WE HAVE ALOT TO UNPACK! ASAP.
We have seen some mega deals by Jamaica’s largest Companies in the past few weeks. Expect to see more of this and in a Major Way for the remainder of 2021 and into 2022.
We mean… Can you imagine, after “delta” we now have “mu” confirmed?
Approximately a year ago, many mid-sized and even big (but not the large ones) Companies took on sizeable debt or preference shares to push through the Pandemic. Many of their owners/ shareholders predicted that within 12 months, approximately September 2021 (the latest), COVID would be well behind us… Well, now its like a COVID party, not just are we in the biggest wave in Jamaica, but also new guests or variants are here… So, we could well be facing the Covid Crisis for at a minimum another 12 months? Let’s see.
What we do know is that specific Companies in sectors that were hit are further highly levered, even if they are mid-size or big. Meaning their owners just didn’t have that business cushion or personal net worth to avoid new or further leverage. Let’s assume in most cases further leverage.
We also know that the “largest Companies” are who are going to benefit from these lockdowns, and the longer the Economy is not open locally. Within the past two (2) weeks, we just saw PBS Group and Jamaica Producers (JSE: JP) do 2 massive deals – both, outside the shores of Jamaica to show the size of both Companies.
If the lockdowns continue, essentially meaning that the local economy is not open, and if something finally gives on the financial forbearance standpoint, regardless of sector, look out for the “largest Companies” to lick their chops and thrive in Q4 2021 and 2022 –its not often our Mega Large Caps get to show extraordinary growth. Sometimes they just can’t find deals or growth in Jamaica, or even in the Caribbean.
Many reports globally and respectful authorities stated that COVID-19 alone had made the digital revolution advance in 3 months what it would have taken 10 years – we predict the same will happen in Jamaica during the next year between our small caps to mid-caps and our Mega Large Caps if the lockdowns continue. The buyer will be our largest Companies.
The real phrase for lockdowns is closing the local economy.
Bottom line is, get yourself into the Mega Large Caps where you can, they may seem boring right now, but eventually with all these deals they are doing, and expect many more, they will become the Party.
Market Moves:
It was a week of deals and management changes at many of the listed Companies on the Exchange, the Jamaica Stock Exchange (“JSE”). Whether it was Executive/ Management Appointments or Resignations, it was one “busy” week on the JSE. During the week from a corporate actions’ standpoint, there were 5 of these such corporate announcements. Is it a sign that mental fatigue is setting in, frustration with continuing starting and stopping of the economy or just coincidence? Anyway, you look at it, it was an extraordinary week, hopefully an outlier. Of interest was that quite a trend of finance/ accounting resignations in a few Companies to note.
Executive/ Management Add-Ins
- Blue Power Group Limited (JSE: BPOW), that has been on a tear in recent times, but had a recent fall off in the latest quarterly results in the revenue line (we assume because of the legal claims and issue brought by a competitor in the Caribbean), appointed a Commercial & Operations Manager. Effective August 1, 2021, Mr. Vishwanauth Tolan joined BPOW, we assume to drive business relationships and to perhaps add new markets. Let’s see.
Executive/ Management Moving On
- Seprod Limited (JSE: Seprod), lost a big name here, but he served them well over the past few years as the advisory states on the JSE. Mr. Jeffrey Moss-Solomon resigned as General Manager, of Jamaica Grain & Cereals, effective August 31, 2021. This is the subsidiary responsible for disrupting and shaking up the Jamaica Flour Market. Jamaica Grain & Cereals produces the “Gold Seal” brand.
- Caribbean Assurance Brokers (JSE: CAB), the insurance brokerage lost its Manager, Accounts & Finance, Mrs. Donnisha Brooks. Effective August 31, 2021, Mrs. Brooks resigned from CAB. A very nice advisory by the Company, that Mrs. Brooks was valuable and well respected. CAB has been going through the motions lately, and their annual earnings have never been smooth. An extremely seasonal earnings Company if there is ever one on the JSE. They tend to make break-even or make losses for ¾ or 9 months of the year and then a very large profit in the 4th Quarter to compensate for this and make a fair Net Profit. However, in this fiscal year, things seem to be getting harder, with mounting losses, and now a financial/ accounting resignation for a regulated company.
- Main Event Entertainment Group Limited (JSE: MEEG) incurred the resignation of their Manager, Finance, Mr. Gregory Seymour. The movement was effective September 7, 2021, and MEEG mentioned that Mr. Seymour was with the Company for 3 years and contributed greatly to the growth of the business. Nicely said! Main Event has been going through a tough time as well, because of the lack of or non-existence of the entertainment industry in Jamaica, pretty much since March 2020 or the on-set of the Pandemic, COVID-19. The consistent starting and stopping of the Economy, that is, lockdowns has not been kind to MEEG either, like many other Companies. With that said, besides over the entire sample size of the Pandemic where Main Event had 1 to 2 bad Quarters, MEEG’s team has done a credible job in maintaining their cash, collecting receivables, and trying to get their cost as realistic and efficient as possible.
- Caribbean Producers (Jamaica) Limited (JSE: CPJ), has some similarities to Main Event but totally different sector. The similarity is that both Companies have been in hard hit sectors or parts of the Jamaican Economy by the Pandemic. This change is more significant than the rest for the week, as it is CPJ’s Chief Financial Officer (“CFO”) role. Mr. Vivek Gambhir is no longer employed to CPJ, as of August 31, 2021. The good news for CPJ shareholders is that there is an immediate replacement and not a delay, as the Market doesn’t react well or like when there is a “drag” or “delay” between material executive roles especially in this department for any Company. The result is, Mr. Christopher Myles, is the newly confirmed Director of Finance, and therefore head of the finance division. CPJ has had it rough even prior to the Pandemic, with management changes, significant IT system issues, etc. The Pandemic made it even more difficult for the Company. Shareholders & market analysts look forward to CPJ getting the business and the earnings right.
Of note, 4 Moving On and only 1 Add-In during the week. It could just be a “heavy” week but that’s a 4:1 ratio, with 3 of the 4 coming from Finance/ Accounts departments and 1 General Manager. Let’s see what next week brings as we prepare for the Cannonball run in the 4th Quarter.
On the deal side, while we spoke about the share price and potential speculation in Radio Jamaica Limited (JSE: RJR) given that their performance was not enthusiastic until the recent Quarter – let’s hand one thing to them, they are doing deals!!!
Besides Gustavos and ePost Caribbean, RJR has now banked on a new deal to the Fold. This week they announced a 15% equity stake in a start-up data analytics Company, named StarApple analytics. The deal states RJR’s intention to acquire the stake and it will be via their Group subsidiary Media Plus Limited that is based in St. Lucia.
RJR with its current team and in particular Chairman, Joseph Matalon who is well known for his acumen & passion for buying businesses and private equity – clearly are adamant about transforming RJR. The only thing that may look like the existing RJR today, as compared to a few years ago, is the corporate office or buildings and the annual report. We are pretty sure in due course there will be more branding upgrades and a “fresher” annual report that was just published.
Overall, lot of interesting buys by RJR, that seem to serve 2 purposes – benefit their group of companies more profitably: make all parts move faster and make upside on them specifically.
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