Guyana’s BIG Oil Find, Cemex Ups Offer For TCL & JMA To Host Conference

January 15, 2017

Here is the latest weekly digest (Jan 9th – Jan 15th, 2017). A quick easy read of this week’s top and most relevant business news. No fluff, just the highlights.  

National Highlights

  • Guyana Finds More Oil – Guyana, the tiny English-speaking South American country, is poised to become the next big oil producer in the Western Hemisphere, attracting the attention and investment dollars of some of the biggest oil companies in the world. This week, Exxon Mobil and Hess announced the successful drilling of a deepwater exploration well that may soon confirm that the seafloor beneath Guyana’s coastal waters contains one of the richest oil and natural gas discoveries in decades (New York Times).

  • Jamaica’s public debt has increased by two percentage points to 122 per cent of gross domestic product (GDP) since the start of fiscal year 2016/17 (reportedly due to a timing issue). Jamaica’s total public debt stood at approximately $2.15 trillion at the end of November 2016. This represented a 2.2 per cent increase over the figure recorded in March.
    • The country’s GDP is approximately $1.7 trillion.
    • The debt ratio before the IMF deal of 2013 was near 150 per cent of GDP and had crippled Jamaica’s chances on the international capital markets.
    • The government’s projections (as at Sept 2016) was for Jamaica to achieve a debt-to-GDP ratio of 96 per cent by the end of the 2019/2020 fiscal year.
  • The Office of Utilities Regulation (OUR) has indicated that the National Water Commission (NWC) is falling short on its efforts reduce non-revenue water. In its 2015-16 annual report released last week, the OUR noted that whereas the NWC was required to achieve non-revenue water of 55 per cent by 2018, it was at 71.44 per cent at the end of March 2016.
    • Non-revenue water is produced and distributed but earns no income for the utility company. The loss may be attributed to leaks, theft and/or metering inaccuracies; and it also may include a category known as ‘social water’, which is distributed freely to some end users, for example, low-income or rural communities through standpipes.
  • Minister of Finance and the Public Service, Hon. Audley Shaw, tabled the first Supplementary Estimates for the 2016/17 financial year in the House of Representatives on January 10. The figures show that the budget has been revised upwards from $579.93 billion to $592.74 billion, an increase of $12.8 billion. It will then be debated in the House of Representatives on Tuesday, January 17, for its approval.
    • $2.7 billion in additional budgetary support has been allocated to the National Security Ministry and will be utilised for, among other things, the acquisition of two boats and communications equipment.
  • The government this week launched the pilot of its new Island Traffic Authority (ITA) Vehicle Management System on Wednesday (January 11), at the Transport and Mining Ministry in Kingston. The new system will eliminate the need for paper and reduce the production of fraudulent documents.
    • This will promote more compliant vehicles on the roads, increase cost savings and reduce transposition errors, among other things.
    • The pilot system will become fully operational on January 12 at the Swallowfield Island Traffic Authority and will be rolled out on a phased basis to other locations.
    • The new system will promote the integration of the ITA with Tax Administration Jamaica (TAJ) and the Jamaica Customs Agency.

 Companies & The Markets

  • Derrimon has embarked on “a very transparent process” for the acquisition of the remaining shares in Caribbean Flavours and Fragrances Limited (CFF), a takeover process initiated after company founder Anand James sold his remaining shares to the trader in December 2016. This was revealed by Chairman and CEO of Derrimon Trading Ltd (DTL) Derrick Cotterell.
    • DTL, which was already owner of 49 per cent of shares in the company, now owns 75 per cent and will offer to minority shareholders $4.50 per share for their shares.
    • The husband and wife founders of Caribbean Flavours and Fragrances (CFF) will forego “a substantial sum”, having sold more than 23.3 million shares at $4.50 to Derrimon in December, at a time when the stock was trading almost three times higher at $12.30.
    • Anand said they took the hit in order to make good on an oral agreement struck more than two years ago.
  • Barrington Chisholm, chairman of AMG Packaging Ltd, indicates in the company’s just released annual report that AMG will be focusing on higher quality standards, product diversification and plant upgrades for the current year. During the financial year ended on August 31, 2016, revenues fell for the company from $633 million the year before to $628 million, but net profit of $82.97 million was up 4.34 per cent on 2015 ($79.51 million).
  • Cemex, which through subsidiary, Sierra Trading, is seeking to acquire a larger stake in Trinidad Cement Ltd, has responded to the negative assessment of company directors of their previous offer as inadequate and unfair, by raising the offer price by TT$0.57. On Wednesday January 11, Cemex upped its price by TT 57 cents per share, also offering to those who accepts their offer — except for those in Barbados — the option of receiving payment in US dollars.
    • The new offer price of TT$5.07, now represents a 50 per cent premium on share price at the time of the December 5 offer.
    • Cement shares in Jamaica and Trinidad moved in different directions on news of an increased buyout offer by Cemex of Mexico.
  • Kingston Properties Limited (KPREIT) announced on Wednesday January 11 the acquisition of a new property — its first in the Cayman Islands. Described as fully tenanted and mixed-use, the building is located in the West Bay Beach South area, the company said via notice on the Jamaica Stock Exchange (JSE). It was noted that the acquisition represents the company’s first foray in the Caribbean territory, which is a global financial centre. Cayman, KPREIT noted, offers a “tax-free environment with no property, income, corporation or capital gains taxes. GDP (gross domestic product) growth for the first half of 2016 was three per cent on an annualised basis, while unemployment stood at 3.9 per cent.
  • CAC 2000 Ltd’s CEO Steven Marston, in his 2016 audited financials report said CAC has “already paid the damages and loss of profit for the X-ray judgement, but has filed an appeal, as we intend to challenge both the term and the unrealistic interest rates (9.25 per cent on US$ and 14.13 per cent on J$ portions) awarded to the claimant”. CAC 2000 Ltd was ordered to pay over J$50m (plus interest) by the supreme court to X-ray Diagnostics in 2016.
  • Jamaica Manufacturers Association (JMA) will host the Jamaica International Exhibition, a new trade show that will debut in June in Montego Bay. JMA president Metry Seaga said JIE will feature more than 600 overseas buyers and suppliers. JMA plans to stage the trade show biennially in Montego Bay. This year’s event is reportedly costing around US$145,000 to stage, financed by JMA and sponsors.

 

Here are some key market and economic figures

  • Stock Market Movement: -0.39% Week-to-date | 1.18% Month-to-date | 1.18% Year-to-date (27.6% YTD 2016)
  • Inflation: 0.4% November (Month) | 1.4% Jan – Nov 16 (YTD)
  • Unemployment: 13.7% (As at Apr 2016)
  • GDP: 2% as at Sep Quarter 2016 (Rate of Growth of Value Added at Constant (2007) Prices Seasonally Unadjusted)

Thanks for reading Vol. 2017 Issue No. 2 of our weekly digest. ( 09.01.2017 – 15.01.2017). All Weekly reviews can be viewed here.

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