Home' Trinidad and Tobago Guardian : August 15th 2013 Contents AUGUST 2013 • WEEK THREE www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG21
This is a review of the nine months
2013 (Q3 2013) performance and out-
look for Republic Bank Ltd (RBL)
and the half-year 2013 (HY 2013)
performance and outlook for
Trinidad Cement Ltd (TCL) and
Readymix Ltd (RML).
Republic Bank Ltd
For the nine months ended June 3, 2013,
Republic Bank Ltd (RBL) recorded $1.6B in
net interest income, 3.3 per cent higher
than the same period of 2012. The net profit
of $871 million was $23.6 million or 2.6
per cent less than the net profit seen in
the comparative period of 2012. Despite
this drop in net profit, there was an uptick
in the company s diluted earnings per share
(EPS) for the period with EPS of $5.34 vs
$5.29 in the same period of 2012.
RBL s operating profit was relatively
unchanged at $1.2 billion despite a third
quarter loan loss provision of $75.7 million
on the group s investment in East Caribbean
Financial Holding Ltd.
The $177 million year-on-year increase
in operating income stemming from
improvements in non-interest income in
Trinidad and Guyana offset the impact of
the overall loss from associated companies
of $70 million for the nine-month period.
Impaired loans were up $7 million to total
$72 million, resulting in profit before tax
(PBT) of $1.1 billion, a $6 million or 0.5 per
cent decline from the prior year.
For the period under review, th billion
with advances accounting for 44 per cent
of overall assets. From June 2012 to June
2013, advances increased by six per cent
to $25 billion as credit demand continues
to increase with deposits increasing by 11
per cent in the same period. See Exhibit 1.
The latest repo rate announcement
showed private sector credit grew by three
per cent in the 12 months to May 2013 with
the largest growth seen in real estate mort-
gage loans which increased by more than
16 per cent in May 2013.
Consumer lending grew by more than
six per cent in May 2013 while business
lending continued to decline contracting
by over five per cent in May 2013.
Customer deposits increased by $4.5 mil-
lion to $44 billion representing 93 per cent
of total liabilities contributing to a ten per
cent increase in total liabilities to $48 billion.
Total equity increased marginally to $8.3
billion from $8.2 billion.
Despite the loan loss provision seen in
the third quarter, market sentiment sur-
rounding RBL remains strong as seen by
four per cent YTD increase in share price
The group is expected to benefit from
its increased stake of 32 per cent in HFC
Bank Ghana Ltd with an increasing trend
in other income boosting its operating
income levels. While deposits have been
increasing, the bank s loans-to-deposits
ratio has been falling and is below one, but
its net interest income remains stable.
At $110.01, RBL is trading at a trailing
P/E of 15 times, a premium when compared
to its five-year average of 13.8. With a trail-
ing dividend yield of 3.9 per cent, BOURSE
recommends a HOLD on this stock.
Trinidad Cement Ltd
Following the $0.60 loss per share in the
first half of 2012, Trinidad Cement Ltd (TCL)
delivered an EPS of $0.26. Sales came in at
$994 million, 26 per cent higher than the
comparable period of 2012. An increase in
domestic cement volumes and export levels
along with higher profit margins contributed
to TCL s strong earnings before interest, tax,
depreciation and amortisation (EBITDA) lev-
Also inflating TCL s EBITDA level of $261
million for the first half of 2013 was a $38.8
million tax credit which was a result of a tax
reversal at TCL s Jamaican subsidiary upon
the capital restructuring of the US$75 million
owed to TCL from the subsidiary.
Excluding this tax credit, EBITDA for the
first six months of 2013 would have been
$222 million, $191 million higher than the
prior year where its poor performance was
exacerbated by the labour strike in 2012.
PBT of $73 million ($35 million when
excluding the tax credit) translated to a PBT
margin of seven per cent (three per cent
excluding the tax credit).
Foreign exchange losses stemming from
the depreciation of the Jamaican dollar, which
is down nine per cent against the USD year-
to-date, did not bode well for the Group s
finance costs which increased by $12 million
year-on-year to $123 million.
Looking at the balance sheet, TCL s asset
base fell by $93 million to $3.6 billion, while
its liabilities decreased by $144 million to
As seen in Exhibit 2, at a current trading
price of $1.51, TCL s stock price rallied $0.56
(59 per cent) from the beginning of July, but
YTD is up $0.02 (1.3 per cent). As seen in
Note 5 of the interim financial report for the
six months ending June 30, 2013, "the direc-
tors have concluded that the challenging
demand environment and the still existing
weakened financial position of the TCL Group
and its key subsidiaries, CCCL and ACCL,
continue to represent a material uncertainty
that may impact the ability of the Group to
continue as a going concern."
Even with an improved year-on-year per-
formance as the Group pursues new strategies
to grow market share, it still faces a chal-
lenging external environment. BOURSE rec-
ommends a SELL on the stock.
Readymix (West Indies) Ltd
For the half year ended 30 June 2013,
Readymix Ltd (RML) earnings per share (EPS)
rose to $0.27 from a loss of $0.30 in the
same period of 2012. Strong profit levels in
the second quarter offset the $244K loss
recorded in the first three months of the
year, delivering an EPS of $0.28.
Higher revenue from concrete and quarry
operations recorded in the second quarter
boosted HY2013 revenue to $85 million with
second quarter revenue accounting for 57
per cent of the total. By segment, revenue
from T&T accounted for 92 per cent of RML s
revenue, while Barbados contributed eight
per cent. Finance costs fell by 48 per cent
($271K) quarter-on-quarter, but the half-
year total of $861K is $522K worse than the
same period of 2012.
Profit before tax (PBT) is $4 million com-
pared to the $5 million loss the comparative
period of 2012. PBT margins recovered in
the half-year given the boost in sales from
T&T, which translated to a PBT margin of
five per cent. For the half-year period, Bar-
bados recorded an operating loss of $924K.
Net profit at $3 million for the half-year
2013 is a significant improvement over the
same period of the prior year largely due to
the boost in sales in the second quarter. A
$3 million fall in current assets dropped the
total asset base two per cent to $150 million.
Total liabilities also fell to $59 million as cur-
rent liabilities dropped six per cent, resulting
in an overall drop in net assets to $91 million,
one per cent lower than the half-year period
At a price of $21.99, RML s share price is
down two per cent YTD with a total of five
shares trading for the year which speaks to
the illiquidity of the stock. BOURSE rec-
ommends a SELL on the stock.
WEEKLY MARKET REVIEW
Tax credit boosts
Bourse Securities Ltd
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