Rebound for Stationery & Office Supplies

Stationery & Office Supplies is enjoying a strong rebound from the COVID-19 afflicted 2020 financial year, with profit swinging from a loss of $22 million in the June 2020 quarter to a small profit of $3 million in the 2021 second quarter and well off from a profit of $34 million in the 2019 June Quarter.

Stationery & Office Supplies Montego Bay

Profit rose over 168 percent year on year for the first 6 months of 2021, from $21.8 million in 2020 to $58.4 million.
Sales surged 76 percent in the June quarter to $238 million from the 2020 covid-19 battered quarter and 17 percent for the half year to $551 versus $472 million in the 2020 period. While making a good recovery, this year’s revenues trail that of 2019 by some degree. Revenues in June 2019 quarter were 24 percent higher at $295 million and for the half year, 15 percent greater than the $633 million generated in 2019.
The cost of goods sold rose 61 percent in the quarter to $117 million and 7 percent for the half year to $261 million. Gross profit margin rose to 51 percent in the quarter, with gross profit of $120 million up from 46 percent in 2020, with gross profit of $63 million. For the half year, gross profit margin rose to 53 percent from gross profit of $290 million up from 46 percent in 2020, with gross profit of $228 million.
Administrative and general expenses rose 54 percent to $82 million from $55 million in 2020 during the June quarters and climbed a milder 16 percent to $163 million from $141 million for the six months period. Selling and promotional costs rose from $14.6 million in the June 2020 quarter to $22 million and moved from $38 million for the six months in 2020 to $43 million in 2021.
Depreciation, amortisation and impairment charges were slightly down in the quarter at $8.2 million versus $8.7 million in 2020 and $16.5 million compared to $17.8 million for the half year. Finance and foreign exchange cost accounted for $5.2 million in the quarter versus $6.4 million in 2020 and $10 million in the six months period this year, from $12 million in 2020.
“History has shown that SOS’s second quarter is normally the slowest period during the year, but even though we continue to suffer through the Covid-19 virus and all of the issues that come along with it, SOS was able to post a profit, with significant improvements compared to the second quarter of 2020. These are good indicators that Jamaica’s economy is continuing to rebound and as we progress through the summer months, we will see the return of children to school which will also help improve the sales of SEEK back to school products in the market,” stated David McDaniel, Managing Director and Marjorie McDaniel, Chief Administrative officer in their joint commentary of the results.
Earnings per share for the second quarter for 2021 amount to one cent and 23 cents for the half year. projects full year earnings at 85 cents per share and $1.50 for 2022. The stock traded at $7.50, with a PE of 9, based on 2021 earnings and that compares favourably with the market average PE of 12.4.
The company remains in a healthy financial position at the end of half year period. At the end of June, shareholders’ equity stood at $668 million, with long term borrowings at $114 million and short term borrowings at $39 million. Gross cash flow amounts to $89 million but, with growth in working capital and repayment of loans, the company ended the half year with net negative flows of $6 million. Current assets stood at $509 million, including inventories of $276 million, trade and other receivables of $102 million, and cash and bank balances of $91 million. Current liabilities ended at $126 million, with net current assets ending at $382 million.

SOS & tTech head IC MarketWatch

SOS anticipates maximising profits from every business line in 2019.

Second-quarter results are coming out but still, a number of them are due out over the next few days. Results released today throws up a few strong numbers and the stocks of these companies are worth watching.
First, out the block today was tTech an IC TOP 10 BUY RATED selection with possible gains of 167 percent. The company reported a 20 percent increase in revenues in the second quarter of $91 million and a 62 percent rise in profit to $16 million and 15 cents per share with flat profit of $17 million or 16 cents per share for the half-year. The stock climbed to $6.50 at the close on Thursday and seems headed higher.
Stationery and Office Supplies reported a strong 195 percent rise in profit fro the second quarter to reach $34 million compared to just $12 million in 2018 from a 23 percent rise in sales to $295 million. for the half-year profit rose 63 percent to $92 million from $56 million from a 23 percent revenue increase to $639 million. The company is on target to meet IC’s forecast of 75 cents for the full year. Radio Jamaica is yet to release its first-quarter results but investors have sent to stock to a high of $1.90 on Thursday. Demand has built and supplies shrank sharply and that should help move the price higher.
Caribbean cement traded 3,770,741shares up to $85 and is worth watching with supply falling. Sagicor Select ETF Fund was listed on Thursday but demand resulted in the price exceeding the 30 percent limit permitted by the JSE with investors attempting to trade the stock as high as $1.90 but the stock closed with no trading and closed with bids amounting 12 million shares at $1.30 and 324,520 were the lowest offers at $1.85. Lasco Manufacturing could be moving higher in coming trading days as supply declines and demand rises.

Watch Barita Investments

Barita Investments headquarters

NCB Financial dropped to $173 on Friday with a large volume trading but bounced to last trade at $188.  The stock may not break out of the $190 range for now but it is worth watching for future developments.
Others worth watching this week include Barita Investments with results that could be released by the end of this week or early next week. The results should be showing a big improvement over that of the similar period in 2018. The third quarter results, is rumored to be far better than the second quarter, that will be known in a few days. Importantly, the second quarter earnings posted as 65 cents should be 90 cents per share instead, with earnings equivalent to $3.60 per annum. Caribbean Cement appeared as if it was going to break higher than $80 during the past week, but did not and is worth watching this week as results for the June quarter is due out at the end of July and there is not an abundance of stock offered for sale.  Sygnus Credit Investments is coming into its own with limited supply of the stock for sale.
Caribbean Producers fell to $4.50 with buying interest around these levels and limited selling pressure. Fontana jumped to a record $6.50 this past week and that encouraged some selling to take place.
the stock remains the main attraction in trading.

Fontana upcoming Waterloo Road branch

Selling supplies remain relatively low at the close on Friday. Stationery and Office Supplies still has little supply offered for sale and could break over the $10 barrier at any time, especially with the June quarter ended. Elite Diagnostic with rising demand and slowing supplies seems set to bounce, having hit a new high on Friday. Lasco Financial price was cut down to $4.10 on Friday, but bounced back to the close at $4.50. The stock is undervalued and could see buying interest building, in the days ahead.
A number of other companies will be releasing 2019 second quarter results between this week and mid August that could move prices.Most of these stocks are in the Junior Market.

Minority deserves better

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SOS directors released June’s quarterly results even though the JSE rules require the first report to be relased for the September quarter.

The investing public seems not to be treated with the respect it deserves. It appears that many companies thing of investors last, not recognizing that they are shareholders just like the majority owners.
The last persons seen are the first to be remembered and is equivalent to out of sight out of mind. That seems to be the case with shareholders in the Caribbean. Newly listed Stationery & Office Supplies release of the June quarterly report although not required by the Jamaica Stock Exchange is an example of good corporate governance and is to be applauded.
In Trinidad for example, there is little liquidity in that market and the directors refuse to do anything about it. In Jamaica many companies tend to stick with the minimum regulations of the stock exchange, even when the recent examples in Jamaica say how important it is to ensure that there is adequate liquidity in the market.
The current regulation for listings in Jamaica, is for new listed companies to file their first quarterly report in the quarter ending after listing. The rule is inadequate to protect investors. Information is critical for the capital market to function properly, as such investors should not have to wait more than two quarters to get a quarterly report. In 2016, there was the very poor decision by Wentworth Graham the then head of the regulatory arm of the Jamaica Stock Exchange to permit 1834 Investments to wrongly withhold the December quarterly report from the public. This was based on improper interpretation of the rules relating to the release of financial information.

Main Event release their first report in June after their January IPO.

Earlier this year Main Event issued their IPO and included interim results to September 2016, with the year end of October. The IPO was in January but it was not until June that shareholders had information on the out turn of the operations for 2016 as well as for the first quarter this year. As it turned out, profit of $60 million at the 11 month period melted down to $56.5 million for the full year. The audited report was only signed on the June 5, more than 7 months after the year end while the first quarter results were never released but the second quarter to April was released within the deadline of June 15.
The management of Stationery & Office Supplies may have had a lot to shout about with pretax profit jumping 146 percent to $20.3 million for the June quarter this year and hence the release of the results to Jamaica Stock Exchange in less than a month of listing on the Junior Market.
Under the stock exchange rules it need not have put out the six months report having been listed in August. Some persons may see it as self interest in the release, but there is no evidence of that. The release provides the investing public with pertinent information in a timely manner, on which they can make their investment decisions. The hope is that the Jamaica Stock Exchange rules will be strengthened quickly to ensure that pertinent information is release on a timely basis to the public.

Watch SOS this week

In the Junior Market activity last week, Stationery & Office Supplies moved back to $5 after the company released impressive results for the year to June. Buying also came in for Barita Investments and Berger Paints while during the week and Scotia Group raced to a record high.
For the coming week investors should continue to keep eyes on NCB Financial Group, Berger Paints, that is priced currently at a PE of 6 times 2018 earnings, Caribbean Producers and Stationery & Office Supplies that IC upgraded earnings to 50 cents per share from 40 cents previously, with the initial public offer helping to drive more business subsequent to the June quarter, with reports of sales rising faster than the 25 percent levels experienced in the second quarter.
Caribbean Producers with improved 2017 results over 2016 with profit doubling, moved up to $4 during the week, before closing at $3.11 on Friday, after a big trade and should head back to the $4 range in the coming week.
Last week stated, “with cut in BOJ benchmark interest rate by 25 basis and a fall in the August Treasury bill rates, the entire main market is on IC’s watch list as the All Jamaica Composite Index could move to the 300,000 points mark before long.”
IC also stated, “the most noted move in the Jamaica Stock Exchange last week was Scotia Group racing to a record high of $52 but ending the week without any stock being offered for sale. This stock has to head the stocks to watch list this week.”
The All Jamaica Composite Index rose to 296,779.53 points during the past week and by the end of the week closed at a 291,332.10 up from 289,247.13 at the end of the previous week and Scotia Group ended at a record high of $60.

Profit jumps 146% at SOS in Q2

Stationery & Office Supplies Montego Bay office.

Profit jumped 146 percent at the recent Junior Market listing, Stationery & Office Supplies, to $20.3 million in the June quarter this year, before corporation tax of $8.8 million. For the six months period to June, profit before tax rose 33.4 percent to $50.4 million.
Revenues climbed 23.7 percent in the latest quarter to $212 million and 22 percent to $432 million for the six months. Gross profit climbed 25.5 percent to $99.5 million for the June quarter, flowing from increased gross profit margin while year to date, the increase was lower at 20.5 percent to $208 million. Expenses closed the June quarter at $79.2 million versus $71 million, an increase of 11.6 percent. For the year to date, the increase is a high 17 percent but still lower than the increase in revenues.
The 2017 result to date, is almost equal to the total 2016 results before tax of $53 million. Gross cash flow resulted in cash of $23 million being generated after an increase in working capital $28 million. The company spent $32 million on acquisition of fixed assets which required borrowing $4 and utilizing some cash on hand.
Businesses need adequate capital to grow and when debt reaches a certain level it becomes more challenging to access borrowed funding. Sometimes owners become concerned with increasing debt and this may hold back the performance of the business. Growth in the SOS’ business was putting pressure on cash resources resulting in borrowings rising, with $141 million outstanding at the end of June amounting to 50 percent of the equity. The need to expand to meet an increasing demand for its products would have placed added pressure on the owners to find the funds to finance the expansion.
The capital that came from the Issue of shares to the public will go a far way in improving the company’s finances and allow it to fund expansion, including paying for additional fixed assets which it was committed to at the time of the IPO.

Some team members at SOS who helped in the growth in prfoits for 2017

The Stationery and Office Supplies executive body that helped to grow profit in 2017

IC’s observations are that listing on the stock exchange brings huge benefits to companies. The constant exposure results in increased business, the capital injection allows for increased focus on inventory selection and choices, all of which feed into increased sales. The increased pace of sales growth in the second quarter may well be connected with the publicity received prior to listing and it would be surprising if the pace of growth does not pick up in the second half of the year and well into 2018.
At a last traded price of $4.20 on the Junior Market of the Jamaica Stock Exchange, the stock remains a buy to benefit from future growth. IC projects earnings before tax at 50 cents per share based on the average number of shares issued for the year, up from 40 cents when the shares were offered for sale and $1 for 2018 which is projected to continue to show strong growth in revenues. IC gathers that sales have picked up strongly after the IPO with many more walk in customers being seen than before. later in 2017, online marketing website and increased sales to the Eastern Caribbean will commence which should add to growth in sales going forward.
The company, under the stock exchange rules need not have put out the six months report, having been listed in August. The release is to be applauded. It is in the investing public’s interest, to have pertinent information on which they can make their investment decisions.

Two financial stocks return to TOP 10

Unlike last week when there were several changes to the TOP 10 lists, this past week had just two changes, with Lasco Financial returning to the junior market and Sagicor Group to the Main market lists.
CAC 2000 dropped out of the Junior Marketlisting, allowing for the return of Lasco Financial that dropped sharply in price, to close the week at $3.40. Mayberry Investments was edged out by Sagicor Group, dropping from $34.35 to $31.75 at the close of the past week.
Former TOP main market value stock, Barita Investments moved up from $9.40 during the previous week to close at $11.60 for a gain of more than 273 percent since September last year. The most recent Initial Public Offering, Stationery and Office Supplies that exited the TOP 10 after listing in the prior week, is fluctuating between $4 and just over $5, and should undergo some amount of wide price movements until demand and supply find some balance. JMMB Group climbed to $23 on Friday before closing back at $21.45, supply has dried up for this stock and it seems to be readying to make an early exit in the next few weeks.
The average PE ratio for the Junior Market Top stocks is at 7.5 and the PE for the main market TOP 10, ends the week at 7.2. The average PE for the overall main market trades at 13.3 and 13.2 for Junior Market, based on 2017 estimated earnings.
At the close of the week, IC’s TOP 10 stocks now trade at an average discount of 42 percent to the average of the market for Junior Market Top stocks and it remains at 46 percent for the main market.

Advancing Junior stocks edge out decliners

Jamaican Teas one of teh more active stocks on the Junior Market after the company released 9 months results.

Trading closed with 20 securities changing hands, 7 advanced, 5 declined and 8 traded firm with 1,716,953 units valued at $8,024,988 compared to 13,753,371 units valued at $73,391,001 on Thursday.

Trading ended with the Junior Market Index rising 1.89 points to close at 3,125.15. The market closed with  an average of 85,848 units at an average of $401,249 trading, in contrast to an average of 687,669 units at an average of $3,669,550 on Thursday. The average volume and value for the month to date amounts to 322,723 units valued at $1,695,591 compared to 309,916 units valued at $1,627,630 previously. In contrast, July closed with average of 536,395 units at $1,905,441 for each security traded.
Trading ended with the market sentiments looking strong for Monday’s activity as 7 stocks ended with bids higher than their last selling prices and 2 with lower offers.
At the close of the market, stocks trading and their last traded price are: AMG Packaging with 21,000 shares at $3.50, Blue Power trading 700 shares at $40, CAC 2000 closed 35 cents higher at $7.85 with 3,000 shares, Caribbean Cream rose 4 cents to $6.74 with 54,000 shares, Caribbean Producers gained 21 cents to end at $3.60 with 32,362 shares, Consolidated Bakeries closed at $2.15 with 22,500 shares, Express Catering inched higher by 3 cents to $5.23 with 158,852 shares, General Accident closed at $2.60 with 11,757 shares, Honey Bun lost 20 cents and closed at $4.80 with 110 shares, Jamaican Teas closed 5 cents higher at $5.00 with 221,554 shares, after it traded at $5.30 in the morning session. Jetcon Corporation closed 9 cents higher at $5.50 with 95,280 shares, KLE Group closed at $2.10 with 277,000 shares, Knutsford Express closed at $15 with 4,171 shares, Lasco Distributors closed at $6.70 with 6,450 units, Lasco Financial lost 40 cents and ended at $3.40 with 155,500 shares, Lasco Manufacturing climbed 36 cents higher to $4.74 with 7,390 shares, Medical Disposables declined by 10 cents, to $5.20 with 13,000 shares, Paramount Trading closed at $2.94 with 2,872 shares, Stationery and Office Supplies traded 422,213 units with the price sliding 31 cents to $4.49 and tTech ended with a loss of 10 cents, at $6.90 with 207,242 shares changing hands.

89% of trades to 2 Lasco companies

Lasco Manufacturing & Lasco Distributors, combined, traded 89% shares on Thursday.

Two Lasco companies dominated trading on the Junior Market of the Jamaica Stock Exchange on Thursday, accounting for 89 percent of the volume traded. Lasco Distributors accounted for 4.9 million units and the manufacturing sister company 7.35 million units.
Trading closed with 20 securities changing hands, 5 advanced, 5 declined and 7 traded firm with 13,753,371 units valued at $73,391,001 compared to 28,446,953 shares valued at $130,472,160 on Wednesday when Jamaican Teas traded over 25 million shares. The Junior Market Index rose 10.72 points to close at 3,123.26.
Trading ended with an average of 687,669 units for an average of $3,669,550 in contrast to 1,293,043 units for an average of $5,930,553 on Thursday. The average volume and value for the month to date amounts to 344,257 units valued at $1,813,259 compared to 309,916 units valued at $1,627,630 previously. In contrast, July closed with average of 536,395 units at $1,905,441 for each security traded.
Trading ended with the market sentiments looking stronger for Friday’s activity as 10 stocks ended with bids higher than their last selling prices and 3 with lower offers.
The volume of stocks changing hands on Thursday and the last traded prices are: Access Financial with 27,855 shares at $46.20, AMG Packaging with 3,100 shares at $3.50, Blue Power losing $1.50 in trading 550 shares at $40, CAC 2000 closing at $7.50 with 1,659 shares, Cargo Handlers closed at $11 with 550 shares, Consolidated Bakeries lost 11 cents and ended at $2.15 with 2,000 shares, Dolphin Cove closed at $17.50 with 100 shares, Express Catering closed at $5.20 with 78,372 shares, General Accident closed at $2.60 with 89,694 stock units, Jamaican Teas ended at $4.50 with 793,230 units, Jetcon Corporation closed at $5.41 with 168,148 shares, KLE Group closed at $2.10 with 168,011 shares, Knutsford Express closed at $15 with 2,000 shares, Lasco Distributors exchanged 4,911,909 shares at $6.70, Lasco Financial closed at $3.80 with 6,898 shares after falling 5 cents, Lasco Manufacturing rose 5 cents to $4.38 with 7,352,203 shares, Medical Disposables climbed 30 cents to $5.30 with 165 shares, Paramount Trading rose 9 cents to $2.94 with 10,000 shares, Stationery and Office Supplies traded 122,333 units with the price rising 40 cents to $4.80 and tTech closed at $7 with 14,584 shares.

Major changes to TOP 10 stocks

Barita jumps TOP 10 with more than 200% gain since September 2016

Investors pushed the price of Barita Investments to $9.40 during the week and drove newly listed Stationery and Office Supplies to $5.10 after it was listed on Thursday moving both out of the top flight of stocks. In addition, four others changed places with new listings.
Barita entered the list when we started the TOP 5 back in September last year, at $3.11 and has gained more than 200 percent since then while SOS is up 154 percent from its IPO price. Both stocks have more room for growth.
tTech reported lower profit in the second quarter to June with lower revenues resulting in a lower earnings forecast for 2017 and dropped out of the top list. CAC 2000 having slipped out of the listing the prior week returned this past week and was joined by Dolphin Cove to replace the two that exited the listing.
Main market stock, Berger Paints fell during the week from $19 to trade at $16 and moved back into the listing. Moving in are Grace Kennedy, Mayberry Investments and PanJam Investment. Stocks graduating from the top flight are Seprod as the price rose during the week to $33.33 from $30, Sagicor Group moving from $31.50 to $34.35 and Salada Foods that closed at $9.50, up from $9.
The average PE ratio for the Junior Market Top stocks is at 7.6 and the PE for the main market TOP 10, ends the week at 7.2. The average PE for the overall main market trades at 13.2 and 12.9 for Junior Market, based on 2017 estimated earnings.
At the close of the week, IC’s TOP 10 stocks now trade at an average discount of 41 percent to the average of the market for Junior Market Top stocks and 46 percent for the main market.