The National Commercial Bank of Jamaica Ltd (NCBJ) is the most undervalued stock trading on the T&T Stock Exchange (TTSE) right now, First Citizens Research and Analytics said in its September Market Insights released to investors on September 19.
The NCBJ is trading 194 per cent below its intrinsic value. Plipdeco is the second most undervalued stock trading at 37 per cent below its intrinsic value. Prestige Holdings is next at 16 per cent, followed by ANSA McAL at 8.7 per cent, and Massy at 3.0 per cent.
"NCBJ interest income has grown 5.0 per cent or JA$1.87 billion, primarily due to growth in net loans, advances and investment securities portfolios. As a testament of positive performances, NCB Capital Markets has been named Best Investment Management Company for the Caribbean 2014 by the internationally-acclaimed World Finance Magazine. Investors should be aware of the exchange rate risk involved with Jamaican stocks. The Jamaican dollar depreciated by 40 basis points for half year 2014 and currently trades at JA$0.0553 to TT$1," First Citizens analysts said.
Saying it is the largest financial institution in Jamaica, First Citizens said NCBJ's intrinsic value is $2.94 per share while it is trading on the TTSE for $1 per share.On Plipdeco, First Citizens researchers said:
"Plipdeco is host of the Point Lisas Industrial Estate and Port Point Lisas, the second major port of the country. Through its industrial real estate management and port management operations, the corporation reported profits in the last three years. For the first half of 2014, Plipdeco reported a profit before tax, excluding fair value gains of $16.06 million, an 8.0 per cent decrease from the same period last year.
Reported revenue grew by 6.0 per cent to June 2014 compared to a year ago, but extensive repairs to port equipment and salary payments led to a 13 per cent increase in operating and administration expenses."
First Citizens said Plipdeco has had "steady increases in group turnover in last three years, consistent growth in dividend payout," and "growth potential from the Port Expansion Project and Logistics Park." First Citizens said Plipdeco's intrinsic stock price is $5.78 while it is trading on the stock market for $4.20 per share.
On Prestige Holdings, First Citizens analysts said the group has "demonstrated its commitment to growth and positive shareholder return through its investments, acquisitions and divestments in recent periods. The group benefits from a strong brand in a strong geographic location and is focused on maximising the profitability of this brand through cost reduction, while divesting from unprofitable and challenging locations. Threatened by rising food costs the group reported lower profits in 2013, but promises positive long-run earning potential."
First Citizens said Prestige Holdings has shown "steady growth in revenues from its core brands and locations; growth potential through horizontal integration" and "divestments from unprofitable markets."Prestige is trading on the market for $9.50 per share, but its intrinsic price is $11.11 per share.
First Citizens reiterated what it said about ANSA McAL in previous research. ANSA McAL delivered profitable growth trends over the last three years, and the quality of the group's profits are supported by strong operations, with return on equity driven mainly by returns generated on its assets, First Citizens said. ANSA McAL is trading for $66.24 per share, but its intrinsic price is $72.03 per share, First Citizens said.
On Massy Ltd (previously Neal & Massy Holdings Ltd), First Citizens said it saw the impact of its group-wide rebranding initiative on its bottom line, reporting a 6.0 per cent drop in net profit for the nine-month period to June 2014 to $396 million, due to one time rebranding costs of $59 million.
Excluding these charges, the group's profitability trend continued, reporting a 3.0 per cent increase in profit before tax to $617 million, supported by 12 per cent increase in revenues and 5.0 per cent rise in operating profits compared to the same period year ago, First Citizens said.The group's source of growth is mainly from acquisition activity as it seeks to continue diversification and expansion of its operations, First Citizens said.
"Liquidity levels are positive although there has been decline in free cash flows over the last three years," the bank said.First Citizens said Massy has "strong growth potential from (an) aggressive mergers and acquisitions (M&A) strategy; leverage activity supporting growth strategy; strong performance of core business," and exposure to Barbados. First Citizens said Massy is trading on the market for $68.51 per share, but its intrinsic price is $70.66 per share so it is undervalued.