Home' Trinidad and Tobago Guardian : January 18th 2018 Contents stocks BG13
Thursday, January 18, 2018
2017 review and 2018 selections
n my January 12, 2017
article, I suggested five
companies that I thought
would appreciate in price
in 2017. With the notable
exception of Massy Hold-
ings Ltd, all my projections ended
at higher prices than at the begin-
ning of the year.
When commenting about its
2016 performance, I suggested
that investors will take a wait-and-
see approach. One might well ask:
is Massy becoming a consistent
How many one-off events and
surprises can investors tolerate?
In the case of Sagicor Financial
Corporation, the closing price of
$7.83 was a meagre $0.10 higher
than its opening price of $7.73. It
was also significantly lower than
my projected price of $10.00.
SFC’s share price continues to
experience wide price swings. It
has more than 33,000 sharehold-
ers, many of whom received their
shares as part of the demutualis-
ation exercise more than 15 years
Several of them sell shares
whenever they need to correct a
“liquidity challenge”, often with-
out reference to any cost price.
As we saw last week, when
measured by price appreciation,
NCBFG was the star performer.
Early in the New Year, it has con-
tinued to attract demand and ex-
cite some investors.
Out of an abundance of caution
and the reality of a declining div-
idend yield, might it not be pru-
dent to reduce one’s exposure
to this company? However, as a
“growth stock” one might want to
ignore traditional metrics and look
to other factors to justify the cur-
rent price on the TTSE. Even so,
a local investor, who is not “des-
perate for US dollars”, will find it
much cheaper to buy these shares
on the JSE.
Agostini’s Ltd recorded a rea-
sonable price appreciation of al-
most 19 per cent to close at $20.75,
which exceeded my forecast of
$19.00. A traditional and unglam-
orous company, it continues to
receive very good advice on its ex-
This is particularly evident with
the creation of Caribbean Distrib-
utors Partners Ltd, which is a joint
venture with Goddard Enterprises
Ltd (GEL) of Barbados. GEL is one
of those unique Caribbean compa-
nies that earns more than 60 per
cent of its revenues and profits
outside of its home base and has
a better than average access to for-
Guardian Holdings Ltd (GHL) ex-
perienced almost 35 per cent price
lift, closing at $17.03. That price
exceeded my estimate of $16.00.
Its exposure to the NCBFG way of
thinking has allowed it to realise
improved investment returns.
We will now turn to my selec-
tions for 2018.
This emerging group of companies
continues to grow by selective ac-
quisition within its area of core
The bulk of its acquisitions have
been handled via the Caribbean
Distribution Partnership (CDP) ve-
hicle. As a sub-set of its expansion
plans, it attempts to earn increas-
ing amounts of foreign exchange,
which can ease the burden for its
SuperPharm and Smith Robertson
A significant challenge for re-
tail investors is that this is a very
closely held share. Slightly greater
than 90 per cent of its outstanding
shares are held by ten core share-
holders, the largest of which is
Mouttet Capital Ltd (MCL), which
owns 33,525,538 shares corre-
sponding to 48.51 per cent.
At my target price of $24.00 and
a projected dividend of $0.60, the
yield would be 2.5 per cent.
Massy Holdings Ltd
After two challenging years, which
included some one-off events, can
the multi-sector Massy steady its
ship and exhibit stable or improv-
While its dividend of $2.10 can
be considered “safe”, much of any
growth or dynamism displayed
was swallowed up by these special
The group’s progress in Colum-
bia is commendable, particularly
in the areas of automobiles and
energy. Massy’s future plans in-
clude seeking opportunities in
Guyana and Columbia while man-
aging costs and growing revenues
in Barbados and Trinidad, its tra-
Assuming there is growing evi-
dence of improvements over the
next few quarters, I expect the
share price to gradually recover to
$56.00. If attained and assuming
an unchanged dividend, that price
would give investors a reasonable
yield 3.75 per cent.
Under its (almost certain) new
ownership, both GHL and NCBFG
will enjoy benefits and synergies.
An investor who has committed to
spend in the region of TT$2.64 bil-
lion to acquire about 62 per cent
of GHL will certainly take a very
proactive interest in its affairs and
seek to realise the maximum value
from this outlay.
In that context, it continues to
be surprising that GHL’s share
price is as low as it is. (Less than
$17 at the time of writing).
Over the past several years, GHL
has gone through a very costly Eu-
ropean experiment. In its current
configuration, it benefits from
hearing commissions from Europe
with only minimal outlay. The
IFC’s investment in the company
appears not to have produced as
much benefit as might have been
originally envisaged. Even so, the
IFC seems to have exited its GHL
purchase at a decent profit.
Currently, investors are agitated
about the low offer of US$2.35
(less than TT$16) for an additional
32 per cent of the company. The
main problem is that this price is
significantly lower that the TT$21
that it paid for the first tranche of
29.99 per cent back in May 2016.
Does this problematic price re-
flect NCBFG’s willingness to “give
selected investors access to US
dollars” or, perhaps, the ineffi-
ciencies of the local stock market?
On January 3, 2013 GHL traded
at $18.50 and rose to $19.90 on
February 22, 2013. Since then, the
price has mostly trended down-
hill. For the most part, this decline
can be attributed to its costly exit
Projecting a sustainable divi-
dend of $0.70 per share, the esti-
mated price of $19.00 would give
investors a yield of 3.68 per cent.
National Gas Liquids
National Gas Liquids’ (NGL) sole
asset is its 39 per cent stake in
Phoenix Park Gas Processors Ltd
(PPGPL). As the supply of gas con-
tinues to improve, this should help
PPGPL increase its production
and allow it to benefit from higher
prices for propane, natural gaso-
line and butane.
Unlike other listed companies,
NGL pays a dividend that often
exceeds its EPS. This is made pos-
sible by the healthy cash reserves
that it accumulates, which are
based on the monthly dividend
that usually exceeds US$2 million
that it receives from PPGPL.
As PPGPL continues to benefit
from larger supply of feedstock,
higher production and improved
prices for its products, then per-
haps, at some future date, this
agreement could be enhanced?
The company’s shareholders
have given the directors authority
to pay dividends in US dollars. As
yet, due to administrative road-
blocks, this directive has not been
At the year-end price of $26.50,
the dividend of $1.50 (about
US$0.22) gives investors a yield of
5.66 per cent. If the targeted price
of $33.00 is attained, that same
dividend will reflect a yield of 4.55
per cent, which is still very attrac-
At the year-end price of $9.15,
Bank’s (FCIB) annual dividend of
US$0.05 (about TT$0.33) offer in-
vestors a yield of 3.6 per cent. At
the estimated year-end 2018 price
of $11, that same dividend will re-
flect a yield of 3.0 per cent. An im-
portant consideration is that this
dividend is paid in US dollars.
There is a report that FCIB’s par-
ent, CIBC, may want to sell a por-
tion of FCIB by listing its shares
on the New York Stock Exchange.
This could help create liquidity for
the parent and eventually make it
easier for them to sell down addi-
tional shares in this subsidiary.
In the early trading days of 2018,
UCL’s share price seems to have
bottomed out. However, in the
short time-frame of one year, it
does not seem likely that the share
price can recover most of what it
lost in 2017.
Even so, might this be an op-
portune time for new investors
to take a plunge or for seasoned
stockholders to lower their aver-
The government has created the
New Investment Fund (NIF), into
which several CLF/Clico assets will
be transferred; following which,
shares in NIF will be offered for
sale to the public. This is likely
to happen in the later part of the
Already, 29.9 per cent of shares
in Angostura Holdings and 16 per
cent shares of Home Construction
Ltd were transferred to this fund
as at September 30, 2017. Those
transfers were valued at $1.4 bil-
In addition, shares in RFHL,
OCM, Witco and LJW are probably
earmarked for transfer.
What about Clico’s shares in
JMMB Group, which amount to
6.35 per cent of that company?
Also, how might the shares in
AHL, that are held by Rumpro Ltd/
CLF, be treated?
Where these transfers are sig-
nificant, will the directors of NIF
insist on board representation?
As an aside, how far advanced
is the sale/transfer of the residual
Clico Life Insurance portfolio?
In making decisions, investors
should keep their personal objec-
tives foremost in mind. Stick with
your plan and happy investing!
In the next article, we will review
the results of Goddard Enterprises
Ltd for 2017.
Links Archive January 17th 2018 January 19th 2018 Navigation Previous Page Next Page