Home' Trinidad and Tobago Guardian : January 5th 2017 Contents JANUARY 5 • 2017 guardian.co.tt BUSINESS GUARDIAN
STOCKS | BG15
The most striking feature of the
local stock market last year
was the prominence of the
companies that comprise the
cross listed shares. The T&T
index closed at 1,834.23 from
December 2015s 1,948.50, reflecting a loss of
5.86 per cent or 114.27 points.
However, the big gains were reserved for
the cross listed index, which advanced to
78.17 from 49.51, representing an increase of
28.66 points or 57.89 per cent.
Without exception, all the companies that
fall within this grouping exhibited gains; the
lowest being 24.68 per cent for Sagicor Fi-
nancial Corporation while the largest was the
97.78 per cent increase recorded by GraceK-
The locally based
The local index performed poorly and large-
ly reflected the recessionary times currently
being experienced. Despite this gloomy envi-
ronment, there were some small positive price
Berger Paints Trinidad Ltd:
The smallest listed company, Berger,
emerged as the stock that enjoyed the greatest
positive price appreciation of 10.63 per cent.
This result probably represented the com-
bination of low trading activity along with the
expectation that its performance for the second
half of its fiscal year, which ends on March 31,
2017, could show a positive result.
This outturn may also reflect the low float
and liquidity challenges of our local exchange.
Trinidad Cement Ltd
The TCL group, which mainly comprises
operations in T&T, Jamaica and Barbados
continues to make good progress in most ar-
eas of its operations.
Most of this price appreciation of 10.28 per
cent occurred in the last month of the year and
was heavily influenced by the offer of $4.50
by its main shareholder, Cemex, to increase
its stake from 39.5 per cent up to a maximum
of 74.9 per cent. Unless extended, this offer
expires on January 10, 2017.
The directors of TCL have since advised
shareholders that the price of $4.50 is "unfair";
however, they have neglected to give share-
holders any guidance as to what a reasonable
and fair price for their shares might be; this
information is important to those investors
willing to sell. Let us see what Cemex's next
move will be.
Cemex's objective to attain majority own-
ership (50.1 per cent) can be achieved in a
less disruptive and dramatic fashion but may
require a somewhat longer period of time to
(Perhaps, Witco and Scotiabank can advise
on that matter?)
As an insider, Cemex is probably in the best
position to gauge the true value of TCL (irre-
spective of what any official valuation might
reveal). It could also be argued that, in many
ways, especially via the Technical Service
Agreement, it already has effective control,
although not accounting or equity control,
Prestige Holdings Ltd
Prestige Holdings Ltd recorded a $0.90 price
increase, which reflected a year-on-year ap-
preciation of 8.91 per cent.
In January 2016, it announced that it had
secured the franchise for the Starbucks brand
of coffee and by year's end, it had opened three
new outlets under that name to enthusiastic
For the nine months to August 2016, PHL's
sales were higher but profits were lower than
the prior period. This reduction was influenced
by the start-up costs of $4.5 million related to
the Starbucks operations along with the ab-
sence of election-influenced activity in 2015.
In the coming year, it is expected to show
growth in the new Starbucks franchise as well
as in its traditional KFC and Subway outlets.
Angostura Holdings Ltd
AHL registered a price increase of $1.03,
which reflected a yearly appreciation of 7.37
In September 2016, it attained a peak price of
$16.00, which occurred around the time of the
special general meeting, which was convened
to apprise shareholders about the progress of
its efforts to recover the $984.2 million from
its parent, CL Financial.
The meeting heard that considerable pro-
gress was made with this effort and both par-
ties are "very close" to an agreement. It seems
likely that full repayment will be staggered over
a three-to-five-year period.
In addition, one of the objectives of AHL's
five-year strategic plan is that the company
must double in size by the end of that period.
Consequently, we could infer that this ex-
pansion can be comfortably financed by some
combination of new debt and the projected
cash inflows from the settlement of the CLF
The claim of $32.9 million to its former CEO
was fully settled by payments totalling $15.9
million in the current year while $17 million
was provided for in fiscal 2015. Despite this
settlement, AHL's EPS up to September 2016
fell marginally to $0.46 from $0.48.
Effective December 1, 2016, AHL advised
that Robert Wong, its group executive officer,
is on administrative leave pending an audit of
matters touching and concerning his employ-
ment duties; this audit is expected to be com-
pleted by the end of January 2017.
According to one newspaper report, at the
end of December, Wong and Romesh Singh,
chief operating officer, resigned. The acting
CEO is Genevieve Jodhan. Those developments
seemed to have dampened investors short-
term enthusiasm for its shares.
ANSA Merchant Bank Ltd
AMBL's share price appreciated by $1.14 or
by 2.93 per cent.
For the nine months to September 2016 EPS
improved to $1.89 from $1.35 in the comparative
2015 period. Much of this improvement was
recorded under its life insurance and mutual
Subsequently, and effective on October 3,
2016, it acquired 100 per cent of Caribbean
Finance Company Ltd in Barbados from ANSA
McAL Barbados Ltd for $177.9 million.
This acquisition was anticipated for almost
two years; consequently, its benefits may have
been largely factored into the current share
price. However, future price appreciation may
be more heavily influenced by the improve-
ments referenced earlier.
AGL's share price appreciated by a modest
by 2.1 per cent or $0.36.
For the year to September 2016 EPS improved
to $1.52 from $1.32. These results were helped
by the settlement of an HDC claim of $11.7
Subsequent to the year-end, AGL entered
into an agreement with its parent Victor E
Mouttet Ltd (VEML) to buy Vemco Ltd, which
is engaged in the manufacture and distribu-
tion of food related items. Simultaneously, it
transferred Vemco to Caribbean Distribution
Partners Ltd (CDPL) and then received $88.7
million from Goddard Enterprises Ltd; most
of these funds (about US$8 million) were in
The full purchase price of $177.3 million
will be settled by AGL issuing 10,399,530 new
shares in AGL to VEML. These shares were
listed on December 30, 2016.
In November, part of the cash received
from GEL was used to buy Pepsi-Cola Trini-
dad Bottling Co Ltd (PCT). This was done in
partnership with GEL and placed under the
CDPL (Trinidad) umbrella. AGL's portion (50
per cent) of the purchase price was US$6.5
The cross-listed index
One of the main driving forces for the popu-
larity of these shares is that they are all required
to pay dividends in US dollars, either directly
or indirectly. In the context of a declining TT
dollar, this created an additional attraction
for local investors, that is, essentially buying
a TT dollar asset, which generates a US dollar
Only Sagicor declares its dividend in US
dollars, then credits investors in TT dollars
using an average selling rate for the US dollar
over a five-day period. The Jamaican compa-
nies declare a local currency dividend, which
is then converted to US dollars and paid to
Lastly, FCI declares a US dollar dividend,
which is then converted to Barbados dollars
and then reconverted to a US dollar cheque
for transmission to local investors. The double
conversion in the last two examples creates a
small loss to shareholders.
Within this group of six companies, four are
Jamaican-based while one is Barbados-based
and the last is Barbados registered but Ber-
The star performer was GraceKennedy Ltd,
which exhibited a price improvement of nearly
98 per cent over the twelve-month period.
In August 2016, GKC effected a stock
split, which gave investors an additional two
shares for every one previously held. Further,
EPS from continuing operations for the nine
months to September 2016 improved to J$3.34
However, in Q1, it reported other income of
J$606.5 million on the disposal of investments,
a large portion of which reflected a gain on
the liquidation of non-operating subsidiaries.
Also, local investors should be aware that,
in Jamaica, GKC trades at about J$41.00 or
approximately TT$2.16, which is significantly
lower than its price on the TTSE. Perhaps, local
investors feel that the premium is justified due
to its US dollar dividend?
In mid-November, GKC confirmed that it
was in discussion with our Central Bank with
a view to setting up a local banking subsidiary.
Will they provide a genuinely customer-centric
alternative for the local consumer?
The runner-up was FirstCaribbean Inter-
national Bank Ltd (FCI), which posted a gain
of almost 70 per cent or TT$3.49.
FCI has relatively little exposure to the chal-
lenging local market and thus provides a useful
counter balance to other banks that are more
heavily exposed to our market.
In addition, FCI has increased its US divi-
dend to US$0.045 from 2015's US$0.035. Its
full year's result to October 2016 revealed EPS
of US$0.089 versus US$0.060, reflecting an
advance of 48.3 per cent.
Much of this improvement reflected lower
loan loss impairment along with higher re-
coveries. In addition, core income streams
In next week's article, we select a few
companies that are expected to do well in 2017
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