Let’s get into today!
No more lockdowns, or no movement days, except for Sundays? Perhaps a more progressive approach but a bit too late.
If we draw on the famous Maslow’s “needs” and do some tweaks for this week, what has been phenomenally “crazy” about the lockdown days or no movement days. We have touched on it in numerous of our weekly newsletters before in different iterations. We branded it “No Man’s Land” in one newsletter where we said, don’t be indecisive, every successful Country has either been zero tolerance or fully open, but none in our opinion half-way house. We relate this via a discussion we had with a gas attendant recently:
Gas Attendant Comments:
- I get paid hourly, and therefore on the no movement days, I get paid “nothing”
- I was at the breaking point of not being able to afford food and my bills
- I reach a point where I was thinking about thieving, crime and doing things
It is clear the if there is ever another lockdown or no movement working day, there should be a sensible committee put in place that ensures food, salaries (hourly/ daily wages), and other basic living needs are not impacted. Committees like this, in these times cannot just be drawn on from PSOJ/ JCC/ JMEA, as clearly, they did not think about the hourly or daily workers.
We also wrote in a previous newsletter, that hubs for 24-hour food, gas, and other vital requirements should also be open (in every parish) and not just on e-commerce platforms or delivery services. Reason being, you are asking security forces, medical staff, and other vital service providers to work and serve 24-hour periods or shifts and then basic Maslow needs are not available to them, equated to a daily Maslow.
Sometimes the importance is execution and to get it done, versus to dwell and pontificate on the matters at hand.
Market Moves:
Last week we spoke about the massive amount of management changes & announcements on the Jamaica Stock Exchange (“JSE”), this week we have several intriguing earnings, strategic listed company announcements as well as U.S. trends emerging & some continuing:
- Main Event Entertainment Group Limited (JSE: MEEG) released earnings for their 3rd Quarter and Year-to-Date, 9 months unaudited financials. They were pretty good, better than expected for the 3rd Quarter in particular. Main Event, in reviewing their performance must be one of the more if not the most underappreciated stocks on the market right now. They have been in arguably the most “ravaged” sector in Jamaica since the Pandemic started in March 2020. While there have been some “minute” openings during the past 18/19 months, it has essentially made Main Event pivot, equate costs as best as possible to revenues quarterly and re-think their business for these times. 18 months is no joke, as in the “being public” sphere, that is the equivalent of 6 quarters, or 1 audited financial statement and 2 quarters – in hindsight, a long time. During this “run”, not only has Main Event collected receivables, but they have maintained cash and increased cash to maintain a defensive position to keep Main Event and their shareholders safe in COVID-19. In looking at the Q3 financial results and YTD (9 months), both periods are profitable – that is admirable given these challenging market conditions. For Q3 2021 alone, Main Event made, earnings per share of J$ 10 cents (net profit of J$ 28.6 million) on revenue of J$ 243.3 million. The real line to draw through this, is that the economy was not fully open the entire period, May – July 2021, or Main Event could have even needed time to ramp back up fully – in either case, Main Event got back to this revenue figure in no time given the circumstances. We could well be in this wave, or there could be another wave (hopefully not), but eventually like every crisis, the Pandemic will pass, and Main Event will be an eventual winner. It is clear now, the worst is behind them, and they have figured out how to balance the business and the Pandemic, so as not to importantly “burn cash”.
- ISP Finance Services Limited (JSE: ISP) making an intriguing announcement and potential move. It seemed just a matter of time, as ISP Finance has been a safe bet/ safe play for investors but lacking growth over the past few years. They had executed a few years ago a preference share issue or a note via VM Group that signalled growth for the Company, but after that, things seemed to go quiet. With this corporate announcement it puts ISP somewhat in the spotlight again. Like any sport or any business, you never want to be in no man’s land – this is defined as being in the middle. They teach you in a learned way, either go big or stay in a niche (small). ISP for the past few years has been in the middle, hence they haven’t registered breakaway profits. Their recent financial numbers have shown a loan book ranging from J$ 609 – J$ 688 million, with the most recent loan book ending at the latter number. Net profits have been averaging around J$ 15 – J$ 20 million per quarter. Industry analysts have stated in the past, to be big in the loan biz, you must be J$ 1 billion or more. Based on this statistic, ISP has been hovering in no man’s land at J$ 688 million. Hence, we figure this announcement, is now here – announced on the JSE earlier this week, ISP has entered into a Loan Purchase Agreement that gives them the right to purchase select existing loans from a medium sized loans portfolio. They did not disclose the loan company or portfolio, but state it is subject to closing conditions and should close by the end of this quarter. We assume that to mean on or before September 30, 2021. While ISP does not disclose the size of the potential deal, we hope it will be at least J$ 300 million or more to get them to a J$ 1 billion loan receivables book and drive profitability consistently to above J$ 100 million annually. Lastly, it demonstrates microfinance market players making moves who seemingly want to be in the sector long-term given the regulations, go big or go home.
- NCB Financial Group Limited (JSE: NCB FG) continues to have large buying & support in the J$ 120s price region/ levels. Although, NCB FG earnings have really fallen off this fiscal year and the downward trend was there, NCB FG share price has not been that bad. Emotionally, many shareholders and analysts may speak like NCB FG has had a rough year-to-date (YTD) or 1 year share run, but in hindsight, as compared to the Earnings per Share (“EPS”), it hasn’t been that bad. When looking at NCB FG’s 52-week low/ high window, its only 19%. The YTD volatility is even less than this range. Based on this, its intriguing the perpetual buying coming into the stock, but clearly buyers are seeing the long-term value in NCB FG, and view the current fall off (that again isn’t much) as just another “cycle” that NCB is in. Case in point, earlier this week, a connected party, purchased 4.453 million shares in NCB FG on September 13th, 2021.
- Knutsford Express Limited (JSE: KEX) earnings were disappointing, but worse than expected. A loss for the year end May 31, 2021, of approximately J$ 95 million. From a quarterly and YTD standpoint, one of the clinkers of the Market. In review, a downward surprise more so than 2020 peak pandemic, in that year when tourism earnings were battered. The audited results reveal some interesting disclosures and accounting around the previous U.S. KE Connect USA expansion and business as well. Not only did the USA business half or more than half revenues year over year, and the footnotes mention the issues surrounding the Pandemic, but it seems that there was a write-off of related party IOU or due to related party. Perhaps Knutsford Express expanded outside of Jamaica too soon or perhaps in fact it was the Pandemic, however the MD&A doesn’t give enough information to decipher. The queries will await the next Annual General Meeting (“AGM”). The concept of the “oxtail bone” comes into play here with one of the scenarios. Perhaps the Board of KEX should have eaten, eaten, and done everything to take all the meat off the oxtail bone in the Jamaica Market before looking outside Jamaica and it stretched the Board and Management too thin? While we are not sure, and we give thoughts on it, the “oxtail bone hypothesis” is a valuable business tool.
- Salada Foods Jamaica Limited (JSE: SALF) announces the unexpected resignation of their General Manager. It’s a surprise because Salada just had their biggest quarter and has been on fire with their financial results for the past few quarters and year. It seems to be a trend at Salada though, that management changes are in order every so often each time Salada hits a new high or is riding high. Although we do not know the exact circumstances, it may not be a bad thing, it may just be that the Board of Directors expectations at Salada and accountability of management is so high that things of this magnitude happen – in turn is a good thing for shareholders. So, even if there is record earnings for the quarter or year, the Board may well want another record next year and so forth. Salada seems to always aim high and even if they do have a fall-off one year, they always rally… What’s the bottom line here: Mrs. Diana Blake-Bennett has submitted her resignation as the General Manager and it takes effect at a forward date, October 31, 2021. Based on it being a date so far out, approximately 45 days from today, that’s a “good look” and clearly all is well in the Salada Camp.
- Amazon (NASDAQ: AMZN) new CEO Andy Jassy has gone on the offense that it’s still early for Amazon in media: they are just getting going… Amazon has big time ambitions in media & entertainment. Jassy spoke about some interesting headline numbers, in addition to that 100s of millions of people are tuning into Amazon original content now. Headline numbers: MGM Studio acquisition earlier this year for US$ 8.45 billion was a part of this plan, Amazon spent US$ 3.2 billion more on content for streaming video and music services (media & entertainment) in 2020 than 2019, hitting US$ 11 billion, strategic plays and relationships with the NFL and looking at sports more overall. When you think of what Amazon has done and their track record of delivering, if you are in the content game now, and Amazon is coming, buying up assets and the CEO has this message, it will be a fun ride, as things heat up with Disney+, Netflix and everyone. One thing for sure, Jassy has carved out an initial focus area/ play as the new CEO!
- Marcus by Goldman Sachs (NYSE: GS) brand of finance products, makes another interesting fintech, consumer financing deal, this time with Company, GreenSky. US$ 2.2 billion transaction via an all-stock deal. GreenSky focuses on cloud-native fintech and executes home improvement loans (buy now and pay later model), a growing market. Goldman Sachs over the years has been building out Marcus to be the biggest and the go to platform for consumer finance and feels that this will add on nicely to their vision. The lending is off-balance sheet, so the scale and potential growth for Goldman Sachs feels is huge. Expect Goldman Sachs to keep adding on to Marcus brand of finance products. Marcus was launched approximately 5 years ago.
- Apple, Inc, (NASDAQ: AAPL) keeps going, despite many criticisms about their technology slowing, as Apple did not release the “Next Big Thing or Item at the Event as they usually do”. The iPhone 13 is here! CEO Tim Cook launched Tuesday evening of this week to an empty auditorium given the continued Pandemic… It goes on sale today and ships next week Friday, September 24, 2021. What are the takeaways and what’s in it for Apple and future buyers: bigger battery and longer battery life, claims of 30 minutes more (every minute counts, right?), improved camera features (the verdict is still out). Biggest takeaway is, the Apple machinery keeps pushing and we have heard the comments before, however that didn’t prevent earnings growth and we doubt they will this time either. Apple will go higher and keep building cash…
Remember to subscribe to our YouTube Channel and follow us on Instagram and Twitter @ItsMoneyMark!
Link –https://www.youtube.com/channel/UCWnDZKfBMJMU07oVN7Dv3bw
Visit our Website and Subscribe to our Weekly Newsletter, every Friday at 7am! 🗞📰
👨🏽💻- www.itsmoneymark.com
🖇LinkTree – https://linktr.ee/itsmoneymark
Happy investing and Happy markets.
Enjoy the It’s Money Experience until next week, bright and early at 7am!
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!
ITSMONEYMARK 