the stock price for some time.
Shareholders on record on May 27 are set to receive a dividend of 50 cents per share payable on June 10.

Berger surges into healthy Q1 profit

There is a huge about-turn in profit at Berger Paints with $48 million generated in the first quarter of March 2024 compared with a loss of $35 million in the first quarter of 2023, following a 7.6 percent climb in sales to $772 million from $718 million in 2023.
Cost control and reduction in some cases played a major role in the turnaround in the operations, with the company reporting a small loss for the fiscal year 2022 and a much bigger $218 million loss in 2023 after a tax credit of $37 million.
The most major development is a sharp fall in the cost of material used in the production to facilitate sales with a drop to 43 percent from 57 percent with costs of $330 million in the latest quarter down from $407 million in 2023, a fall of 19 percent while other manufacturing costs coming in 12 percent lower to $14 million.
Staff cost rose 12 percent to $154 million from $138 million in 2023 while Other operating expenses jumped 17 percent to $212 million from $180 million in 2023. Depreciation rose 16 percent to $22 million from $19 million in 2023, with fixed assets net of depreciation jumping to $480 million from $289 million at the end of March 2023.
The operations generated Gross cash flow brought in $80 million, netting out at $69 million after working capital and capital spending.

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Current assets ended the period at $1.7 billion inclusive of trade and other receivables of $595 million, cash and bank balances of $224 million. Inventories were reduced by $200 million to $800 over the twelve months to March this year and receivables by $170 million over the same period to $600 million.
Current liabilities ended the period at $1.17 billion. Net current assets ended at $500 million.
At the end of March, shareholders’ equity amounts to $1.1 billion with little borrowings.
Earnings per share for the quarter was 23 cents. IC Insider.com computation projects earnings of $1.60 per share for the fiscal year ending December 2023, with a PE of 3.4 times the current year’s earnings based on the price of $5.50 the stock traded at on the Jamaica Stock Exchange Main Market. Net asset value ended the period at $5.12 with the stock selling at a mere 7 percent over book value.

NCB Financial stock offer a long term investment

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NCB Financial will be offering 78.5 million Ordinary Shares to the public to purchase at $65 per each of which 785,000 are Reserved Shares for staff at $58.

NCB Financial

The issue opens on May 6 at 9 AM and is slated to close on May 27, 2024 subject to the right of the Company to close it at any time after the opening date once the Invitation is fully subscribed.
The issue may be upsized to a maximum of 117.75 million shares. The issue is expected to raise between $5 billion if only the initial offer is subscribed to and up to $7.6 billion if the issue is upsized to the maximum.
The number of shares being initially offered will raise the issued share capital from 2.545 billion units to 2.624 billion and if the amount is upsized fully, to 2.663 billion.
The financial group states that they “intend to use the net proceeds from this Invitation to support a part of our deliberate plan to reallocate capital with a focus on reducing debt and bolstering the capital in the NCB Financial Group. This APO is one of multiple strategies that the NCB.”
Equity attributable to stockholders of the parent totalled $159.7 billion, an increase of $27.1 billion or 20 percent over the prior year. The growth in equity was mainly attributable to increased retained earnings and a reduction in unrealised fair value losses.
An APO brings an additional supply of shares to the market and will satisfy the demand for a large pool of investors for several months if not years, as such the issue is likely to keep the price of the stock subdued for some time unless there is a big jump in profitability to make them more attractive as an investment and thus encourage increased buying to move the stock price up appreciably.
Recent issues of APO, except for those issued by Barita Investments send a cautionary note for investors looking for early capital gains. While the APO is priced at $65, the stock is trading closer to $63 on the Jamaica Stock Exchange.
NCBFG and its subsidiaries operate in 21 territories across the Caribbean, with the main operating territories being Jamaica, Trinidad & Tobago, Dutch Antilles, and Bermuda. The Group’s business, results of operations and financial condition are materially affected by the economic, social and political conditions of these countries.

Caribbean Cement blockbuster Q1 profits

Caribbean Cement reported blockbuster profits in the first quarter to March this year from an increase of nearly 12 percent in revenues of $7.6 billion versus $6.8 billion in 2023 with profits jumping by 546 percent to $1.9 billion compared to just $289 million in last year first quarter.
Helping with the surge in profits was a sharp drop in the cost of sales from $5.5 billion to just $4 billion in the current quarter as the cost of raw materials fell sharply in the first quarter from $1.3 billion to $505 million.
Total operating expenses remained fairly stable at $673 million in 2024 versus $670 million last year with other operating expenses coming out at $311 million compared with $319 million in the previous year. Taxation jumped to $701 million versus a tax credit of $133 million last year.
Earnings per share ended at $2.27 for the quarter, up sharply from just 34 cents in the 2023 first quarter with full year’s earnings likely to exceed $8 per share.
The company generated $2.2 billion in cash inflows, bringing first quarter balance to $6.3 billion.
Shareholders’ equity climbed to $26 billion from $20 billion at the end of March 2023 and there is just a small amount of long term debt on the books.
Caribbean Cement stock is trading currently around $58 at a PE of just over 7 times this year’s earnings compared with an average of 13 for the Main Market. The company reported that the 30 percent expansion is expected to be completed in 2025. That will allowed for increased sales on the local and the overseas markets and making the stock an attractive investment for the immediate future and longer term.

Share buy back & dividend at Kingston Properties

Kingston Properties (KPREIT) plans to repurchase up to one half of one percent or 4.42 million shares in issue for up to two years to commence in the later part of May this year. 
According to the release, “the Board of Directors sees this use of capital as an opportunity to enhance shareholder value through the purchase, from time to time, of undervalued shares”.
The repurchase of the shares will be done using the Company’s cash flows and will be conducted on the open market through the Company’s stockbrokers. A fixed price for the repurchase will not be set but will be the market price at the time of the repurchase. In keeping with the requirements of the Companies Act of Jamaica, within 30 days of the dates of the repurchase of shares, Kingston Properties will advise its shareholders of the details of the shares purchased.
The company has 884 million issued shares that were last traded at $8.10 on the Main Market of the Jamaica Stock Exchange with a PE of 10 times last year’s earnings and a book value of $8.40.
A total of 7.5 million shares were traded over the past twelve months for a daily average of 30,000 units.
The company has also declared a dividend of 0.0566 US cents per share, payable on June 5 to shareholders on record at May 17 with the ex-dividend date of May 16, 2024.
The company reported a profit of US$4.65 million in 2023 an increase over 2022 with US$3.8 million from operating revenues of US$4 million in 2023 and US$3.5 million in 2022. Profit was boosted by gains from revaluation and gain on sale of properties of US$3 million in 2023 and US$2.4 million in 2022.

Barrows to head Wigton in May

Gary Barrow now heads Wigton Windfarm (WIG) management as Chief Executive Officer the company announced that will take place effective on May 6.
The position of Chief Executive Officer is a new one, in addition, the position of Head of Energy which was held by Miss Michelle Chin Lenn will be dispensed with and she will be appointed to the new position of Deputy Chief Executive Officer.
According to the release on these appointments, the Board of Directors of WIG is of the “view that the aforementioned changes, and specifically the appointment of Gary Barrow following a successful recruitment process, will further allow the Company to fully realize its vision of being a profitable, regional conglomerate with successful clean energy and other investments”.
Barrow has a multi-disciplinary background in Engineering, Finance, Technology, Innovation, Business Transformation, Process Re-Engineering, Governance and People Management will allow him to hit the ground running at WIG.  His last appointment at the Jamaica Public Service, was Chief Operating Officer. Barrow holds a Bachelor of Science in Electrical Engineering and a Master of Business Administration.

Profits continue to send mixed signals

Early profit results for the first 2024 quarter show some positives, with the Montego Bay-based Knutsford Express reporting b revenue growth and profit for the quarter and the nine months to February, followed by positive results for AMG Packaging and Express Catering, but there were also some disappointing ones.

Knutsford Express

The directors of Knutsford Express stated that “strong and steady demand for our courier services complemented our passenger services have combined in delivering year to date profit of $268 million, up 27.1 percent from $211 million at the end of February 2023. We, therefore, recorded a 20.9 percent growth in our total revenue in this quarter moving to $565 million from $468 million in the comparative period in 2023. Similarly, our nine-month year-to-date revenue has increased by 19.5 percent from $1,281 million in 2023 to $1,530 million in 2024.”
Innovative Energy, formerly Ciboney reported no revenues in the February quarter and a loss of $4.4 million with the year to date, ending with $500,000 in income and a loss of $7.8 million.
AMG Packaging grew profit by 79 percent to $32 million from $18 million in 2023, better than the 72 percent rise in the first quarter. For the six months to February, profit was up by 79 percent to $84 million from $47 million in 2023.
Revenues climbed from US$6 million to US$7 million at Express Catering, up 17.6 percent in the quarter and increased by 23 percent from US$15 million to US$18.7 million, delivering a profit of US$2 million for the year to date and US$1 million for the latest quarter, compared with US$1.9 million for the nine months in 2023 and $1.15 million in the February 2023 quarter. Ian Dear, the company’s CEO confirmed that added cost in the third quarter would have been associated with new restaurants opened close to the quarter as such, some of the cost would not be fully covered by revenues.
The revenue at Margaritaville (Turks) rose just 5 percent to US$5.25 million for the current year, compared to US$4.98 million for the same period last year, with a net profit of US$521,909, earnings per share of 0.773 US cents compared with the similar period of 2023, with a net profit of US$1.18 million which includes non-recurring gains of US$658,000 for EPS of 1.749 US cents.
For the third quarter, revenues fell to US$1.9 million from US$2.2 million in 2023, delivering a profit of US$222,174 versus US$725,000 in 2023 including one time income of US$340,000.
Sygnus Real Estate Finance fell by 43 percent in the February quarter from $67 million in 2023 to $44 million in 2024. For six months revenues reached $88 million down 38 percent from $142 million in the prior year. The company incurred a loss of $187 million in the 2024 second quarter 45 percent worse than the $129 million and for the six months, a loss of $320 million was incurred marginally more than $302 million in 2023.

Paramount Trading is expanding into Chlorine and bleach processing.

Paramount Trading reported reduced revenues and profit for the third quarter and the nine months. Revenues in the February quarter declined 8.5 percent from $438 million in 2023 to $401 million in 2024. For the nine months, revenues fell 23 percent from $1.63 billion down to $1.266 billion with profits coming in at 40 percent lower at $18 million for the quarter from $30 million in 2023 and 44 percent to $100 million for the nine months of February this year from $179 million in the previous year.
One On One Educational Services reported revenues of $57 million in the February quarter down 12 percent from $73 million in 2023 and fell 27 percent to $111 million for the six months to February from $153 million in 2023.
A loss of $20 million million was incurred in the February quarter down from a profit of $6 million in 2023 and a loss of $41 million for the six months, down from a profit of $17 million in 2023 for the 6 months.

Grace up stakes in Spur Tree Spices

The GraceKennedy a wholly owned subsidiary – GK Investments Limited, purchased 60,000,000 units of shares in Spur Tree Spices thereby increasing its ownership to 20.18 percent. this was the objective Grace had before the company went public.
On Wednesday Spur Tree reported that two directors sold 30 million units each, which seems to have met the demand from Grace, but it may not be the last of the big trades for the company whose products have strong appeal internationally.
The company has been struggling to grow its profit since listing on the Junior Market in 2022. Profit of $116 million fell to $88 million in 2023, with earnings per share of 5 cents last year and 7 cents in 2022.

Spur Three stock traded at $2.42, up 2 cents on the junior Market of the Jamaica Stock Exchange on Thursday.

Profit bolts 79% at AMG

Profit continued to surge at AMG Packaging in the February quarter, up 79 percent to $32 million from $18 million in 2023, the performance is better than the 72 percent rise in the first quarter. For the six months to February, profit was also up 79 percent to $84 million from $47 million in 2023.
Sale revenues rose by just one percent for the quarter, to $250 million from $247 million and popped 4 percent for the year to date, to $522 million from $501 million in 2023.
Two main features are at play resulting in improved performance. The company installed new multi-coloured machinery in early 2023 that measures and determine the cut for boxes which has helped in cutting operating costs as it is far more efficient than the original ones. Secondly, the price of paper declined in 2023 from 2022 and has carried over into the current year, the result is that raw material costs declined to 41 percent of revenues in the second quarter from 53 percent in 2023.
Historically, profit was stuck for years between $37 million and $62 million from 2017 to 2021 . In 2022 profit jumped to $105 million following a revenues surge of 41 percent over 2021 but fell back to $89 million in 2023 with some one-off cost, helping in pushing the profit down, otherwise it would have exceeded that of 2022. ICInsider.com projects profit to come in around $225 million for this fiscal year ending in August.
Manufacturing costs declined by 12 percent in the February quarter to $154 million from $175 million and by 9 percent year to date, to $325 million from $356 million. Gross profit margin rose a significant 36 percent in the quarter to $96 million from $72 million and climbed even more for the half year to 39 percent to $197 million from $145 million in 2024.
Administrative expenses rose 18 percent to $33 million in the quarter and increased 19 percent in the six months to $66 million. Depreciation charges increased by 26 percent to $13.5 million in the quarter, and the half year to $26 million. Finance cost declined in the quarter, to $1.8 million from $2 million in 2024 and from $4.2 million to $3.6 million for the six months.
The operations generated $130 million in Gross cash flow, after paying dividends of $51 million and increased working capital needs, net flows were negative and pulled down the cash on hand from of $297 million in 2023 to $252 million.
Current assets ended the period at $651 million and include trade and other receivables of $143 million, up from $123 million in 2023, and cash and bank balances of $252 million, representing an increase over $144 million in 2023. Inventories rose a bit from $240 million to $255 million. Current liabilities at the half way marker amount to $152 million. Net current assets ended the period at $500 million.
At the end of February, shareholders’ equity amounts to $1.29 billion with long term borrowings of just at $66 million and short term at $19 million.
Earnings per share for the quarter amounts to 6 cents and 14 cents for the half year. IC Insider.com computation projects earnings around 45 cents per share for the current fiscal year, with a PE of 8 times the current year’s earnings based on the price of $3.59 the stock traded at on the Jamaica Stock Exchange Junior Market. Net asset value ended the period at $2.53 with the stock selling at a premium of 41 percent to book value.

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