Home' Trinidad and Tobago Guardian : December 6th 2015 Contents SBG12 STOCKS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt DECEMBER 6 • 2015
This week, we look at a number
of companies and comment on
their recent results, price move-
ments and related matters.
Trinidad Cement Ltd
Particularly in the current year, investors
have seen a rapid transformation in the fortunes
of TCL. The most dramatic was the reduction
of debt and the refinancing of its total debt of
US$200 million; less than two years ago this
figure was closer to US$300 million.
The exercise shown in the table suggests that
TCL can and will pay a dividend for fiscal 2015.
This payment can be as low as $0.22 or, if the
credit on the debt restructuring exercise is
included, as high as $0.39. For our purposes,
we will use the lower figure.
In the worksheet, the consolidated leverage
ratio is calculated as 2.93:1.00. However, if we
assume that the total debt is US$200 million,
which equates to $1.29 billion, then the leverage
ratio improves to 2.70:1.00.
The price closed on September 30, 2015 at
$3.15. Following the release of its third quarter
results on October 24, 2015, the price of TCL s
shares have risen consistently. On the next trad-
ing day, October 26, 2015, the price closed at
$3.30 and it continued trending upward closing
at $4.00 on November 12, 2015, when 872,000
shares changed hands.
Assuming that a dividend will be paid, prob-
ably in March or April 2016, investors willing
to accept a yield of 4 per cent are probably
eager to pay as much as $5.50 for this share.
(Projected dividend of $0.22 divided by 4.0 per
cent.) On the other hand, investors, who prefer
a higher yield of say 5.0 per cent, would not
want to pay more than $4.40 for TCL at this
These are some of the considerations that
would continue to drive the demand, supply
and price of this share in the weeks and months
Recent media reports concerning its com-
mitment to boost profitability at Arawak Cement
in Barbados and improve distribution arrange-
ments in Jamaica with a new partner, Tank-
Weld Metals, should result in additional effi-
Earlier in the year, some commentators
expressed their concerns. First, the pricing of
the rights issue above the then-current market
price was seen as a device to discourage local
investor interest and facilitate the participation
of Cemex, which now owns 40 per cent of
However, many shareholders bought addi-
tional shares on the secondary market at less
than $2.90 and are now enjoying the benefits
of that significant capital appreciation. Also,
those with foresight and confidence, who bought
at less than $1.00 back in April and May 2013,
are now smiling from ear to ear!
In addition, the rights issue document did
not provide any profit projections. This is a
valid point. However, potential investors familiar
with the company could have developed their
own scenarios. The prospectus gave several
clues, for example, the recurring annual savings
of $50.00 million was disclosed. (Refer to page
50 section 7.1 of the prospectus.)
Of course, one of the biggest (perhaps,
unquantifiable) advantage is the active partic-
ipation of a single large shareholder, which has
a substantial stake in the success or failure of
the enterprise and which operates in the same
By way of analogy, most investors in Witco,
Unilever and Scotiabank do not grumble that
their largest shareholder is a foreign entity; they
simply enjoy their dividends and capital appre-
ciation and, mostly, keep quiet.
National Flour Mills Ltd
When NFM released its stellar results to Sep-
tember 2015 on October 29, 2015, the share
price actually rose to $2.00 from $1.96 at the
end of the previous session. It again fell below
$2.00 and stayed under that level until Novem-
ber 18, 2015.
The announcement of the payment of a div-
idend of $0.06 on December 22, 2015, sparked
renewed interest and the price again broke
through the $2.00 mark, closing at $2.50 on
November 30, 2015. Also, its 2014 AGM will
be held on December 10, 2015.
The EPS for the nine months to September
registered at $0.25, which was more than twice
the $0.12 earned for the comparative 2014 peri-
od. Most of this improvement was attributed
to smarter grain procurement, higher sales and
productivity gains in both operations and work-
ing capital management.
Praetorian Property Mutual Fund
The life of the PPMF was first extended to
November 14, 2015. However, reliable infor-
mation suggests that it is now likely to be further
extended to November 2016.
The major reason for this is that it has not
yet been able to sell its two largest properties.
One of these is located in the Cayman Islands
(Bermuda House) and the other is sited in Bar-
bados (Bay Corporate Centre). All its Trinidad-
based properties have been sold.
The additional time should see investors
derive a break-up value that is a little closer
to the original offer price of $5.00.
We should get a further update on this devel-
opment when the fund releases its audited
results to September 2015 in late December.
T&T NGL Ltd
The start of trading in NGL saw the price
quickly appreciate to $25. The major reason for
this was the purchase by the NIB of 7,400,000
shares at $25 on October 20, 2015. This was
quickly followed by additional purchases by
the same institution totalling 718,342 shares at
prices ranging from $23.00 to $24.65. Thereafter,
the share price languished from lack of serious
interest from other institutional buyers.
On November 12, 2015, the price closed at
$21.49. On November14, 2015, the interim
results for the nine months to September 2015
were released. Not unexpectedly, this report
showed a significantly lower EPS of $0.85 versus
$1.78 for the seven months to September 2014.
As expected, an interim dividend of $0.50
was declared and will be paid on December 16,
2015. Against the background of lower energy
prices and related concerns, this news sparked
renewed interest from retail investors, who bid
up the price to $22.00; this is 10 per cent above
the IPO price of $20.00.
Republic Bank Ltd
Despite operating in several difficult markets,
RBL s diluted EPS advanced to $7.57 from $7.39.
In addition, its final dividend, which was
paid on December 1, was improved to $3.10
from $3.00. This increase raised its total dividend
to $4.35 from 2014 s $4.25. These positives were
insufficient to boost its share price, which has
remained stubbornly at around $112.00, both
before and after its profit announcement.
A big question hanging over this institution
is how and to who will the government (Ministry
of Finance and/or Central Bank) dispose of
Clico-related shareholdings in this iconic entity.
If a single buyer is selected, that could see a
major change in the way the bank operates.
Clico Investment Fund
Investors in this fund received their first div-
idend for the year of $0.64 in February 2015.
This was followed by an interim dividend of
$0.33 paid in August 2015.
Relating the recent price of $22.65 to the
2015 dividend of $0.97 investors enjoy a yield
of 4.28 per cent.
The recent share price of $22.65 represents
a discount of 10.8 per cent from the NAV of
$25.40 as at September 2015. The fund is often
used as a means to buy Republic Bank shares,
its major asset, at a discount while providing
a good current yield.
In about seven years time, investors would
have their shares cancelled and be issued with
RBL shares and the value of the bond holdings.
Given that RBL recently paid a higher final div-
idend, one expects that this increase would
flow through to CIF holders in February 2016.
Unilever Caribbean Ltd
One of the stocks on the local exchange that
defies gravity is Unilever Caribbean Ltd. UCL s
share price closed at $65.00 on January 15, then
advanced to $66.00 on April 2 and moved up
to $67.00 on July 31 before closing at $68 on
Starting in the first quarter, turnover was
lower by 16 per cent while EPS contracted to
$0.22 from $0.53. The major reason for this
decline was given as serious problems in the
deployment of a new IT platform system.
This problem was solved by the second quar-
ter, but still sales continued to be lower than
the prior year. But, by the third quarter, the
shortfall in sales had narrowed somewhat. Even
so, the third quarter EPS, at $0.40, was lower
that the EPS of $0.48 recorded for the second
The cumulative EPS up to the end of Sep-
tember reached $1.10 compared with $1.70 for
the same period in 2014. If it earns $0.60 in
the current quarter, which is usually its best
period, then the full year s EPS would amount
to $1.70. Based on previous experience, share-
holders can expect that the entire EPS will be
disbursed as dividends. Having previously paid
an interim dividend of $0.20 in August, the
final dividend should be $1.50.
This dividend, when related to the $68.00
market price, gives investors a reasonable yield
of 2.5 per cent. Consequently, the upward share
price movement would have correctly antic-
ipated the dividend payment.
Interim results, share prices
and related matters
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