The Market “Hungry” for JPSCo Initial Public Offering (“IPO”), a Big Issuance, Liquidity in the Market & JPSCo Quarterly Earnings Surge 40%
JPSCo 2022 annual revenue on track to beat US$ 1 Billion
Jamaica Public Service Company Limited (JSE: JPS) clearly on track based on their recently released first quarter (March 31, 2022) financial results, to surpass US$ 1 billion in operating revenue for 2022. This quarter, must have everyone asking, potential investors, minority shareholders and market analysts at brokerage houses:
“Like where is this IPO, when is this IPO coming to the JSE Market? This is the one we want… We get to the profits momentarily, as based on the growth in revenue and net profit again for this quarter, JPS is hotter than potential “food” (manufacturing/ distribution) plays right now…”
JPS reported operating revenue of US$ 264.5 million for the quarter, versus US$ 224 million, year over year, representing an increase of 18%. JPS’s gross profit margin for the period under review was 34.5%. Net profit for Q1 2022, rallied even higher for JPS, hitting US$ 7.8 million, improving from US$ 5.59 million in the previous year, rallying + 40%.
JPS’s shareholders equity closed the quarter, March 31, 2022, at US$ 542.7 million. A lot of market pundits have suggested openly that the Country should not give away JPS and wait for it be valued much more! Let us tell you at ItsMoneyMark, markets, and Mr. Market on the JSE – Jamaica Stock Exchange will not always be this good, or glorious, given what is happening globally, the predictions of an impending U.S. recession, interest rates moving higher locally and globally (the trend there) and inflation.
JPS is performing well above average now based on its earnings and the market is hungry now for “big issuances, with safety of earnings like JPS, a moat, and there is liquidity now.”
- All the rave has been about Seprod’s (JSE: SEP) deal in Trinidad regarding the purchase of A.S. Bryden & Sons Limited, but do not forget, Seprod Limited, is a solid company, generating a lot of positive cash flow as is. When someone reminisces and says, “they miss Lascelles deMercado, or they are looking for another Lascelles to buy up shares in,” SEP and JP are the stocks/ companies that give you that feeling again slowly but surely in our thoughts at ItsMoneyMark.
By the numbers, SEP reported robust growth in operating revenue for the 3 months ended March 31, 2022, to J$ 11.8 billion, from J$ 9.57 billion, in the previous year’s quarter. SEP continues to gain market share. Net profit for the quarter improved to J$ 595 million, up from J$ 546 million. Seprod’s earnings per share for the quarter alone, has now hit J$ 81 cents.
The Company’s book value really ramped up, increasing to J$ 24 billion as of March 31, 2022, with the significant jump, revaluation in capital reserves at SEP.
- On that note, we get to Jamaica Producers Group Limited (JSE: JP), another powerhouse on the JSE – Jamaica Stock Exchange. We have always said, JP, has been waiting to explode, but it must get it earnings to grow and to grow consistently. It has been a few years in the making, and maybe this quarter, we are finally seeing, what has been in the making by the management of JP. In the end, JP, is a re-shaped company, and it took a few years or more, for that re-shaping, top line growth, changing of business lines, and all the subsidiaries with the re-shaping to flow to the “bottom line or EPS – earnings per share.”
This is one of the better quarters we have seen from JP management and board. JP reported:
Operating Revenue: Increased to J$ 6.9 billion, + 26% year over year
Earnings per share: Increased to J$ 36 cents, + 57% year over year
JP continues to highlight, and they have done this for a long time, and rightfully so, that their net book value per share as at the end of the quarter, April 2, 2022, is J$ 16.28/ share. While this is critical, we are focused on JP’s earnings and the growth rate!
With J$ 11.5 billion of cash and investments on hand, several cash flow positive and profitable, business lines, subsidiaries and associate stakes, JP should be able to keep a consistent earnings growth rate of 20% + moving forward now.
- Palace Amusement Company (1921) Ltd (JSE: PAL), had another troubling quarter with a net loss of J$ 77.3 million for the 3rd quarter ended March 31, 2022. On a 9 months or YTD – year to date basis, the net loss is J$ 268.7 million. The cash burn at PAL has been real!
Revenue for the 3rd quarter was a much-improved J$ 141.9 million, as compared to J$ 28.3 million in the previous year’s 3rd quarter. Despite the rebound in revenue, it was not enough to cover, (a) direct expenses, (b) admin expenses & (c) finance cost. PAL continued to experience a gross loss in the period after direct expenses of J$ 30 million.
Cash & investments ended the quarter at J$ 362 million, so the “good news” is PAL has more than enough cash on hand to get this turnaround to finally happen. With the re-opening of more of their cinemas, products in PAL’s Q4 2022, or after these earnings, PAL should get back to the point where most importantly they run at a minimum a gross profit. The 4th quarter or the next set of results will be the “tell-tale sign” for the markets.
- The quarter was lower for Victoria Mutual Investments Limited (JSE: VMIL), the 3 months ended March 31, 2022. VMIL reported a lower net profit of J$ 8.2 million versus J$ 89.5 million in the previous year’s quarter. Leading to this was mainly, a materially lower “gains on investment activities” at VMIL. During the quarter, the company, booked gains on investment activities of J$ 72.6 million, which was J$ 126.7 million, lower than the 3 months ended March 31, 2021. Despite this, VMIL still registered a profit for the quarter, or earnings per share of J$ 1 cent.
Total assets of VMIL, stood at J$ 30.2 billion as of March 31, 2022, and VMIL’s total equity at J$ 3.7 billion.
VMIL has been making several major moves as a part of the VM Group & Family, so its one of the ones to digest this quarter and think about (a) their long game, and (b) how their recent moves/ deals and re-branding will impact their earnings for the remainder of 2022 and 2023.
- The market has been abuzz about EV – Electric Vehicle cars, and the whole EV industry, and this has been generating excitement at home, in Jamaica as well, with announcements by Tropical Battery Company/ CAC 2000 joint venture, Jetcon’s passion for the EV segment, and charging stations dominating media headlines. Is it real and will it “get legs in Jamaica”? Time will tell.
Some other key words dominating media headlines are, “supply chain issues & inflation.” Areas creating some concern for the EV market over the next few years of financial projections by global investment bankers. Again, this is normal, as the EV industry, is a disruptor, and it will take time, and anything the disrupts, will have negative projective reports… The new concerns arising are the projection that the cost to produce “battery cells,” key component for the EV market, is set to skyrocket, given the raw materials shortage playing out.
The main issue at hand is the mining, and the shortage of lithium. Projections have it that, over the next few years, the current issue, may add as much as US$ 1,500 – US$ 3,000 onto each EV car by 2026 or before.