Transjamaican revenues still down

Toll collections fell 13.8 percent in 2020 versus an increase of 1.6 percent in 2019 over 2018 for Transjamaican Highway, resulted in US$45.38 million in tolls collections compared to $53.29 million in 2019.
The company, in its annual report for 2020 in commenting on the decline in traffic on Highway2000, states, the “effects of the health measures implemented are still being felt on our traffic at the start of 2021, traffic being falling 9 percent below for January and February when compared to the same period of 2020, which were not impacted by the pandemic. We are, however, optimistic that greater levels of recovery will be recognized as the traffic at the end of March 2021 was 6.8 percent above that of March 2020, when the pandemic first hit.” While the directors sound optimistic, the March 2021 recovery does not look exciting and would represent a decline of 11.5 percent compared with traffic for 2019 that would make the company worse off than in January and February this year, with the fall of 9 percent versus the first two months of 2020 with increases of 2.1 percent.
Last year the directors stated that “the first two months of 2020 were marked by a 2.1 percent increase in our toll transactions compared to the same period last year. The decrease for March was 19.3 percent, April 2020 saw a more significant decrease of 52 percent when compared with April 2019 due to additional restrictions introduced, such as the lockdown of the parish of St Catherine, which started on April 15. The end of this confinement on May 1 was immediately followed by an increase in traffic on the motorway, as the decline fell to 34.2 percent compared to May 2019.”
“The trend observed for June 2020 is down 17.3 percent when compared to the previous year, confirms a gradual recovery in traffic and is anticipated to continue in the next weeks.”
The decline in traffic in the second quarter of 2020 was 34.5 percent compared to the previous year, the company had reported. For the three months ended March 2020, the Company generated revenues of US$12.9 million, reflecting a mild increase over the US$12.7 million earned for the same period in 2019. What seems clear from the latest report from the company is that revenues should be down in the first quarter in 2021 to around US$11.5 million, but the second quarter should experience a nice bump from a depressed second quarter in 2020 that delivered just US$8.5 million in revenues.
THJ reported a US$1.87 million loss for the year to December 2020, compared to a profit of US$8.3 million helped by a tax credit of US$21.4 million in 2019. The 2020 results saw a US$5 million reduction in operating expenses and a fall of nearly US$16 million in finance cost. Despite the loss, the company still managed to generate a positive cash flow of just over US$11 million for 2020. The results for 2021 should end with a breakeven position of about US$1 million in profit.
The company last traded on the Jamaica Stock Exchange at $1.34 on Friday.

Profit dips 38% at NCB Financial

NCB Financial Group reports unaudited consolidated net profit of $9.2 billion for the period, a decline of 31% or $4.1 billion from the prior year. Consolidated net profit attributable to stockholders of the parent totalled $5.9 billion, a 38 percent or $3.7 billion decrease from the prior year.

NCB Financial Group added to JSE record close on Friday.

“The performance reflects the impact of the reduced economic activity caused by the pandemic” the directors reported in their commentary on the results. Credit impairment losses fell below the March 2020 period with $1.36 billion provided for the latest quarter versus $1.65 billion in 2020. The big items that left profit sink was an increase in commission and other selling expenses that increased nearly $3 billion over March 2020 and Other operating expenses that rose over $2 billion over March 2020.
Earnings per stock unit came in at 82 cents for the quarter and $2.48 for the half year.
The Board of Directors, declared an interim dividend of 50 cents per stock unit payable on May 31, to stockholders on record on May 14, 2021.
The stock last traded on The Jamaica Stock Exchange on Thursday at $140.

Carib Cement Q1 profit triples

After several years of underperformance, Jamaica’s sole cement producer – Caribbean Cement is reporting record profits of $1.53 billion, an increase of 216 percent from $483 million in 2020 from a 31 percent increase in revenues to $5.97 billion for the quarter ending March 2021, over the 2020 corresponding period. 
The strong quarterly performance follows an excellent December 2020 quarter when profit jumped sharply to $962 million from $310 million in 2019.
Direct production cost rose 15 percent from $2.7 billion in 2020 to $3.1 billion, as a result, gross profit jumped 54 percent to $2.88 billion from $1.88 billion in 2020, resulting in profit margin rising 48 percent from 27 percent in 2020.
Other operating expenses fell 10 percent from $651 million to $582 million in the quarter. Finance cost declined in the quarter, from $164 million to $162 million. Foreign exchange losses slipped to $209 million for the quarter from $281 million in the previous year’s corresponding period.
The company continues to enjoy a healthy cash flow and ended with $755 million in cash funds at the end of the quarter after pulling in $3.3 billion in gross cash inflows and after paying $953 million in corporate taxes and repaying $1.9 billion in connection with loans.
At the end of March, loans outstanding amount to $4.8 billion, while shareholders’ equity amounts to $13 billion up from $8.8 billion at the end of March 2020.
Current assets ended the period at $4.1 billion up from $3.1 billion at the end of March 2020. Trade receivables ended at $404 million from $450 million last year march while inventories stood at $2.7 billion up from $21 billion at the end of the 2020 first quarter. Current liabilities rounded out the quarter at $7.3 billion compared to $4.9 billion at the end of the 2020 first quarter.
Earnings per share came out at $1.79, up from 57 cents in 2020. IC Insider.com is forecasting around $8.50 per share for the year with the PE currently at 12.5 times 2021 earnings.
The stock last traded at $75 on the Main Market of the Jamaica Stock Exchange on Wednesday and is projected to get to $150 in the next twelve months.

A Supreme dip of 18% in Q1

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Profit for Supreme ventures dipped 18 percent in the March 2021 quarter, to $602 million, from $737 million in 2020 from Sale revenues that rose 5.7 percent to $10.7 billion from $10.1 billion in 2021.
Growth in revenues disguises an 8 percent or $400 million dip in revenues for the lottery segment and a $1 billion jump in sports betting.
Gross profit slipped 8.8 percent to $2 billion from $2.3 billion in 2020 as direct cost rose 11 percent from $7.8 billion to $8.7 billion and gross profit margin slipped to 18.84 percent in the 2021 March quarter, from 22.68 percent. Selling, administrative and other expenses rose marginally to $1.32 billion, from $1.30 million in 2020.
Finance cost ended at just $12 million in the quarter, while taxation came in at $163 million from $272 million in 2020.
The company has four reporting segments; Lottery, Sports Betting that includes horseracing, Pin Codes, and Other. During the quarter, the Lottery segment generated revenues of $4.6 billion versus $4.99 billion in 2020, with profit falling 32 percent to $630 million compared to $928 million in 2020. Sports Betting raked in revenues of $3 billion versus $2 billion in 2020 and transformed a $4 million profit into a profit of $246 million in 2021, Pin Codes generated income of $2.95 billion in 2021 with a profit of $46 million versus revenues of $3 billion in 2020 and profit of $69 million and the Other segment had revenues of $125 million with a loss of $155 million compared to revenues of $83 million and with a small $3 million loss in 2020.
Earnings per share came in at 22.46 cents for the quarter, down from 28 cents for 2020. The lottery segment delivered an increase in revenues of 9.6 percent to $5.13 billion, up from $4.68 billion for the similar period in 2019, but the gains were nullified in the first quarter of 2021. With the company now faces increased competition, that could be one reason for the fall in revenues for this segment and is a matter to be closely watched as it could worsen going forward for the rest of the year.

Supreme Ventures traded at $16 on Friday.

Gross cash flow brought in $965 million, but additions to fixed assets and acquisition of subsidiary and the paying of $738 million in dividends resulted in a net outflow of $1.34 billion. At the end of March, shareholders’ equity stood at $4 billion, with borrowings at just $5.9 million. Net current assets ended the period at $7.1 billion, including cash funds of $4.97 billion, with Payables of $3.45 billion.
The company has declared an interim ordinary dividend of 20 cents per stock payable on May 21 to shareholders on record at May 7, with the ex-dividend date of May 6.
The stock traded at $16 on the Main Market of the Jamaica Stock Exchange, with a PE ratio of 16 times 2021 projected earnings of $1. There is the view that earnings to come, will show that the projection is too low.

Barita’s profit doubles

Fast out of the block, Barita Investments opens the earning season for the March quarter with a doubling of profits for the quarter and half year. Profit after tax rose from $509 million to $1.04 billion and from $1 billion in the half year ended March 2020 to $2.06 billion in 2021.
Revenues nearly doubled for the quarter to $2.05 billion from $1.13 billion in 2020 and from $2.26 billion last year to $4.05 billion in 2021. Fees and commission income surged from $182 million in the 2020 quarter to $898 million and foreign exchange gains jumped from just $19 million in 2020 March quarter to $650 million this year, while the half year’s figures saw a steep increase from just $106 million to $1.1 billion. Investment gains in the latest quarter fell to just $121 million compared to $599 million in 2020, while the half year saw a slight drop in 2021 to $791 million from $851 million.
Operating expenses rose 70 percent at a much slower pace than revenues to $794 million in the quarter from $468 million in 2020, for the half year cost increased 54 percent to $1.47 billion from $958 million to March 2020.
Earnings per share rose to 96 cents in the quarter from 62 cents in 2020 and from $1.24 last year to March to $1.90 in 2021.
Total assets are now $78.7 billion, up from $48.7 billion at the end of the year ago and from $70.7 billion at the end of September, last year and shareholders’ equity climbed from $14 4 billion in March 2020 to $28.7 billion in 2021. Pledged assets jumped from $21.5 billion in March 2020 to $47 billion in the latest quarter, while loans receivables increased from $1.1 billion to $7.3 billion.
The company’s shares trade on the Jamaica Stock Exchange and last traded at $86.01 at earnings for the full year of $4 the PE is 21.5.

Knutsford Express on the mend

Good turnaround candidates are companies that investors can make oversized gains from, Knutsford Express falls into this category and investors would be wise to take a serious look at the company’s third quarter results to February this year.

Knutsford Express

While they did not return to profit in the quarter, they made huge strides in almost closing the gap, with the February quarter showing a moderate loss of a mere $1.7 million from revenues that fell 42 percent from $318 million to $185 million. The results show a marked improvement over November when revenues fell from $283 million to $149 million with a loss of $34 million. At the same time, the Jamaican operation enjoyed a breakeven position in the third quarter. The performance is in keeping with the Directors, comments stated in their report accompanying the quarterly for November, “we expect an improved performance in the next quarter.”
Information coming in about the tourist sector indicates that the industry is on the mend with the expectation for high demand for the summer months. This will augur well for Knutsford that transports visitors to places like Negril and Ocho Rios. In addition, a more buoyant tourism sector and greater vaccination of Jamaicans will encourage more Jamaicans to travel using their buses.
The latest development is good news for the company that suffered an 11 percent decline in revenue and a 78 percent drop in profit for the 2020 financial year and a loss of $26 million for the August 2020 quarter, which worsened to $34 million in the November quarter. This followed the $70 million loss incurred in the April quarter last year, as dislocations caused by the impact of the COVID virus the company’s severely affected operations.
For the February quarter, administrative and operating expenses fell at a much slower pace and amounts than the fall in revenues, with expenses dropping 31 percent from $271 million in the 2020 January quarter to $187 million in 2021.

Knutsford Express closed at an all time high of $16 on Friday

Finance income in the 2021 quarter pulled in $4 million compared to $757,190 collected in 2020, while finance costs declined from $7 million in 2020 to $4 million in 2021.
Revenue dropped 51 percent from $925 million for the nine months to February 2020 to $456 million in 2021.
For the nine months to February this year, administrative and operating expenses fell at a much slower pace and amounts than the fall in revenues, with expenses dropping 35 percent from $797 million in the 2020 quarter to $514 million in 2021. Depreciation charges accounted for $87 million, up from $74 million in 2020.
The US operation generated a mere $638,000 in revenue and a loss of $11 million that is down from the prior year with a loss of $26 million from revenues of $21 million.
Cash flows from operating activities brought in $31 million, down from $190 million at the end of January 2020. After spending $137 million on the acquisition of fixed assets and borrowing $65 million, the balance of cash funds fell to $38 million at the end of the period, down from $96 million at the end of January 2020. The company also has investments amounting to $101 million compared to $140 million at the end of February 2020. The build out of their Drax Hall Business centre has used up some of the funds.
Current assets ended at $183 million at the end of the quarter, down from $357 million at the end of February in the previous year. Current liabilities stood at just $96 million and is well covered by current assets. At the close of January, shareholders’ equity stood at $710 million, down from $845 million as of January 2020. The company has borrowings of $300 million in borrowed funds on the books.
Earnings per share came out at a loss of just one cent for the quarter and 13 cents for the nine months. The company stands a good chance of returning to full or nearly full operations in the new fiscal year commencing in June. ICInsider.com’s estimate is for earnings per share of 45 cents for a PE of 20 times 2022 projected earnings. Knutsford Express currently trades on the Junior Market of the Jamaica Stock Exchange at $9.
The results for the latest quarter support ICInsider.com‘s forecast for the company to return to profit for the 2022 fiscal year.

Cement production surges with big Q1 profit

Three months after Caribbean Cement Company announced its 2020 record cement production of 940,000 metric tons results, approximately 78,000 per month, the company recently reports the production of more than 100,000 metric tonnes of cement in a month in March. It marks the highest monthly production in recent history, the company reported.
“The trend for this quarter is of a higher average than that of the past ten years and is in response to domestic market demand”, a release from the company stated.
In 2020, the company had sales of $20 billion, up 13 percent from $17.8 billion in 2019, with a profit of $3.2 billion, up from $1.9 billion. In the first quarter of 2020, revenues grew by two percent to $4.5 billion, but profit fell to $453 million from $1.1 billion in 2019. In the 2020 first quarter, there was a loss on foreign exchange of $282 million. The company reduced most of its foreign currency exposure. As such there should be minimal exchange losses in the 2021 first quarter.
The company reported sales of $5.77 billion in the September quarter sales were approximately 270,000 tons and in December 2020, quarter sales was around 310,000 resulting in revenues of $6.6 billion.
ICInsider.com estimate revenues to be slightly ahead of the December quarter and has upgraded projections of revenues to $26 billion for 2021 with a net profit of $7.2 billion for EPS of $8.50, up from $6.70 previously.
Cement production is one of many bright spots in the Jamaican economy in 2020 and the current year. The companies shares are listed on the Jamaica Stock Exchange and last traded at $73 with a PE of 8.6 times 2021 earnings and a projected stock price of $160 by early 2022.

Another acquisition for Proven

Proven Investments has entered into a definitive agreement with Knowledge First Foundation to purchase all the issued shares of Heritage Education Funds International Inc., for an undisclosed consideration, a release from Proven disclosed, making it this is the third acquisition the company has announced since January this year.
“Heritage Education Funds International specializes in administering and managing Education Savings Plans for its clients in the Bahamas, Bermuda, Jamaica, and the British Virgin Islands, and has enrolled over 50,000 children in its plan since its inception in 1983. It oversees approximately US$150 million in assets under management.
“The proposed acquisition is subject to regulatory authority and approvals in the various jurisdictions and is scheduled to be completed in the third quarter of 2021, subject to any extension by mutual agreement between the parties.
Proven sees this acquisition as complementary to its current financial services offerings, with current operations in three of the four main territories that Heritage Education Funds International Inc. also operates in. This acquisition is consistent with the Group’s overarching strategy to widen its presence in the wealth management space throughout the Caribbean, providing a solid platform for future growth,” stated Proven.
Reports reaching this publication indicates that Heritage has some challenges with some existing clients who are dissatisfied with returns they are getting on their funds that are well below levels that were pitched to them when they entered into contracts with them. All of that may well be factored into the price Proven will be paying to purchase the company.
Proven, that is listed on the Jamaica Stock Exchange and recently announced that they entered into an agreement with Fidelity Bank and Trust International to acquire all the shares of Fidelity Bank Cayman and in In January this year, they acquired 50.5 percent interest in Roberts Manufacturing Company, a Barbados based spice manufacturing company.

FosRich closes the year with strong 4th quarter

FosRich, a Junior Market listed company that is a distributor of lighting, electrical and solar energy products, recently added the manufacturing of PVC pipes and repairing of transformers to its list of goods and services it provides.
The company reported strong fourth quarter results, with profit before tax rising 46 percent to $50 million from $34 million in the December quarter of 2019. Profit rose just 15 percent over 2019 to $126 million for the 2020 fiscal year, up from $110 million in 2019.
They incurred $2.7 million in taxes for 2019 due to under accrual of the 2016 taxation and no interest income was booked on advances to a related company. There was no tax charge in 2020, under tax savings enjoyed from listing on the Junior Market.
Revenue climbed 18 percent in both the final quarter and for the year, coming in at $504 million and $1.9 billion, respectively, up from $1.6 billion for 2019. “The product lines that had significant increases over the prior year were PVC Products, which grew by 252 percent, Industrial Electrical Products, which grew by 194 percent, Hardware, which grew by 153 percent and Control Devices which grew by 144 percent,” management reported in the analysis of the company’s financial performance for the year.
Other income dropped 38 percent for the year to $32 million, from $52 million in 2019 and fell from $30 million in the final 2019 quarter to negative $366,000 in the 2020 fourth quarter.
Cost of sales increased by a mere one percent for the quarter but grew by 19 percent for the year, from $902 million to $1.1 billion. Gross profit climbed 39 percent for the December quarter to $270 million and 16 percent to $825 million for the 2020 fiscal year, up from $709 million in 2019. Gross profit margin for the year remained at a healthy 44 percent and 54 percent for the final quarter. Cost of sales is based solely on cost of goods sold and not the full direct cost entailed in selling. It is troubling that with such a high mark up on goods sold, net profit is just contributing a mere 6.6 percent, due partially to the high level of inventory carried and high distribution cost currently, in addition, finance cost accounted for 8.4 percent of sales in 2020 and 6.79 percent in 2019.

Mark Croskery speaking to Cecil Foster, Managing director of FosRich before the company went public.

The high finance cost includes cost of funds advanced to a related party, and the amount includes provision for expected losses on receivables. At the year-end, near two year’s supply of inventories were on hand, but that is up from about 13 months at the end of September. The level of inventories consumes around half of the profit margin due to the turn over time for the inventory. “Vagaries of the supply chain due the holidays in China” resulted in the increased year-end inventories in 2020, Foster informed ICInsider.com. Foster further indicates that they have seen inventory position “steadily getting better.”
Administration, marketing and selling expenses fell 13 percent for the quarter but grew by four percent for the year from $487 million to $506 million. Finance cost rose 46 percent for the year to $160 million, from $109 million with $38 million of the increase due to provision for expected credit losses.
Current assets for the 2020 financial year stood at $2 billion inclusive of cash and bank balances of $34 million and trade receivables of $245 million, while current liabilities increased by 5 percent to $580 million. Shareholders’ equity stood at $869 million and borrowings totalled $1.6 billion, resulting in a high degree of leveraging that is extremely risky.
A total of $365 million is due from a related party, with the funds used to complete the construction of an apartment complex in Kingston that is yet to be completed. According to Cecil Foster, Managing Director, the units are virtually complete and should be disposed of within two months. “All 80 units are sold at prices between $16 and $35 million and that will allow for full repayment this year of the amounts advanced,” Foster informed ICInsider.com. No interest was booked on the debt during the year, even as Fosrich has to pay interest on amounts borrowed to help fund the amounts due from the related party. The cost to the company is around $30 million per year, Foster confirmed that interest is payable and will be fully paid when the debt is paid this year.
FosRich paid dividends of 9.5 cents per share in November 2020, amounting to $48 million. Earnings per share came out at 25 cents for the fiscal year. ICInsider.com projects 45 cents per share for 2021.
The company is not focusing solely on its traditional business of distribution. In 2019, the company commenced the manufacturing of PVC pipes, with the plant producing 16 different types of PVC pipes, on a 24-hour basis and currently has the capacity to supply the entire local market. According to the company’s management, PVC Products delivered revenues of $66 million for the period in 2019 that they operated and in 2020 up to September. “We have been profitable in this area since November last year, Foster told ICInsider.com.” There is more to come from the manufacturing of PVC pipes. “We will be manufacturing four to sixteen inch PVC pipes at Hayes in Clarendon as well as fittings for the pipe,” Foster informed this publication. From all indications, the company should have a full year of profit for the pipe division in 2021.
After 20 months of discussions with JPS in taking over their pole-mount transformer repair activity, the company has an agreement to do so and the activity is now in operation. Phase one of the reconstruction of our new distribution centre at 76 Molynes Road is completed, management told shareholders in their September interim report.
The application for Blue Emerald Limited, a new company for registration under the Special Economic Zone Authority, in order to take advantage of the significant long-term tax concessions is at an advanced stage. Activities being undertaken at the new Hayes facility in Clarendon will be done through this company, acting exclusively for FosRich under a contract manufacturing arrangement.
The stock last traded at $5.25 on the Junior Market of the Jamaica Stock Exchange with a PE of just 11.7. Going forward, Foster says that 2021 has started out well in fact, he said “very good.” As such, shareholders can look forward to more gains in 2021. This is clearly a stock to have on ones’ watch list if not already owned.

Jamaica Broilers profit jumps 64%

Nine months through the fiscal year, profit after tax at Jamaica Broilers Group jumped 64 percent to $1.9 billion, up from $1.1 billion for the similar period to January 2020. The group had a solid third quarter performance registering a 61 percent increase of $287 million over the corresponding period to land at $758 million.
Revenue gains have been small, with a two percent rise to $41 billion for the nine months through January and a three percent rise to $14.7 billion for the third quarter. However, the second quarter enjoyed a seven percent increase in revenue that pushed profit before finance charge up a strong 42 percent at $1.3 billion for the quarter and 35 percent for the nine months at $2.97 billion.
Gross Profit climbed 11 percent to $3.84 billion from $3.45 billion and three percent to $10.28 billion from $9.94 billion in 2020. Gross Profit margin increased to 26 percent in the 2021 quarter from 24 percent in 2020 and remained at 25 percent for the nine months period.
Other Income rose from $81 million in the 2020 January quarter to $225 million and from $184 Million to $453 million for the nine months period.
Distribution Costs fell 14 percent in the third quarter to $601 million from $696 million in 2020 and by 6 percent to $1.7 billion for the nine months period from $1.8 billion in 2020.
Administrative Expenses rose 13 percent to $2.19 billion from $1.94 billion for the latest quarter and fell modestly for the nine months to $6.07 billion from 6.12 billion in 2020. Finance cost climbed 37 percent to $330 million from $240 million in the 2020 January quarter and dropped 33 percent for the nine months to $509 million, from $758 million in 2020.
Segment profits rose in the Jamaica operations by a convincing 29 percent, from a four percent fall in sales for the nine months largely driven by the first quarter performance with a 24 percent increase.

Jamaica Broilers announced a new acquisition last week

Sales in the USA market was up nine percent in Jamaican dollars with profit rising by 10 percent. Haiti continues to operate at a loss, but the group has managed to reduce the loss by 75 percent to just $23 million, with sales improving by 26 percent for the nine month period to $1.7 billion.
The group has been enjoying geometric growth as well as by using cheap debt in financing acquisitions of new businesses, helping to grow profits.
The business brought in gross cash inflows of $3.7 billion, up from $2.3 billion in 2020, $2.15 billion was spent on investing activities versus $2.46 billion in 2020, mainly due to acquisition of property, plant and equipment and ended with cash and equivalent of $3.4 billion up marginally from $3.37 billion in 2020. Borrowings of $20.7 billion as of the end of January 2021, while Shareholders equity stood at $17.9 billion, up from just under $16 billion at the corresponding point in 2020.
Listed among IC.Insider.com’s Top 15 for 2021 and remains on the TOP 10 list. Earnings per share closed out the quarter at 74 cents and $1.77 for the nine months. IC.Insider.com projects earnings per share of $3 for the year ending April and $4 for fiscal 2022. Jamaica Broilers last traded at $31 on Monday with a PE of 10 based on 2021 earnings and 7.4 times 2022 EPS.

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