3 New IPOs – PBS, SOS & Express Catering. Are You Going To Invest?

Here is the latest weekly digest (Jul 3rd – Jul 9th, 2017). A quick easy read of this week’s top and most relevant business news. No fluff, just the highlights.

What an exciting time for investing. Within the space of a week we have seen 3 companies coming to the market to raise funds with their initial public offerings – Productive Business Solutions, Stationery & Office Supplies & Express Catering.

Since we will have our hands full trying to do our analysis, I thought it good to provide a summary of some points on each offering. Also, when evaluating each company and offering, be sure to look at the risk factors related to each. Risk factors include both internal and external risks like

  • legal cases of significant magnitude
  • risks highlighted by auditors
  • risks from competition
  • intellectual property
  • impact of labour unions
  • financial statement risks – capital structure, growth pattern, profitability, dividends

Here are some key points on the 3 initial public offerings out now. Figures are in J$ unless stated otherwise.

Productive Business SolutionsStationery & Office SuppliesExpress Catering
Date OpeningJuly 5, 2017July 19, 2017July 12, 2017
Amount TargetedUS$41.5m$95.0m$491.3m
Total Offering39.1m shares @ US$0.55 per share50.0m shares @ ($1.6 to $2 per share)327.5m @ $1.5 per share
Reserved Shares34.6m @ US$0.55 per share22.5m (12.5m @ $1.6 for employees and 10.0m @ $2 for JNFM clients)294.9m @ $1.5 per share
General public4.5m @ US$0.55 per share27.5m @ $2 per share (general public)32.6m @ 1.5 per share (general public)
% for Public11.51%55.00%9.95%
BrokerNCB, FCIBJNFMMayberry
Dividends policyStarting 2018, not less than 60% of Free cash Flow25% of profit after tax25% of after tax earnings, paid in USD
Profit / LossUS$3.3m loss (2016)

US$1.6m profit (2015)

J$46.6m (2016)

J$7.1m (2015)

US$1.1m (2016)

US$591k (2015)

 

Also as it relates to risks here are a few.

For Express Catering,

  • The business model and scale of the Company is not diversified as to its geographic location, because it operates only in the Sangster International Airport at Montego Bay under a long term contractual arrangement.
  • The business of the Company is dependent on tourist and other visitor numbers to Jamaica that use that particular airport and make use of the Company’s offerings. The Company is taking steps to increase the range of its product offerings and also, individual spend by customer at its outlet
  • The Company operates a number of branded restaurant outlets under franchise or sub-franchise or similar agreements with franchisors. If the Company were to breach its arrangements with MBJ Airports, any of the third-party franchisors, or (in the case of a sub-franchise) if the Group were to do so, the Company could lose its premises at Sangster International Airport and/or the right to use the names and brands and operation of the relevant franchised restaurant outlets with attendant loss of income and possible negative effects on other ongoing operations.

 

For Productive Business Solutions (PBS)

  • The economies where PBS has franchise operations may experience unfavorable performance based on their macro-economic variables such as; low GDP, high unemployment, low capital reinvestment rates and adverse balance of payments. The risk of economic downturn is mitigated by the geographical diversification of the Group.
  • The ISM (on the Barbados Stock Exchange)  was launched in March 2016 and is a new market option for investors. The Company cannot give any assurance that a liquid market for the securities listed on the ISM will develop. If no active trading market develops, a holder of Shares may not be able to resell their Shares on the ISM.
  • The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Jamaica dollar, the Guatemala Quetzal, and others. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. The Group manages its foreign exchange risk by ensuring that the net exposure in foreign assets and liabilities is kept to an acceptable level by monitoring currency positions.

 

For Stationery & Office Supplies

The Company is subject to the risk presented by potential shifts in the local and international macroeconomic environment, as well as changes in fiscal and monetary policies and their impact on variables such as business and consumer confidence, commerce and capital markets including the Junior Market.

 

Market Performance This Week

Here are some of the top performers this week.

Top 5 Advancing Stocks

SecurityOpenClose% Change
TTECH7.89.2518.59%
PAL50055010.00%
EPLY1212.957.92%
PULS2.93.117.24%
XFUND11.512.246.43%

 

Declines were led by…

Top 5 Declining Stocks

StockOpenClose% Change
CAC86.57-17.88%
MEEG5.795.05-12.78%
GENAC3.32.9-12.12%
JAMT4.323.8-12.04%
LASM5.134.55-11.31%

 

52 Week Highs and Lows

SecurityOpenCloseLowHigh% Change
PROVEN8.255.165.15.15.1-1.16%
PULS2.93.1134.357.24%
TTECH7.89.257.89.518.59%
JMMBGL7.251.491.551.551.554.03%
LASM5.134.554.35-11.31%
PAL50055055055010.00%
ProvenJA24.0124.0224260.04%

 

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

 

We won’t be including recent market news this week, but don’t worry, we will be launching a new, exciting news page in the next few weeks (currently testing). We think it will be the best darn way to stay up-to-date on business news in the Caribbean. Look out for it.

 

Here are some key market and economic figures

  • Stock Market Movement (Combined Index):
DateMTD % ChgYTD % Chg
Jan/1710.09%10.09%
Feb/178.99%19.99%
Mar/17-3.08%16.30%
Apr/174.08%21.04%
May/173.19%24.91%
Jun/17-1.93%22.50%
Jul/17-1.91%20.16%

 

  • Inflation:
    • Year to date (Dec 16 – May 17) 1.4%
  • Unemployment: 12.7% – Jan 2017 (12.9% as at Oct 2016)
  • GDP: 1.1% Oct – Dec 2016  (2.0% – Jul – Sep 2016) – Rate of Growth of Value Added at Constant (2007) Prices Seasonally Unadjusted

Thanks for reading our weekly digest. (Jul 3rd – Jul 9th 2017). All weekly reviews can be viewed here.

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