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Will The Jamaica Stock Exchange Step-up And Lead The Charge For A Single Regional Stock Exchange by 2020? – Part 2/3

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The Unique Peculiarities of Each Exchange Market

Barbados

Edwin Thirlwell Executive Chairman of BICO Limited, which is listed on the Barbados Stock Exchange (BSE) in an article published in Barbados Today, is reported to be lamenting the lack of inactivity on the BSE which he says is depressing the share price of his ice cream and Cold Storage Company.

Expressing dissatisfaction at the level of BICO’s share price in trading on the Barbados Stock Exchange, Thirlwell said, “Due to the fact that shares were not changing hands, along with high levels of compliance and the risk-averse nature of shareholders, the BICO share price was lower than it ought to be.”

The Barbados Stock Exchange according to Thirlwell is not buoyant by any means. “You only need to listen to the news every night, it tells you what is happening in Jamaica and it tells you what is happening in Trinidad and when it tells you what is happening in Barbados [little or] no trading. It is a difficult situation. There are a diminishing number of listed companies,” said Thirlwell.

Trinidad and Tobago

John G. Cozier writing in an article entitled “The Evolution of Stock Markets in the Caribbean: From 1969 and Beyond” dated February 2010, made a number of observations about stock/share ownership in Trinidad and Tobago, which are still relevant today.

Cozier contends that stock ownership in Trinidad and Tobago tends to be highly concentrated thereby resulting in a stock market of limited size. This he says is attributed to a number of demand and supply factors such as:

1) Low personal incomes;

2) Relative financial naïveté among the general population;

3) Strong preference towards commercial bank credit which can be sourced relatively cheaply. In addition, many established enterprises are usually guaranteed a ready supply of bank credit because of credit criteria and partly because of interlocking directorates;

4) Great reluctance to dilute family ownership, thereby relinquishing control of their firms. It is believed that the strong preference towards commercial bank credit among firms and the reluctance to dilute family ownership are inextricably linked. However, there have not been studies on this topic;

5) The desire to minimize public availability of information about company operations, finance and profitability; and

6) The small size and limited investment horizons of many local businesses in less developed countries.

7) Several weaknesses prevailing within Trinidad and Tobago’s capital markets. It is determined to be narrow and thin based on the criteria of volume of transactions, the number of market participants and the degree of price volatility. Furthermore, the market is deemed to be inefficient with respect to offering equal prospect of gain to all market participants.

Jamaica

In relation to Jamaica John Cozier cited the following observations still very much at play today pointing to a number of structural changes that have occurred in the Jamaican market from 1983 – 1984. These conditions he said are necessary conditions for the development of an efficient market. These conditions include:

1) A large number of new investors;

2) A large increase in trading, both in volume and in value;

3) A more effective use of information by market agents; and

4) A tendency for stock prices to more readily reflect important market information.

A Regional Population Not Inclined To Take Risk?

Edwin Thirlwell pointed to another very important factor and element in the considerations for a regional stock exchange – a regional population not inclined to take risk.

In the Barbados Today article Thirlwell is quoted as saying “So in fact, what we have is a shorter list of quoted companies and a population not inclined to take risk at the moment. In fact, I think the profile of the entire nation is risk-averse at the best of times and even more so at the moment. So in fact, there is very little trading. And I think if you look at all the listed companies including people like Goddard [Enterprises Limited] who trade right around the region, they are well below their net asset value.”

John Jackson noted Jamaican financial analyst and publisher of ICInsider.com is of the view that the evidence is clear, “It is not so much that our people are that risk averse, they have not been educated in the area of investments. What we don’t learn early we tend to pass over. As far as I am aware Jamaica is the only country in the WI that has had a continuous public educational program going based on the interest of a number of individuals plus institutions.”

Speaking with Businessuite Magazine Jackson indicated that from his observation most investors buy into the IPOs and are not active in the secondary market. They leave the after IPO trading to “professionals.” Trinidad companies he said have not been geared to individual investors hence the very high stock prices and limited trading. They need stocks splits like a desert needs water, in order to get more players in the action. The one stocks market is not going to change that.

Jackson finds the subject of a single market “Interesting” but as he has said repeatedly elsewhere “We are barking up the wrong tree.” What is first needed he says is “a Caribbean capital market where capital is free to move from country to country at least for investment purposes. Such a market will see companies being free to offer securities across the region rather than in just their own territory. Also holding back the markets are the economic factors that stifles a dynamic private sector and encourage nationals to look outside the region for investments when they would do far better regionally. The most telling of it is the performance of our market that telegraphs the opportunities available to make money. Most other markets in the region are based on relatively small population with profits of the companies growing slowly. That does not excite.” He told Businessuite

In Part 3 SMEs Can Transform Their Financial Performance by Listing on the Stock Exchange

 

Editorial Note:
The quotes above expressed by Marlene J. Street-Forrest General Manager Jamaica Stock Exchange (JSE) are her personal views on the matter and do not necessarily reflect the views of the JSE board.

Sources:
http://jamaica-gleaner.com/article/focus/20160626/marcia-forbes-caribbean-stock-exchange
https://www.barbadostoday.bb/2017/03/11/bicos-shares-trading-way-below-value-thirlwell/
http://www.jamaicaobserver.com/A-look-at-stock-exchanges-across-the-Caribbean_7901820
http://sta.uwi.edu/conferences/09/salises/documents/J%20Cozier.pdf

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CAC 2000 Reporting A 41% Improvement In Net Income For Period Ending July 31, 2024.

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Gia Abraham Chief Executive Officer for CAC 2000 has released the following Unaudited Third Quarter results for period ending July 31, 2024

The Results:
Year -to-date we saw an increase of 18% in Sales for the period ending July 31, 2024, over the same period last year ($752,812,566 vs. $637,763,300), along with a 41% or $28,980,191 improvement in our net income. We continue to contain our overall operating expenses by 1.8% or $4,416,661 over the same period last year.

Whilst we are still experiencing longer shipment times due to the movement of manufacturing to China, we have been able to realize a reduction in our inventory days from 398 days to 300 days, in our debtor days from 225 to 206 days, as well as a decrease in our creditor days from 108 days to 77 days over the same period last year.

Retail Update
We continue to utilize our retail store located at 3U Village Plaza to improve the delivery of product offerings and services to our customers, while building the Team in Montego Bay, which is becoming the hub for the projects we are presently executing on that side of the island. As a company we are encouraged by this positive trajectory.

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PBS Expects 2024 Revenue, EBITDA And Profitability To Closely Align With Full Year Budgetary Expectations.

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Pedro M. París C. Director and Group CEO For Productive Business Solutions Limited Has Released The Following Unaudited Interim Report For Q1 2024

Q1 2024 Financial Performance Overview
In the first quarter of 2024, Productive Business Solutions (PBS) reported revenues of US$65.9 million, a decrease of US$21.6 million compared to the same period in 2023.

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the quarter was US$8.5 million, down from US$10.2 million in the first quarter of the previous year.

Additionally, our Profit After Tax (PAT) for the first quarter was US$0.4 million, as compared to US$1.7 million during the corresponding period in 2023.

Notably, our first quarter results in 2023 were impacted by a large transaction in which PBS provided laptops to the government in El Salvador. The transaction
produced a significant revenue contribution to PBS in that period but carried a lower than-average gross margin. As a result, PBS recorded higher gross profit in in Q1 2024 relative to Q1 2023 despite a reduction in revenue. PBS’ gross margin for the first quarter of 2024 improved to 35.5% from 26.5%, which is more representative of our business without the influence of any large, non-recurring sales.

Historically, the fourth quarter represents the strongest financial period for PBS, while the first quarter typically exhibits the lowest earnings. Our performance in Q1 2024 reflects this seasonal trend.

Strategic Acquisition Announcement
We are delighted to share a significant milestone in our company’s journey. During this quarter, we successfully initiated the strategic acquisition of Xerox operations in Ecuador and Peru and expect to close the transaction by the end of the second quarter of 2024. This acquisition is a testament to our commitment to expanding our market presence and enhancing our service offerings in the Latin American region.

The integration of Xerox operations in these key markets strengthens our capabilities in delivering expanded product/service and industry-leading solutions to a broader client base and offers a deeper Latin American footprint for our regional and global customers. We expect that this transaction will close in the coming months subject to regulatory approvals.

PBS expects to file its Audited Financial Statements for 2023 by June 30, 2024. The audit has been delayed as a result of accounting corrections which impact revenue, cost of goods sold, and contract assets primarily in periods before 2023.

Outlook

Our company’s pipeline of sales opportunities for the remainder of the year is strong.
We expect PBS’ 2024 revenue, EBITDA and profitability to closely align with our full year budgetary expectations.

PBS connects the largest enterprise software companies in the world to the leading firms and governments in our region. Our business is increasingly diversified by country, customer and supplier. Moreover, our growth reflects the enduring longterm trends of digital transformation to meet the needs of businesses and consumers. As we look ahead, we expect PBS to continue its trajectory of profitable growth.

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Main Event Entertainment Group Reporting 14% Drop In Nine Months Gross Profits

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Solomon Sharpe,  Chief Executive Officer for Main Event Entertainment Group Limited is reporting that the company recorded revenues of $440.064 million for the three months ended 31 July 2024 relative to the $428.056 million earned in the same period in 2023. This represents an increase of $12.007 million or 3% over the corresponding period of 2023. Despite the improvement in our year-over-year third quarter performance, the company saw a decrease of 10% to $1,426.391 million in its revenues year-to-date relative to the corresponding period in 2023 of $1.586.931 million.

Gross profit for the quarter was $205.678 million. Compared to the third quarter of 2023, this represents a decrease of $18.081 million or 8%; while for the nine months ended 31 July 2024, gross profits fell by $119.538 million or 14% to $719.565 million. Gross margins also fell for the quarter and the nine months results to 47% and 50% from 50% and 53%, respectively. The decline in gross margin is attributable to sales distribution with lower margins and maintenance exercises which were undertaken earlier in the year.

Despite the improvements in our third quarter results, the impact from the second quarter results continues to be shown in the year-to-date totals.

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Limners and Bards Make Big Bets On Management Of Talent And Content

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Kimala Bennett  Chief Executive Officer  for Limners and Bards Limited (The LAB) has released the following report to Shareholders of its unaudited financial statements for the nine months ended July 31, 2024, which have been prepared in accordance with International Financial Reporting Standards (IFRS).The consolidated results include the subsidiary Scope Caribbean Limited (Scope) whose principal business is the scouting, placement and management of talent while expanding and maintaining a database of quality talent.

The LAB achieved higher net profits compared to the corresponding period last year, with net profit reaching $83.5 million, a 46.7% increase over the comparable period. This growth was driven by our strong emphasis on the Agency Segment of the business for this quarter, as we continued to build brands. While revenues were down compared to the prior period, the company implemented cost containment measures, resulting in an 18% reduction in administrative expenses.

Shareholders’ equity grew to $681.4 million, up from $597.5 million or 14.0% over the corresponding period last year. We maintained a strong balance sheet, with an improved cash position over the period. Additionally, our asset base increased as we reinvested in the business, upgrading film studio facilities.

Revenue for the nine months ended July 31, 2024, was $752.7 million, down 17.6% relative to the prior period. This decline was primarily attributable to a reduction in Media during the period. Notwithstanding this, the Agency segment outperformed the comparable period. The revenue achieved was derived from the company’s core business lines: Media totalling $407.6 million, followed by Production with $190.5 million and Agency with $154.6 million.

Gross Profit for the nine months was $284.5 million, down 9.6% when compared to the corresponding period. Administrative expenses were also lower when compared to the comparable period. Administrative, selling and distribution expenses decreased by $47.5 million or 18% in comparison to the corresponding period last year. These decreases are primarily due to reduction in contractor and staff cost.

The consolidated Balance Sheet saw total assets increasing by $161.2 million or 17.1% to $1.1 Billion compared to $941.2 million in the corresponding period. This increase in assets is driven by building and film studio facilities improvement and purchases of new production equipment to facilitate future growth.

Current Assets amounted to $846.7 million, increasing by $59.9 million over the prior year.

Cash and cash equivalent increased by $25.5 million over the corresponding period last year. Management continues to maintain tight monitoring and control over receivables

Outlook
As the LAB continues to grow and diversify, our strategic initiatives are positioning us to capitalize on the booming global film industry and the increasing demand for fresh, international content.

We have successfully completed filming our first feature film, “Love Offside,” a sports romantic comedy that showcases the vibrant culture and dynamic talent of Jamaica. The film, features an impressive cast and has now entered the editing phase is slated for a February 2025 release, perfectly timed to meet the growing appetite for diverse and engaging content.

The global film market is experiencing a significant surge, with demand for international content at an all-time high. Industry reports indicate that streaming services and traditional distributors alike are increasingly seeking diverse narratives that resonate with a global audience. This trend presents a significant opportunity for the LAB, as “Love Offside” is poised to attract viewers with its unique storyline and cultural richness. Over the next 12 months, the Company plans to produce three films and three web series.

We are pleased to announce that our Chief Operations Officer (COO) and Head of Production, Tashara Lee Johnson, recently represented us at the MIP Africa Content Market in South Africa as a part of the Jamaican delegation organized by JAMPRO, a premier event in the global film industry. This market is a critical platform for forging connections, understanding market trends, and securing partnerships that will enhance our film’s reach and profitability.

In parallel, our agency arm is gearing up for our regional expansion strategy, where we will engage with various businesses and explore strategic partnerships across the Caribbean. Our goal is to solidify our presence in these markets, leveraging the region’s growing influence in the global media landscape.

Our commitment remains steadfast in delivering value to our shareholders by expanding our content portfolio, exploring new markets, and forging strategic alliances that will drive growth and profitability. The steps we are currently taking are designed to position the LAB at the forefront of a rapidly evolving industry, ensuring we capitalize on the opportunities presented by the global demand for fresh, compelling content.

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Trinidad and Tobago NGL’s Investment In Phoenix Park Gas Processors Delivers Robust Revenue and Profit Performance For Six Months Of 2024

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Dr. Joseph Ishmael Khan, Chairman Trinidad and Tobago NGL Limited has released the following Condensed Interim Financial Statements For The Six Months Ended 30 June 2024.

Trinidad and Tobago NGL Limited delivered a robust performance for the first half of 2024, posting a profit after tax of TT$46.7 million. This represents an outstanding turnaround from the corresponding 2023 period, where a loss of TT$2.8 million was recorded and signifies an impressive year-on-year improvement of TT$49.5 million.

Earnings per share reached TT$0.30, a substantial recovery from the loss per share of TT$0.02 for the same period in 2023.

The driving force behind TTNGL’s strong performance was the enhanced profitability of its investment in Phoenix Park Gas Processors Limited (PPGPL). This achievement was principally due to increased production of natural gas liquids (NGL), higher sales volumes, and improved NGL prices at Mont Belvieu.

Enhanced NGL production was facilitated by a 4.4% increase in natural gas volumes processed at Point Lisas in the first half of 2024 compared to 2023. Moreover, the gas stream’s NGL content saw a significant rise of 15.5% over the previous year, a result of deliberate efforts by The National Gas Company of Trinidad and Tobago Limited to enrich gas supplies. As a result, NGL production from gas processing increased notably, even when accounting for the extended plant downtime experienced in the first half of 2023.

Additionally, NGL volumes delivered from Atlantic LNG also increased by 3.2%, over the comparative period in 2023.

NGL prices rose by 11.5% compared to the same period in 2023, driven mainly by increased global demand and strategic positioning by market participants for future arbitrage opportunities.

The combination of higher NGL production and increased sales revenues, supported by improved NGL product prices, underscores PPGPL’s strong operational safety and its market leadership as the preferred NGL marketer locally and regionally.

Moreover, PPGPL has maintained high levels of operational efficiency within its processing plants, complemented by a strong commitment to safe operations and effective cost management.

During the first half of the year, Phoenix Park Trinidad and Tobago Energy Holdings Limited (PPTTEHL), PPGPL’s North American subsidiary, also delivered strong performance. PPTTEHL experienced significant trading volumes and benefited from improved margins on its sales contracts.
We anticipate continued earnings growth from this business segment moving forward.

TTNGL’s cash position at the end of June 2024 remained strong at TT$139.1 million, up from TT$113.0 million in 2023, reflecting the Company’s solid liquidity. TTNGL continues to explore all options to address its accumulated deficit and move towards a position where it can resume dividend distributions to shareholders.

Outlook
As we look ahead, we remain ever – optimistic about the positive price forecasts, while PPGPL continues to monitor market uncertainties and implement value-added strategies. PPGPL is unwavering in its commitment to strategic growth, prioritising the following: safe operations; high plant reliability and availability; meeting customer needs and sustaining market presence across all territories. These efforts are critical to delivering long-term shareholder value.

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