ItsMoneyMark Newsletter #37

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Welcome to META! The Metaverse!
Historically, and in many conversations, with analysts, observers, functions, boardrooms, etc.persons have always alluded to Facebook being a Universe, so actually, whether for the right or wrong reasons, this re-naming of the entity seems “apt.” Facebook the Universe becoming the Metaverse. Let us face the facts & the music, the heated negative PR on Facebook over the past week or two, that escalated so quickly could not have led to suddenly, a name change and brand change overnight. Clearly “the Zuck” had this in mind, and his Facebook senior team, board from the previous barrage and U.S. Senate meetings he attended, practically had this in their back pocket. In the event, an escalation occurred again, or this did not just go away, he could pull out an “Ace.” Boom, META emerges!
Companies the size of Facebook, have a massive amount of “consulting budget” and “ultra-access to professionals.” Example, PR professionals, brand professionals, etc. They would have examined this thoroughly and practically from the first barrage that Facebook received and that “the Zuck” handled in hindsight very well. Most CEOs/ Chairpersonsdo nothandle this pressure well, and tend to crack or even crash, which in most cases of the trial, is the intended purpose. Zuck and Facebook did well, and the share price reflected that since then. S
o, here we go again and the quick decision or resulting factor has been, effective December 1, 2021, the world will have META, ticker symbol FB will change to MVRS!

Whether the market views it as a deflection, a true & new strategy, enhanced growth, the Zuck working his magic, whatever it may be, it is already working, and it has captured and captivated the headlines. Already there is new product development, new product pictures, technology spend announced, and more under META.
With all the noise, and the barrage of every morning criticisms of Facebook before it became META, let us not forget that it is a business and a huge one, a universal one:

DAILY ACTIVE USERS:                1.93 BILLION
REVENUE (YOY):                           +35% (Q3)
NET PROFIT (YOY):                      +17% (Q3)

Facebook, now META is truly a Universe, that now has ambitions of not just social media but as they have stated at their Facebook Connect:
 connecting people through technology.

Market Moves:

  • Dividends, Dividends, Dividends… lots of meetings coming up and one thing we know about JSE/ JCSD listedcompany shareholders, “we love dividends!” Seprod Limited, FosRich Company Limited, Stationery & Office Supplies Limited & Knutsford Express Services Limited are a few that have announced promptly that their board of directors are meeting over the next week or so to consider an interim dividend or a dividend payment to their respective ordinary shareholders.
  • Precarious Notice of Annual General Meeting (“AGM”) by KLE Group Limited (JSE: KLE), and a revised Notice of AGM by KLE. What seemed like the normal course of business for shareholders of KLE, with the 2021 AGM Notice accompanied with the 2020 audited accounts, and the normal resolutions, then got updated on the JSE website, with quite a dramatic update. While it is scheduled for one (1) date, it is, 2021, 2020, and 2019 notices, for three (3) different times… So, therefore in 1 day there will technically be 3 AGMs, at 10am, 11am and 12pm… While we do not know the entire history of the Stock Exchange and/or the data, this might be a record…
  • Ciboney Group Limited (JSE: CBNY) has been an incredibly “hot” stock over the past month (+110%) and in 2021 (+275%). It has been all the rave on “social media” over the past few weeks. Ciboney, has gone through something similar before when it had announced it was putting its majority shareholding up for a sale and here, we go again… A bit of history on Ciboney, especially if you have been in the Market for long enough or have gotten a few stories… While on the JSE market we do not have a penny stock market or penny stocks, or a market like the OTC in the U.S., for a decade or longer, lots of guru traders would thoroughly enjoy trying to “buy” Ciboney at say J$ 1-3 cents and if it popped to say, J$ 5-7 cents, then “sell”. If you were an avid JSE stock observer, this would happen every so often. Periodically, you would read in the media, or in those days, a fax, or a daily email of the trade report of a big block! Oh yes, 10 million shares (note the focus on the Volume, lol), of Ciboney traded. At say J$ 1 cent, this was J$ 100,000 plus fees… In hindsight, the large absolute volume did create some excitement, and whoever the consistent buyers/ sellers in Ciboney were, they enjoyed it… Let us flash forward back to today. Ciboney’s Board is back at it! Two mainstream newspaper ads, which were “pretty cool” and sales pitches by the company, seeking a buyer for the said 72% – the majority shareholding in Ciboney. The advisory stated a deadline of November 8th, 2021, which is very soon for interested purchasers to submit offers. Time will tell, but the question on “social media” mind is, is Ciboney worth the current market cap, of J$ 448 million – J$ 507 million? The recent trading market cap range… Some perspective, TTECH Limited, one of the smaller companies on the market, but key words as compared to Ciboney, TTECH is “profitable,” TTECH’s last market cap is approximately, J$ 450 million… So, if you really decide to buy into hype, mentally, you are telling yourself that Ciboney is worth the same or more than TTECH. Our takeaway, if the momentum continued which we doubt it will, Ciboney, potentially was feeling like Jamaica’s GameStop Corp. for a minute, our local meme stock…
  • The Jamaica Stock Exchange (JSE: JSE) booming! This is the only time; we can say the JSE on the JSE! Sounds good. Despite the Pandemic, COVID-19, the JSE, their Board and their Management team, put in an absolute huge number for the 3rd Quarter. Talk about piling on the revenue, cess revenue and fee income for Q3, September 30, 2021. Clearly shows, that yup, we know real estate, steel, lumber, cement, all that good stuff is booming as well, but the JSE quietly had a very busy 3 Months, July – September 2021 Quarter with volumes and trading… By the numbers: Earnings per Share (EPS) hit J$ 27 cents per share for the Quarter 2021 (Q3) versus J$ 10 cents per share in the comparable Quarter 2020 (Q3). Representing growth year over year, of +63%. To re-iterate, huge! Net profit of J$ 187 million for the 3rd quarter versus J$ 73 million in the 3rd quarter 2020. Although revenue is not profit, the impressive number in the quarter, was the headline growth. Revenue for the quarter under review jumping to J$ 621.4 million from J$ 373.2 million, an increase of 66%. Largest single line item that grew % wise under revenue, was “cess revenue.” The good old core revenue of the Stock Exchange. This number 4x year over year and grew to J$ 232 million versus J$ 57 million. At J$ 17 & change, even with the growth, and a potentially similar or big 4th projected quarter, the JSE’s P/E ratio is still a bit high at projected 20x – 23x. One of the few areas, if any we could “ding” the JSE for is that the management of expenses seems to never be flat or incrementally scalable in reviewing the quarter or in looking back at comparative periods. Defined as “staff costs” grew by approximately 47% year over year for the quarter, increasing by about J$ 53 million. It is understandable, that if new services, or significantly increased business could lead to the requirement of increased admin expenses, but at some stage, the JSE must become efficient with technology and get base fixed expenses like other global exchanges. As whether trading volumes is 4x, 8x, 12x, etc. and cess revenue is great and growing, it should not necessarily mean admin expenses must grow as well… That incremental year over year admin expenses for that single item, equates to a potential additional J$ 7-8 cents in EPS.
  • Caribbean Cement Company Limited (JSE: CCC) has a surprise fall off in earnings for the 3rd quarter September 30, 2021, after a booming 1st 2 Quarters for 2021. The Company released its 3rd quarter & 9 months (YTD) financial numbers earlier this week. For the Q3, CCC, made EPS of J$ 5 cents per share versus J$ 1.44 per share in the previous Q3 2020. On a net profit basis, this worked out to be J$ 43.7 million, a far cry from J$ 1.22 billion in the previous year for Q3. Glaringly, besides revenue tapering off by approximately J$ 300 million, to J$ 5.49 billion from J$ 5.77 billion for the quarter, the “cost of sales” line item it what really hampered CCC for the 3rd quarter. Given the decreased revenue, cost of sales dramatically increased by approximately J$ 1.4 billion year over year, hitting J$ 4.4 billion versus J$ 2.92 billion. Of concern, is that in going over the MD&A or Director’s Statement in detail that accompanies the financials, it does not go over or give specific details as what caused this. While we can make assumptions or interpretations, it is a significant ballooning of cost of sales as compared to the revenue number. If you take the YTD 9 months, standalone, CCC is having a fantastic year and we now await Q4. YTD, CCC net profit is J$ 3.1 billion versus J$ 2.2 billion, YTD % uptick of 41%.

Happy Halloweennnn! And see you next week!

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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.

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