Home' Trinidad and Tobago Guardian : January 17th 2016 Contents SBG12 STOCKS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JANUARY 17 • 2016
In my January 4, 2015 article, I selected
four local stocks that I anticipated would
do well in 2015; these are shown in the
upper portion of the table. My sole
declining stock was Agostini s Ltd, which
lost $0.36 or 2.06 per cent of its value.
Even so, its total dividend for 2015 was slightly
increased to $0.56 from the previous year s
$0.55. On the other hand, TCL gained almost
60 per cent, cumulatively influenced by the
rights issue, debt refinancing success and the
reasonable likelihood of a dividend payment in
AHL delivered modest capital appreciation,
with the price peaking at $16.00 on January
26, 2015. The changes in government and of
Central Bank Governor have introduced ele-
ments of uncertainty as to the way forward on
the CL Financial, Clico, Republic Bank, Angos-
tura and related matters.
In the case of PHL, steady unspectacular
growth and diligent attention to variable cost
items seemed to be the formula for success.
Trinidad Cement Ltd
You may well ask: "Why TCL, again?" The
short answer is that I believe that its trans-
formation and streamlining is still in the early
stages and that those processes will prove to
be increasingly profitable.
TCL is also an exporter and we have precious
few of them on the exchange. (The other major
exporter is Angostura.) Although Carib Brewery
probably does a fair amount of exporting, its
results are buried within the ANSA McAL
group s figures. While the local economy may
not experience much growth in 2016, some
strategic pockets of activity will benefit. These
include export manufacturing and housing.
The share price peaked at $4.75 on December
2, 2015. Perhaps, the run-up in the share price
was a little too fast? This may have panicked
some investors, who then decided to take some
When the audited results are released in
March, investors will have a clearer perspective
on what to expect in the coming year. Until
that time, the share price may continue to
I have estimated that the closing price next
December could be $5.50 or higher.
Prestige Holdings Ltd
In a slow growth economy, PHL s continued
focus on cost controls and invigorating customer
service will serve it in good stead.
Next month, the company will release its
audited results for the year ended November
2015. Most expect that this will be accompanied
by an increased dividend.
As its stock of cash improves, it is likely that
it will grow its business by consummating an
acquisition within its field of expertise.
Steady profits from its existing franchises
combined with the possibility of an acquisition
underpin my recommendation to buy this share.
I estimate a December 2016 price of $11.00;
if an acquisition occurs, it could be higher.
The robust expansion in share prices in
Jamaica that occurred in 2015 may not be repeat-
ed to the same extent in 2016. Even so, there
are some regional companies that deserve our
attention and focus.
National Commercial Bank Jamaica Ltd
NCBJ is a dynamic entity, which, for a long
time, has been trying to gain more than toe-
hole in to the Trinidad market. It has had
some success with its capital markets oper-
ations. Now, it has decided to up the stakes
by proposing to take a 29.99 per cent own-
ership in GHL.
This proposal has been described as a "part-
nership". With Lok Jack and Ahamad interests
having only 22 per cent equity, it is reasonable
to assume, that, after a suitable "learning
period", the NCBJ interests would begin to
assert their influence commensurate with
their larger shareholding.
In the medium term, many would agree
that, after a suitable period of courtship, the
two groups may decide that a less expensive
merger would be in their best interests.
The outright purchase of GHL by NCBJ in
the future may saddle the latter with too
much debt; we have already seen that it has
resorted to the sale of its future credit card
receivables to obtain financing for the proposed
We can estimate GHL s full year s 2015 profit
attributable to shareholders of at least TT$300
million. NCBJ s proposed 29.99 per cent of
this is about TT$90 million, which translates
to almost J$1,800 million.
For its year ended September 2015, NCBJ
recorded net profit attributable to shareholders
of J$12.3 billion; thus, the possible inclusion
of GHL s net profits could boost NCBJ s bot-
tom line by about 15 per cent. Some of this
could flow to NCBJ shareholders in the form
of higher dividends.
My target year-end price for NCBJ is
TT$3.00, translating to about J$60.00 in its
Another energetic Jamaican-based company
is GraceKennedy Ltd, which is now focussing
on two main areas, food and finance. The
recent disposal of its Hardware and Lumber
Ltd subsidiary would have provided it with a
useful gross cash infusion of about J$869.75
million (about US$7.21 million); this can now
be used to help grow its two core business
The company has external operations in the
UK, USA and Africa. Effective January 1, 2016,
Massy Trading replaced AS Bryden and Sons
(Trinidad) Ltd as the local beverage distribution
partner for Grace Foods International. The
group remains focussed on achieving its 2020
vision of deriving most of its income and profit
outside of Jamaica.
At J$6.19 their EPS for the third quarter was
lower than the J$7.21 for the comparative period
in 2014. Some of this decline related to one-
off expenses occasioned by the integration of
the enlarged US food operations. The appli-
cation of the asset tax, lower foreign exchange
gains and higher finance costs also contributed
to the lower result.
On a positive note, dividends improved from
J$2.33 in calendar 2014 to J$2.48 in calendar
2015. It is likely that this trend can and will
be sustained as the group continues to expand
internationally and become more profitable.
Perhaps, its share price would again reach
TT$5.00, which it attained on June 22, 2012?
Sagicor Financial Corporation
From a high of $11.75 back in January 2010,
SFC s share price has mostly been on a free-
fall to lower and lower levels in the main, for
good reasons. This decline was only occasionally
punctuated by temporary upward blips that
lasted for brief periods before the price slippage
Within the next six months or so, the com-
pany is expected to execute several actions that
should redound to the benefit of sharehold-
ers.These include the re-domiciling of its oper-
ations from Barbados to another jurisdiction,
In May 2016, it will also repay all of its pref-
erence shares, which have a fair value of
US$128.9 million and settle a 5.0 per cent note
with a fair value of US$44 million.
The funds for this exercise were secured
back in August 2015, when it issued a bond
of US$320 million. US$160.5 million from that
issue was used on September 10, 2015 for the
early settlement of 7.5 per cent 2016 senior
notes with a face value of US$150 million.
After these transactions in May 2016, SFC s
debt level will improve. Additionally, it is expect-
ed to confirm its complete exit from the Euro-
pean market, with no residual costs or liabil-
There is a maximum residual liability under
the original sale agreement (which has not
been signed) of US$5 million, which is likely
to be included in the fourth quarter s results;
this item should not dramatically affect the
full year s performance.
In its third quarter report to September 2015,
EPS, after including a loss on discontinued
operations of US$0.061, registered at US$0.06.
This is a strong improvement over the restated
2014 loss of US$0.028; in 2014, the discon-
tinued operations accounted for a loss per share
Also, it is likely that the interim dividend
for 2016, payable after September 2016, should
see an improvement from the regular payment
Let us see how these selections perform in
the coming year.
Dividend increases by
banks (optional section)
In addition to NCBJ, four banks have also
increased their dividends, including two that
have decided to pay special (bonus) dividends.
Scotiabank and First Caribbean, paid or will
pay a special dividend this month; the former
of TT$1.10 while the latter will pay US$0.063.
In the case of FCI, consistent with its
improved profitability, it has increased its regular
final dividend from US1.5 cent to US2.0 cents.
In addition, it has allocated US$100 million
from its ample reserves to the payment of the
special dividend of 6.3 US cents.
First Citizens Bank (FIRST) also increased
its final dividend to $0.74 from $0.61; this
brings its total dividend up to $1.32 from 2014 s
$1.18. This increase was approved despite its
miniscule EPS improvement to $2.51 from
2014 s $2.50. This may reflect one benefit of
Republic Bank s (now, RFHL) final dividend
moved from $3.00 to $3.10.
Interestingly, none of the prices of these
stocks have risen dramatically in the trading
days following these announcements; perhaps,
after the year-end lull, the market will "wake
up" to these developments in the coming weeks
and months? Or, is there a reason for the iner-
Next week, we will review the 2015 results
of Agostini's Ltd.
card and stock
picks for 2016
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