Fe­lix Pereira

Fol­low­ing up on the ar­ti­cle two weeks ago, I will now deal with some of the oth­er price move­ments ex­pe­ri­enced for the year thus far.

De­spite con­tin­u­ing in­dus­tri­al re­la­tions prob­lems and a slug­gish eco­nom­ic en­vi­ron­ment, Re­pub­lic Bank Ltd man­aged to re­port a prof­it at­trib­ut­able to share­hold­ers of $550 mil­lion for the six months end­ed March 2012, which is al­most $25 mil­lion greater than the same pe­ri­od last year. This trans­lates in­to earn­ings per share of $3.42 or 4.6 per cent bet­ter than last year's $3.27. The in­ter­im div­i­dend of $1.25 was main­tained. With to­tal as­sets ex­ceed­ing $50.8 bil­lion, the bank has share­hold­ers eq­ui­ty of $7.5 bil­lion. For most of the pe­ri­od cov­ered, the share price has fluc­tu­at­ed be­tween $94.00 and $97. In ear­ly May, the price of Sco­tia­bank In­vest­ments Ja­maica Ltd (SI­JL) reached a high of $2.41 and has de­clined con­tin­u­ous­ly since then. It closed at $2.17, a mere 4 cents above its Jan­u­ary price. For the half-year end­ed April 30, 2012, SI­JL net in­ter­est in­come fell to JA$1.39 bil­lion from JA$1.47 bil­lion last year. For­tu­nate­ly, its' net fee and com­mis­sion in­come rose to JA$406 mil­lion from last year's JA$301 mil­lion.

How­ev­er, a huge pos­i­tive change was ob­served in net gains on fi­nan­cial as­sets avail­able for sale; this shot up to a ro­bust JA$120.4 mil­lion this year from a very mod­est JA$6 mil­lion last year. The net ef­fect of these changes was that SI­JL re­port­ed an 11.4 per cent in­crease in earn­ings per share, which moved to JA$2.45 from JA$2.20 in 2011. So far, two in­ter­im div­i­dends of JA$0.43 cents each have been de­clared. With a 52-week share price range of TT$0.21 to TT$0.35, Cred­it & Cap­i­tal Fi­nan­cial Group (CCFG) trades reg­u­lar­ly on the lo­cal stock ex­change. Sim­i­lar­ly, Ja­maica Mon­ey Mar­ket Bro­kers (JMMB) has trad­ed in a price range of TT$0.36 to TT$0.90 over the last 52 weeks and al­so sees reg­u­lar trad­ing. For the pe­ri­od Jan­u­ary to June, nei­ther com­pa­ny record­ed any ap­pre­cia­ble price change at the two ref­er­ence points. Af­ter first sig­nalling its in­ten­tions in Au­gust 2011, on May 25, 2012, JMMB for­mal­ly made an of­fer to ac­quire 100 per cent of CF­FG at a price of JA$4.55 (TT$0.33) per share. Sev­en­ty per­cent of the pur­chase price would be in cash (JS$3.16 / TT$0.23) and the re­main­der would be in the form of shares in JMMB. The di­rec­tors of CCFG have rec­om­mend­ed that its share­hold­ers ac­cept the of­fer, which is ex­pect­ed to be com­plet­ed in the next few weeks. The of­fer closed last Fri­day, June 15. For 2011, Na­tion­al Flour Mills gen­er­at­ed flat sales of $441 mil­lion and earned a pal­try prof­it of $639k. This trend con­tin­ued in the first quar­ter of 2012 when its sales de­clined by 1.6 per cent to $102.6 mil­lion over the com­par­a­tive pe­ri­od in 2011 and it re­port­ed an af­ter-tax loss of $2.3 mil­lion.

The com­pa­ny's lack of prof­itabil­i­ty is di­rect­ly re­lat­ed to its un­will­ing­ness to pass on in­creas­es in prod­uct costs to cus­tomers; the sub­sidi­s­a­tion of food costs to con­sumers should not be a ma­jor con­cern of a pri­vate com­pa­ny. This price in­ac­tion is al­so dam­ag­ing to NEL share­hold­ers. In the con­text of this gov­ern­ment-man­dat­ed pol­i­cy, the state should con­sid­er buy­ing out the mi­nor­i­ty share­hold­ers of NFM and plac­ing its op­er­a­tions un­der an ap­pro­pri­ate min­istry or agency. The pre­ferred op­tion is to al­low the com­pa­ny to op­er­ate as a re­al busi­ness. Guardian Me­dia Ltd at­trib­uted its low­er first quar­ter's re­sults to re­duced in­vest­ment in­come and high­er newsprint costs. Earn­ings per share fell to 13 cents from 17 cents last year. The com­pa­ny re­mains con­fi­dent that it can achieve an ac­cept­able re­sult for the full 2012 pe­ri­od. The fall in its share price could be main­ly re­lat­ed to the dis­ap­point­ing per­for­mance. At the end of the quar­ter, the com­pa­ny's cash po­si­tion im­proved to $130.2 mil­lion.

The board of Na­tion­al En­ter­pris­es Ltd (NEL) has ex­pe­ri­enced more than its fair share of changes over the last nine months or so. On 30th Sep­tem­ber 2011, R. Boy­er Ja­gas­sar re­signed. This was fol­lowed on March 14, 2012 by the res­ig­na­tion of D How­ell, then, on April 27, 2012, Car­la Car­tar al­so demit­ted of­fice. Thus far, one new di­rec­tor has been ap­point­ed; this was Robert Le Hunte, ef­fec­tive June 1, 2012.

Against this some­what flu­id back­ground, NEL's earn­ings for the nine-month pe­ri­od end­ed De­cem­ber 2011 showed a nom­i­nal de­cline of two cents per share or from 68 cents last year to 66 cents cur­rent­ly. Over­all, prof­it for the pe­ri­od de­clined from $414.8 mil­lion to $392 mil­lion. Look­ing a lit­tle clos­er, the gross prof­it showed a sharp de­cline of 45 per cent from $68.3 mil­lion in the pe­ri­od to De­cem­ber 2010 to $37.3 mil­lion for the nine months to De­cem­ber 2011. It is be­cause of a small im­prove­ment in the con­tri­bu­tions from the in­vestee com­pa­nies, which rose from $392.1 mil­lion to $398.3 mil­lion, that the prof­it de­cline was not more se­vere. From Jan­u­ary to mid-June, the share price has de­clined from $15.00 to $13.35 or by 11 per cent. NEL's an­nu­al ac­counts are due to be re­leased this month. The per­sis­tent de­clines in its share price in re­cent weeks sug­gest that these re­sults would be dis­ap­point­ing. CIBC First Caribbean's com­bined net in­ter­est in­come and op­er­at­ing in­come re­port­ed a 5.2 per cent im­prove­ment for the half-year pe­ri­od to April 2012. Un­for­tu­nate­ly, an in­crease of pro­vi­sion­ing for pos­si­ble loan loss­es, from US$30 mil­lion to al­most US$71 mil­lion dragged down earn­ings per share to US 1.8 cents from US 3.4 cents last year. An in­ter­im div­i­dend of US 1.5 cents has been de­clared. The bank re­cent­ly launched a wealth man­age­ment di­vi­sion in Trinidad; this augers well for a more di­ver­si­fied stream of in­come and prof­it in the fu­ture. Al­so, if mar­ket con­di­tions im­prove, some of the pro­vi­sions for pos­si­ble loan loss­es could be re­versed, per­haps even with­in the cur­rent fis­cal pe­ri­od.

Af­ter a dis­mal 2011, Sagi­cor Fi­nan­cial Cor­po­ra­tion (SFC) saw a wel­come re­turn to prof­itabil­i­ty in its first quar­ter. In this pe­ri­od, SFC re­port­ed a prof­it of US2.8 cents per share ver­sus a loss of US6.4 cents per share in the 2011 pe­ri­od. Help­ing this re­sult was a sharp re­ver­sal in for­tunes at Sagi­cor at Lloyds (SAL); af­ter shed­ding the ma­jor prob­lem­at­ic busi­ness lines, the more stream­lined op­er­a­tion pro­duced earn­ing of US$1.5 mil­lion, which is a huge im­prove­ment over the loss of US$32 mil­lion re­port­ed last year. As­sets now to­tal US$5.5 bil­lion and share­hold­er's eq­ui­ty stands at US$811 mil­lion. If the trend in prof­itabil­i­ty con­tin­ues in­to the sec­ond quar­ter's re­sults, we should be­gin to see an im­prove­ment in the share price. Na­tion­al Com­mer­cial Bank of Ja­maica (NCBJ) ex­pe­ri­enced a 22 per cent de­cline in its prof­it for the six months to March 2012. This fall in prof­itabil­i­ty was di­rect­ly at­trib­ut­able to loan pro­vi­sion­ing of JS$926 mil­lion, re­sult­ing from one ex­po­sure. There was al­so a 17 per cent in­crease in staff cost re­lat­ing to both the cur­rent and pre­vi­ous years. Net prof­it came in at JA$4.8 bil­lion and rep­re­sents earn­ings per share of JA$1.93. In Feb­ru­ary, a first in­ter­im div­i­dend of JA$0.38 was paid; this was fol­lowed by a re­duced in­ter­im div­i­dend of JA$0.21, which was paid in May. Soon, NCBJ ex­pects to do an IPO of Amer­i­can De­pos­i­to­ry Re­ceipts for at least US$225 mil­lion on the USA mar­ket.

Al­though the of­fi­cial 90-day strike pe­ri­od has end­ed at Trinidad Ce­ment, the in­dus­tri­al re­la­tions cli­mate re­mains volatile. For the first quar­ter end­ing March 2012, TCL re­port­ed a not un­ex­pect­ed loss of $60.8 mil­lion or 25 cents per share. Eco­nom­ic con­di­tions con­tin­ue to be chal­leng­ing. The com­pa­ny has not yet set a date for its AGM. Against this back­ground, it is not sur­pris­ing that its share price has con­tin­ued to lan­guish; for the pe­ri­od cov­ered, it lost 30 cents or al­most 17 per cent to close at $1.49. Rev­enue from Point Lisas Port De­vel­op­ment Cor­po­ra­tion (Plipde­co) for the quar­ter end­ing March 2012 im­proved by 6.4 per cent to $53.7 mil­lion while gross prof­it rose to $38 mil­lion from $34.5 mil­lion last year. Ex­clud­ing fair val­ue gains, earn­ings per share im­proved by 71 per cent to 12 cents per share from 7 cents last year. For 2011, Plipde­co re­port­ed 7.0 per cent high­er rev­enue of $225.6 mil­lion and 12 per cent low­er earn­ings per share of 33 cents (2010:37 cents). The div­i­dend for 2011 was 10 cents per share, which was a big im­prove­ment over the 7 cents paid for 2010. With 39,619,607 shares out­stand­ing and to­tal eq­ui­ty of $1.545 bil­lion, each share has a book val­ue of $39.01. The cap­i­tal in­ten­sive na­ture of the busi­ness com­bined with low prof­itabil­i­ty keeps the share price de­pressed.