ItsMoneyMark Newsletter #6

Greeeeeeeeeeeeeeeetings! Another Friday, another newsletter!

Earnings continue to come in hot and heavy on the Jamaica Stock Exchange (“JSE”) daily… There are now so many listed Companies on the JSE that the Newsroom pretty much uploads daily company earnings at record pace. Seems even on the weekend and especially on a Saturday that the JSE Team is working overtime to get the Earnings posted in the Newsroom.
While each and every report references the respective impact of the Pandemic or COVID-19 on operations, and in most the tone has now changed to the famous phrase of “cautiously optimistic” for Q4 2020 and 2021  by most Chairmen and/or CEOs who pen the remarks to the Earnings for the Quarter and YTD results, some Companies are actually benefitting or doing better. We have not seen much commentary or analysis if this is based on the evident change in consumers staying at home more or potential picking up market share as well as smaller businesses may have closed over the past 6-8 months.
Outside of the local food stocks we have spoken about recently, like Seprod and GraceKennedy, HOT TO TROT, and relatively newbies to the Stock Market just roasted the Quarterly reports – flying…
The results were way better than the reported numbers… Not only were the profits up by over not only 100%, but by over 150% year over year, making J$ 45 MM for QUARTER 1 versus J$ 18 MM. For the 2nd straight quarter in a row, the “Finance Cost” line item really is understating the results. There is a bit more upside to read into.
Balance sheet has the long-term loans or bank debt around J$ 174 MM but for the Quarter 1 their Finance Cost was J$ 51.4 MM??? Does not really make much sense as that would be an astronomical interest rate, so you really have to head to the footnotes here. Interestingly, about J$ 43 MM is exchange losses and lease interest expenses. Assuming Fontana does some FX management here, will that FX loss continue as this rate?
The results clearly shattering a quarterly record for Mailpac… Has a feeling of Tesla and Amazon in one for Jammy… The market is soft right now and understandably so given COVID-19, so the results have not broken the stock lose yet, but eventually they will. Mailpac may join the Main Market at this rate, sooner than we think, as it feels like Tesla on the verge of December 21 and joining the S&P 500.
The net margin is just one of the many takeaways coming in at 31% for the Quarter with Profits hitting for the 3 Months for September 2020, J$ 149 MM. There was a time in Jamaica, when margin discussion was about chemicals, gambling, and food, but let us talk about logistics… 30%+
The quarter has dramatically changed the trailing P/E ratio and Projected P/E with the best Quarter on its way.
Otherwise, lots of other earnings
They continue with no end in sight just yet especially for Amazon and Bezos.

  • Amazon continues to buy up Companies strategically and add them to its platform and eventually go after the traditional brick and mortar businesses; each time it has done this or does this, it not only wins, but adds tremendous Profits and in turn Market Cap for its Shareholders
  • Take the US$ 1 Billion it bought PillPack for about 2 years
  • Now Amazon launches EPharmacy; clearly it used that gap of time wisely, tested all sorts of stuff to make sure it is a success
  • Now, EPharmacy Amazon or the “Zon” as many analysts are calling the Company, gear up in most U.S. states and can offer free shipping, discounts and take advantage of their platform
  • Industry size here, over US$ 300 Billion

What sector will be next for the “Zon” is the question… its just a matter of time.

Musk and Tesla join the famous and outstanding S&P 500 on December 21, 2020…

  • Even with this fast approaching and all the success in 2020 for Tesla, there are still a lot of criticisms and new negative articles surfacing in traditional media on the Company’s current Market Cap
  • The narrative is Tesla is now worth more than all the U.S. automotive market caps compiled
  • Tesla finds a way to win, and as they continue to win as a Company and Musk, there will be a narrative

The S&P 500 has garnered the stock more attention and will also force many mutual fund managers and ETFs etc. to buy it as well even if they did not want to prior now or very soon.
Until next week, be good, keep moving and happy markets!

These opinions and thoughts are solely of ItsMoneyMark and does not constitute investment advice.
Ensure to always speak to a Licensed Financial Advisor.

Thank you for reading!

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