9 JSE Main Market stocks double in 2019

Last year was a mixed one for investors in the Jamaican stock market. On the one hand, Investors in Main Market stock enjoyed gains of more than 30 percent for the second year in a row, but Investors in Junior Market Stocks had far less to cheer about with a market rise of 3 percent.
Ten JSE Main Market stocks doubled in price in 2019 with the Jamaica Stock Exchange ordinary share leading the group with a gain of 177 percent with the Main market rising 34.3 percent for the year, upon the 31.7 percent rise in 2018.
VM Investments rose 120 percent to hold down the number two spot followed by Sygnus Credit InvestmentsWisynco Group and Radio Jamaica. All three ended up on the worse 10 performing stocks in 2018 along with Proven Investments, the 10th best performer in 2019, with a 93 percent gain. Palace Amusement stock gained 100 percent, in 2019 and is the only 2018 TOP 10 stock to reappear in the top 10, in 2019. In 2018, it came in at number 3 best performing stock, compared to eight position in 2019. Palace has a remarkable record of more than doubling in each year, from 2016 to end in the TOP 10 for all of them

Some impressive profit results

The latest set of listed companies to report financials show an array of impressive profits for a number of them, turn around situation in one and flat results for a few.

C&W reported a small loss of $138M for 2017 before tax.

Cable and Wireless reported a very small loss for 2017 down sharply from a billion loss in 2016 and is about to break out into a highly profitable period starting in 2018. The company that has chalked up accumulated losses of more than $48 billion reported losses of only $138 million before tax for 2017, and just $383 million after tax, flowing from a 9 percent rise in revenues to $27 billion with a big rise in mobile revenues by 54 percent to $15 billion while interest cost at $5.2 billion the company lost the year, down from a loss of $1.4 billion in 2016. With the sharp fall in interest rates locally interest cost should drop by around $2 billion in 2018 and plunge the company into an excellent profit position with continued growth in revenues. Unfortunately, the parent company wants to take over the company at a low price, after local shareholders have suffered losses for many years at just the stage when good times seem to be returning.
Newly listed FosRich Group posted an 81 percent increase in profit to $55 million and earnings per share of 14 cents from revenues that fell 9.5 percent to $1.05 billion, but helped by other income of $42 million comprising mostly interest and foreign exchange gains.
Jamaica Producers enjoyed strong gains in operating profits with an increase of 77 percent to $662 million after adjusting the 2016 results for non-recurring gains of $3.7 billion. Operating income for the year was up an impressive 34 percent resulting in gross profit rising from $3.24 billion to $5.14 billion. Earnings per share came in at 59 cents.
Stationery and Office Supplies that listed in August last year enjoyed a 29 percent bounce in revenues for the full year and 37 percent rise in the December quarter to record full year revenues of $906 million and a 78 percent rise in profits to $83 or earnings per share of 38 cents.
Kingston Wharves profit climbed 18 percent from $1.29 billion to $1.63 billion for 2018 from revenues that moved from $5.41 billion to $6.37 billion for a rise of 28 percent and ended with earnings per share of $1.14.
Grace Kennedy continues to struggle to increase profits ended 2018 with flat results of $4.15 billion versus $4.12 billion in 2016. The 2016 figures and one off gains that makes the 2018 better that it appears on the surface. Revenues rose from $88.3 billion to $92 billion in 2018 and other revenues slipped from $2.38 billion to $2.1 billion. The group reports $4.15 in earnings per share.

FosRich profit rose 77% for 2017.

Supreme Ventures reports earnings per share at $44 cents from profits that are virtually flat with 2016 results coming from a 25 percent rise in revenues to $56.2 billion. Profit for the year ended at $1.197 billion from $1.178 billion. The 29017 suffered from write off of assets and impairment amounting to $484 million while repairs and maintenance rose by $110 million.
The 2017 listed Victoria Mutual Investments reports a 9 percent rise in profits to $346 million from a 19 percent rise in net income of $966 million and produced earnings per share of 29 cents.

VM Investments lists on Friday

VM Investments list on Friday

Investors who applied for shares in the public pool in VM Investments recent public issue of shares will get the first 30,000 units and 4.32 percent of the balance.
Employees and Members reserved groups were allocated the full amounts applied for. The offer closed with subscriptions in excess of $2 Billion for the $689,261,487 offered”
A total of 225,003,750 Ordinary Shares in the Offer were reserved for staff and customers of the VMBS Group at discounts from $2.08 to $2.33 each and 75 million for the general public at $2.45 each.
The company’s shares will list on the main market of the Jamaica Stock Exchange on Friday.

NCB Capital Markets Manager, Origination and Structuring Stanley Thompson (left) exchanges laughs with Wisynco Group Limited Chairman William Mahfood during a signing ceremony commemorating a partnership with the local manufacturing and distribution giants. Sharing in the moment, too, are Wisynco Chief Executive Officer Andrew Mahfood and PriceWaterhouseCoopers Director Fiona Hyman

Wisynco started trading on the main market on Thursdays with very strong demand for the shares that were sold to the public at $7.87, by the close of trading attempts were made to trade 3.46 million units as high as $13.50 but most were cancelled as the price exceeded the 30 percent price movement limit of for the day. At the close 2,925,359 units were traded up to $10.09, the maximum price limit for the day.
Wisynco ended with 7,382 new shareholders, with those applying for shares from the General Public pool receiving the first 25,000 units in full and approximately 18.81 percent of the balance.

JSE board needs a huge shake up

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Ian McNaughton, Chairman of the Jamaica Stock Exchange.

The Jamaica Stock Exchange needs to heal itself and fast, since no one else seems able to do so yet. There are some startling truths about Jamaica but not many persons want to talk about them.
One such truth, stock exchange board is not running the exchange in the interest of the wider investing public. The other is that the Financial Securities Commission is almost a waste of taxpayers’ money whether by government subvention or fees paid directly or indirectly by investors. If that were not the case how can the country explain that Berger Paints’ directors could make false statements about the acceptance and value of Berger Paints shares in response to Ansa Coatings offer to buy out minority shareholder and no one in authority called them to book and got them to support their claims with evidence.
In July this year, Express Catering shares were not being traded as demand exceeded supply by a wide margin and pushing the equilibrium price well ahead of prices that the circuit breaker rule at the JSE permitted. The stock did not trade for a number of days after listing, left to the rules as was being practiced, the stock would have taken much longer to trade than it finally did after management intervened. The same thing is now happening to FosRich shares that have not traded after two days of listing, with demand exceeding supply well above the permitted price of the JSE. When Wisynco and VM Investments list, one can expect the same situation to occur, unless the rule is modified.
Having hand the problem several months ago it seems implausible that the JSE has not moved speedily to correct what is clearly a problem when IPOs start trading. Why has the stock Exchange board not moved to correct what is clearly a problem for new listings. Why has the FSC not intervened to ensure it get sorted out, before new listings come to market?
The fact that we are seeing a repeat of this problem is a clear indication that there needs to be changes at the board level of the JSE.
Lest face some facts, time is money. The FosRich issue closed on December 4, as such, investors who would like to sell have to wait for nearly a month to be able to get their money out based on the Jamaica Stock Exchange price restriction. In the cases of Wisynco and VM Investments the situation will be vastly worse with both having protracted period to announce the allocation of shares much yet listing.
The Junior Market of the exchange has demonstrated the power of share ownership, to radically transform the economy and the wider society. Alas enough effort is not being given to it, the mechanical application of the circuit breaker rule is one such factor that is negatively affecting the market.
Finally, the Berger Paints takeover offer is once more pointing to the fact that a rule meant to protect minorities is not doing so at all, if it did how can one explain the fact that just over 6 million shares were surrendered as a result of the Ansa’s bid with the shares trading up to $18 since compared to an offer on $10.88. Clearly the big investors did not sell so it must be much smaller investors who are not adequately informed.

General public oversubscribed GWest 100%

GWest complex in Montego Bay,

Montego By based GWest Corporation’s Initial Public Offer of 169,689,500 shares, closed on the opening day, December 7, was oversubscribed by 41.3 percent, but the oversubscription by the general public exceeded 100 percent.
The level of oversubscription by the general public is amazing for company that is its infancy and generating a loss in its current fiscal year, with limited data on which to judge future earnings. Details of the level of subscription for the IPO was released by the broker for the issue, JMMB Securities.
Applications totaling 1334, were received for shares valued at $599,310,000. All the shares that were reserved were fully taken up, while General Public for which 69.7 million shares at $2.50 each, were available to purchase, received the first 10,000 shares applied for and 45.941 percent of the balance.

Dr. Konrad Kirlew, chairman of GWest.

GWest made a loss of $29 million in the six months to September this year and for the full year to March 2018, a loss of $111 million is projected, and is estimated to swing sharply to a profit of $166 million in 2019 and $388 million in 2020 as revenues rise from an estimated $158 million in 2018 to $803 million in 2019 to $1.2 billion in 2020. The shares are slated to be listed on the Junior Market of the Jamaica Stock Exchange.
Elsewhere, IC Insider.com gathers that VM Investments received applications in the range of more than 3,000, but less than 5,000, with the basis of allocation to be considered by the board on Thursday.

VM Investments 2 times over

Yet another Initial Public Offering crossed the line with demand exceeding supply as the latest issue by VM Investments to raise just under $700 million, has been oversubscribed and closed at the end on Tuesday.
“We were heartened by the overwhelming confidence demonstrated by Members of the Victoria Mutual family and the wider public. We closed today with subscriptions in excess of $2 Billion for the $689,261,487 offer” Devon Barrett, Victoria Mutual Group’s Chief Investment Officer said.
Barrett went on to say “we believe this augurs well for Jamaica’s economic growth and look forward to contributing to this growth by providing financing solutions for small and medium-sized entities in Jamaica. Details on the basis for allocation will be communicated to the Jamaica Stock Exchange in a subsequent advisory.”

Devon Barrett CEO of VMIL addressing invitees at the formal announcement of the IPO

A total of 225,003,750 Ordinary Shares in the Offer are initially reserved for staff and customers of the VMBS Group at discounts from $2.08 to $2.33 each and 75 million for the general public at $2.45 each. The offer which opens on December 11, was scheduled to close on December 18.
The company reported profit after taxes of $326 million, surpassing the $310 million made in 2015 and up to September profit of $273 million was achieved putting in on track for $360 for the year or 30 cents per share with PE ratio of 8, which is well below the average of the market 14.
Last week, FosRich and GWest closed with the issue oversubscribed and Wisynco closed with over $17 billion chasing a little more than $6 billion that was sought. Reports are that the Wisynco offer was heavily subscribed to by institutional investors.