Home' Trinidad and Tobago Guardian : January 10th 2015 Contents SBG12 STOCKS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JANUARY 10 • 2016
In Jamaica, the JSE rose by a robust
97.36 per cent to end at 150,692.13
from its opening value of 76,353.39.
In stark contrast to our Jamaican coun-
terparts, investors on the local stock
market had a tough time registering
many capital gains in 2015.
Last years returns, as measured by capital
gains, from only two local manufacturers and
two cross-listed Jamaican financial companies,
far outperformed any of the other listed com-
panies on the local exchange.
Although the composite index eked out an
almost one per cent increase in value, this
result was hugely influenced by the nearly 19
per cent gain delivered by the cross-listed
index. Not surprisingly, given recent and con-
tinuing challenging economic conditions, the
local index contracted by almost 35 points or
1.75 per cent.
Let us now review the major factors that
influenced the gains on the local exchange,
starting first with the locally based companies.
National Flour Mills Ltd
NFM benefitted from a variety of positive
factors, including lower food commodity prices.
Its results were also influenced by improved
plant productivity, more refined grain pro-
curement, improved working capital manage-
ment and higher sales.
Its third quarter EPS registered at $0.25,
which compares favourably with $0.12 for the
comparative 2014 period. The fourth quarter,
just concluded, should see a continuation of
The 2014 dividend of $0.06 was paid on
December 22, 2015 and represented an
improvement over the $0.05 paid for the 2013
fiscal year. If we project a 2015 dividend of at
least $0.10, then the year-end price would
give investors a yield of 3.7 per cent.
Being a state controlled enterprise, one vari-
able that will always hang over this company,
is if, when food prices start to rise, it will be
"allowed" to raise its prices commensurate
with the then-current market conditions.
Trinidad Cement Ltd
Despite an imperfect rights issue in the early
part of the year, TCL was able to solidify
Cemex s role as a significant shareholder. The
proceeds from this transaction helped to reduce
its total debt and, eventually, led to the suc-
cessful renegotiation of its remaining lower
Its third quarter results were boosted by a
one-off $205.8 million net debt restructuring
credit. This boosted its EPS to $1.19 for the
period. Even after excluding this restructuring
credit, the adjusted EPS came in at $0.72,
which is three times the $0.24 EPS for the
2014 comparative period.
The company s hoard of cash improved from
less than $97 million as at December 2014 to
$302 million last September. Similar to many
companies, the October to December quarter
is likely to provide its largest profit.
The release of its third quarter results in
the third week of October stimulated investors
interest in this share. The share price advanced
strongly, reaching as high as $4.75, as investors
anticipated the return of dividend income in
the coming months.
After peaking at $4.75, some investors may
have decided to take some profits as they con-
templated financing their upcoming Christmas,
New Year s and Carnival expenditures. This
selling activity pulled down the share price,
which ended at $3.99.
T&T NGL Ltd
After a reasonably successful IPO at $20.00,
the NGL s share price initially spurted up to
$25.00. This rise was hugely influenced by
the purchases of the NIB, which bought a total
of 8,118,342 additional shares at different prices.
The lack of further new institutional demand
resulted in the price drifting downward, even-
tually closing the year at $21.50.
With its EPS for the first nine months reg-
istering at $0.85, it is likely that the full-years
EPS could register at $1.10 or thereabouts. On
that basis, the final dividend could be $0.50.
This would bring the total dividend for the
year up to $1.00. Based on the recent price
of $21.50, that would translate into a yield
of 4.65 per cent. For investors at the IPO price
of $20.00, the yield would be 5.0 per cent.
Unilever Caribbean Ltd
Despite a challenging start to 2015---which
mostly related to getting a new computer sys-
tem fully operational---UCL proved as resilient
Lower sales, up to the end of the third quar-
ter, were attributed to a weaker local economy
influenced by a more cautious election season
and pre-budget period.
The EPS for the nine months to September
2015 registered at $1.10 versus $1.70 for the
comparative period in 2014. Both the computer
problems and weak consumer behaviour were
major factors that influenced this result. A
modest recovery was expected in the last quar-
ter. UCL s cash balances declined modestly to
$60.2 million from December 2014 s $69.7
Although UCL does have a dividend pol-
icy---similar to Witco---it can disburse sums
equal to or exceeding its current year s profit
as dividends; this may be dependent on its
wish to maintain its lofty share price and/or
the needs of its parent company.
Prestige Holding Ltd
Even in an economy weakened by lower
energy prices, sporadic foreign exchange sup-
plies and associated challenges, consumers
need to be adequately fed in a reasonably
PHL is one of the companies that do this
to a creditable degree, earning profits for its
shareholders, customers and employees.
Although revenues for the nine months to
August 2015 improved by only 4.0 per cent,
EPS advanced by more than 13 per cent to
register at $0.66 versus $0.58 for the com-
parative 2014 period. This result was helped
by lower finance costs and reduced income
PHL s cash balances improved from $57.3
million as at November 2014 to $68.7 million
last August. In October, it increased its interim
dividend to $0.16 from last year s $0.15.
The higher share price supports the view
that its final dividend would also be greater
than the $0.17 paid for 2014.
We now turn to the cross listed companies,
all of whom exhibited year on year gains.
National Commercial Bank Jamaica
LtdDespite essentially flat profits and EPS,
NCBJ s share price managed to post a gain of
82.61 per cent on the local exchange.
Is it that investors recognised that the share
price was previously under-valued? Or, per-
haps, the market has great hopes for its recently
announced link up with Guardian Holdings
It was only in early December that investors
made the connection between the proposed
new investment in GHL and NCBJ raising
US$250 million back in May 2015.
How was this money raised?
In my December 13, 2015 article I pointed
out that its obligations under securitisation
arrangements exploded from J$13.9 billion to
J$44.9 billion. Much of this was explained by
the sale of its future cash flows from its
Jamaican credit card operations. On May 18,
2015, NCBJ raised US$250 million (J$29.68
billion) via this method at an interest rate of
5.875 per cent; this is commonly called financial
Investors in both Jamaica and T&T await
further details about the approved version of
the proposed deal between NCBJ and GHL.
JMMB Group Ltd
Effective April 13, 2015, the former JMMB
was re-listed as JMMB Group Ltd, having
adopted a group structure. Interestingly, its
closing price of TT$0.55 was first attained on
May 7, 2015, less than one month after the
Although some slippage occurred in its sec-
ond quarter, JMMBGL s results for the half-
year to September 2015 showed an improve-
ment over the 2014 result. EPS for half-year
2015 registered at J$0.72 versus J$0.63. An
interim dividend of J$0.19 was paid on Novem-
ber 26, 2015.
In the not-too-distant future, JMMBGL
expects to have a banking operation in its
home country; this would add to its existing
banking operations in the Dominican Republic
NCBJ owns 26.3 per cent of JMMBGL.
Towards the end of the year GKC confirmed
the finalisation of its sale of its majority stake
in Hardware & Lumber Ltd at J$18.50 per
In mid-December, GKC announced that
work will start on a US$25 million commercial
centre in downtown Kingston, which will also
house its corporate headquarters. Interestingly,
ownership of the project will eventually be
transferred to a Real Estate Investment Trust
(REIT), thus expanding investors options.
Despite recent one-off profit challenges,
GKC continues to improve its dividend pay-
Next week, we will review how last year s
picks fared and select a few shares that could
do well this year.
Local stock market review: 2015
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