The Results Are In! GK Goes Mobile & Obama Surfing In The Caribbean

Here is the latest weekly digest (Feb 6th – Feb 12th, 2017). A quick easy read of this week’s top and most relevant business news. No fluff, just the highlights.

Market Review

Main Event was listed this week, of course to a rousing welcome – with the Prime minister and Minister of finance both there to welcome the company to the exchange. The market also continued on its highs this week slightly subdued partly due to a few technical errors being experienced by the JSE, however that did not stop some companies from experiencing significant gains.

However the highlight of this week were the quarterly results released by a number of companies. The details are below, but now that the results are in, I think we will see a more guided (since I don’t want to say conservative) approach to this investing craze, especially since some companies failed to perform. The Lascos for instance (except Finance) really disappointed due to sliding revenue and increasing costs. It didn’t help that LASD was dealing with the additional costs related to their court case. Honey Bun also had its own challenges.

Click to see bigger chart

Click to see bigger chart

Top performers compared to last year were 138SL (up 173.8% from a loss) – they are now experiencing better results as they have more revenue from completed rooms and better occupancy, AFS (up 87.2% vs the prior year), Lasco Financial and Caribbean Flavours and Fragances. There may be some more results this week.

As always, you can see the full list of companies and their stock price performance since the start of the year here.

National Highlights

  • New Budget Coming – The Government has presented a budget of $710 billion for the fiscal year 2017-18, with $485 billion allocated for recurrent (housekeeping) expenses and $225 billion for capital (development) spending.
  • Southcoast highway – Finance and Public Service Minister, Hon. Audley Shaw, will travel to the People’s Republic of China next week to sign an agreement with that country’s EXIM Bank for the construction of the southeast coastal highway project at a cost of approximately US$384 million. Mr. Shaw said the new highway will run from Harbour View in Kingston through Morant Bay in St. Thomas and on to Port Antonio, Portland.
  • IMF On Track – Jamaica has met or is on track to meet all 12 quantitative performance indicators and structural benchmarks under the new International Monetary Fund (IMF) Precautionary Stand By Arrangement (PSBA) for the period ending December 2016. Key among these are the central Government primary surplus balance; grants and revenues; inflation; new property tax rates and bands; and formation of the Financial System Stabilisation Committee.
  • Airport, JPS To Be SOLD! – THE Government has confirmed that it will be selling its 19.9 per cent share in the Jamaica Public Service (JPS) company in the upcoming fiscal year. The Government is also looking to get the Norman Manley International Airport (NMIA) off its books in 2017/18. The enterprise team which was set up to examine the operations of the airport has recommended the divestment in light of the significant State funding and resources being expended to run the airport.

And on a lighter note,

  • Obama Was Kitesurfing In the Caribbean This Week On Richard Brandon’s Necker Island – Richard Branson’s Caribbean kitesurfing trip with Barack Obama secured his Virgin business empire millions of dollars in free publicity, brand experts have estimated.

Companies & The Markets

  • GraceKennedy launched its mobile payment solution this week GKM Pay – In a bid to tap into the mobile market and capture the upbanked section of the population GraceKennedy Money Services (GKMS) has launched its mobile payment platform. It is estimated that about 30% of the population is unbanked.
    • There are now three mobile money services in Jamaica – GK MPay, Quisk and Conec. GK MPay is the second to get approval but first to market with a remittance component of its mobile money service. Conec, the mobile money service offered by credit unions, said it secured authorisation for receiving remittances last year but is yet to launch the service.
    • GK MPay can be used to send and receive money, buy phone credit, receive remittances through Western Union, make purchases – including from street vendors – pay for services, and pay bills.
  • Massy Jamaica Aims To Grow – Massy’s businesses in Jamaica span gas, technology and distribution. Both the gas and technology sides of the operation contributed the bulk of their 2016 revenue.
    • Massy Gas Jamaica is a trader in liquefied petroleum gas under the brand name, GasPro. The growth in the gas business was driven by strong volumes sold to the tourist sector; and that the company was able to make the case for some in the hotel sector to use LPG as a cheaper alternative for ‘non-cooking’ applications – to fire boilers, produce steam and do laundry.
    • The non-cooking gas business currently accounts for 20 per cent of the total gas business in Jamaica.
  • Even UWI Gets In On The Credit Bureau Reporting, Oh Boy – The University of the West Indies (UWI) will be providing information to Jamaica’s two credit bureaus on persons pursuing academic studies at the Mona campus. On-campus enrolment at Mona totalled 16,045, and 17,200 off-campus, for academic year 2014-15. Monthly reports covering all students, whether part-time or full-time have already begun starting January 31st.
  • Yellow pages Rebrands, Aims To Tap into Local  – Advertising platform for local businesses Yellow Pages has rebranded to a full-service media business under the name Yello. Their new site will feature more content including events business tips, reviews and they aim to have services to connect buyers and sellers locally.
  • Make IPOs More Accessible To The Small Man – The Jamaica Stock Exchange (JSE) says it is considering ways of enticing brokers to widen the pool of shares to investors when IPOs come to the market.  The JSE requires that 20 per cent of the company lands in the hands of at least 25 shareholders outside of the owners of the company that is floating its shares. The Main Event IPO offered 20 per cent of the company at $2 per share to raise $120 million, but surpassed that in subscriptions. The offer got 1,056 applications valued at approximately $673 million.

And there were quite a few quarterly results this week…

  • Lasco Manufacturing Reported a 51% Drop in Net Profit Despite Big Marketing Spend – Lasco Manufacturing is reporting a decline in Net profit for the 3rd Quarter ending December 2016 compared to the prior year (December 2015). The company’s profit for the 3 months fell from $231.7m in December 2015 to $113.2m in December 2016. This due to $116m or 52.6% increase in operating expenses (related to marketing and new product launches) and a 15.8% decline in revenue.
  • Honey Bun, one of the top movers on the Jamaican stock exchange is reporting a 16.5% decline is net profit despite a 6.8% increase in sales for the 1st quarter ending December 2016.
  • 138SL, the construction company doing the expansion of residential facilities at the University of the West Indies is reporting a 173% increase in profits for the first quarter ended December 2016.
  • Lasco Financial is reporting a 24.5% increase in revenues compared to Q3 last year (from $239.0m to $297.7m ) driven by their expansion into new markets and products. Profits have also increased by 41.2% for the quarter compared to last year.
  • For the first quarter ending December 2016 Salada Foods Jamaica Ltd is reporting Net Profit of $17.29m up 28% above the previous year ($13.47m). While Salada is reporting an increase in profits compared to last year, this is however 20.4% lower than the $21.7m reported in the last quarter, Q4 2016.
  • Head of Citi bank to retire – Peter Moses, the long-time head of Citi Jamaica, is set to retire from the international bank at the end of March 2017. Eva Lewis, the current head of Citi Corporate Bank in Jamaica, will replace Moses in his role as Citi Country Officer — subject to regulatory approvals.

 

Here are some key market and economic figures

  • Stock Market Movement: 6.86% Week-to-date (5.93% Last week) | 10.68% MTD – Feb (10.09% MTD Jan) | Year To Date – 21.85%, 14.03% YTD Last Week (27.6% YTD 2016)
  • Inflation: 0.3% December (Month) | 1.7% Jan – Dec 16 (YTD)
  • Unemployment: 12.7% – Jul 2016 (13.7% as at Apr 2016)
  • GDP: 2% – Jul – Sep 2016  (1.4% – Apr – Jun 2016) (Rate of Growth of Value Added at Constant (2007) Prices Seasonally Unadjusted)

Thanks for reading Vol. 2017 Issue No. 6 of our weekly digest. ( 06.02.2017 – 12.02.2017). All Weekly reviews can be viewed here.

 

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