ItsMoneyMark Newsletter #69



Wisynco Group Limited (JSE: WISYNCO) declared a good dividend, declaring J$ 20 cents per share, at their recently held board meeting on June 27, 2022. The payment date is August 4, 2022. 

Wisynco’s share price is trading around its 52-week high/ low mid-point, at J$ 19 – J$ 20 per share. The company’s 52- week high/ low is J$ 26.90 per share and J$ 15.37 per share, respectively. The share price has been consolidating a bit, which is not a bad thing as we await the next earnings report from Wisynco

Last fiscal year, Wisycno, declared approximately J$ 30 cents in dividends, and based on the 1st interim dividend (J$ 20 cents) repeating itself year over year, Wisynco seems to be on track to replicate itself in 2022, to declare similarly, J$ 30 cents, or perhaps J$ 40 cents. It works out to be a dividend yield of around 1.5% – 2.0% at this week’s price. Not fantastic, but not bad based on where money market rates are presently. The company has a ton of cash on its balance sheet, and should consider (a) higher dividend this year or (b) share buyback programme, if it cannot identify some larger M&A plays locally or regionally to move the growth rate higher… 

The food market has gotten way tougher, competitive, as you can see the larger food manufacturers, distributors are even buying smaller players, way smaller players, whether associate equity stakes or majority stakes or 100% deals, which in hindsight doesn’t make much sense, as it really hasn’t moved their earnings, but it shows perhaps some shareholder pressure and market pressure to “do something in these markets”. 

This is a JSE – Jamaica Stock Exchange market now where you really must sit down, and carefully think about, who really is the “best of breed” in this food space long-term, and who is potentially going to give you the upside over the long-term… a lot more listed players to digest versus ten (10) years ago or longer. Some of the names:

Wisynco Group, Jamaica Producers Group (not a pure “foodie” play), Seprod Limited (we await to see Trinidad’s earnings combo), Derrimon Trading, Lasco Manufacturing, Lasco Distributors, GraceKennedy, Jamaican Teas (smaller play), etc. 

Like everything, all have their respective pros and cons, its about finding, which is going to really outperform and provide that above average growth rate consistently long-term. 

  • Wisynco Group and GraceKennedy seem to be the only ones really showing and dedicated to grow their earnings per share (“EPS”) consistently, with Wisynco able to get a higher growth rate…
  • Lasco Manufacturing, may not be exciting but it seems mis-priced and eventually, without clear business continuity planning, does someone on this list buy them, and if you are in there before, you get the real gains then… Let us see. 

Market Moves:

  • Ciboney Group Limited (JSE: CBNY) just put out a news release and it created a lot of excitement for us at ItsMoneyMark at first, and then we realized, that it was not about a takeover or a reverse takeover, LOL, but it was solely an update on their 2022 Annual General Meeting. A needed and necessary disclosure, however, Mr. Market awaits further and just as important news if a deal or any takeover news is happening with CBNY… 

So, the release was an update on the 2022 AGM, and that, it will be held on or before October 16, 2022, to allow time to complete the CBNY’s audited financial statements for the year-end May 31, 2022. 

The Company’s las annual general meeting was held on March 16, 2021, hence the advisory and the importance.

  • Caribbean Assurance Brokers Limited (JSE: CAB), has made a smart, and timely release regarding a very important unit/ division to our understanding, or based on their MD&A – management, discussion & analysis, in their quarterly financial reports and their annual reports. That is their international insurance division. CAB had advised of the resignation of their manager for the unit during June 2022, and now they have advised accordingly of the following:

“As of June 15, 2022, Ms. Krystal Gayle was appointed as their new Divisional Manager for International Insurance. Caribbean Assurance Brokers Limited wishes her all the best in her new capacity with our organization.” 

Given the assumed importance of this unit to their earnings and significance of the clientele, this was important to manage timely. It continues to demonstrate the learned, tempered, and experienced leadership of CEO, Mrs. Tania Waldron-Gooden as she continues to put her stamp on Caribbean Assurance Brokers. 

  • iCreate Limited (JSE: iCreate) is continuing to make their money moves in 20-22 and reshape not only their balance sheet but also their future profit & loss for ordinary shareholders for this year and 2023… 

They had their successful shareholder meetings, AGM, EGM, etc, got their necessary approvals, and there have been a few positive signs, tangible ones such as corporate action items, defined as connected parties, managers, and/or directors buying up shares within recent months. Case in point, a connected party purchased 75,000 shares on June 27, 2022. 

Latest step in iCreate continuing its turnaround is, the acquisition of 100% of, agreement dated June 28, 2022. The release states “Visual Vibe” is a leading video board advertising company for the past fifteen (15) years. The deal release states, the deposit has been done, and further funding will be handled via iCreate’s pending rights issue. The release does not go into Visual Vibe’s current revenue, EBITDA, operating profit, etc. and that is standard, as the JSE rules to the best of our knowledge do not require this level of information disclosure, like Seprod acquiring its large Trinidad deal in A.S. Bryden & Sons, and many other recent M&A deals that do not disclose either. Therefore, we await earnings reports post transaction closure to see further details. 

  • Caribbean Cream Limited (JSE: KREMI) every once in a blue moon, throws in a “clinker” defined as a bad earnings year. Really no issue, as slowly but surely, they are becoming like one of the bellwethers on the exchange, where they always rebound. The audited financial results released by KREMI were not good, but on the bright side, they clawed more market share and as projected grew operating revenue, above J$ 2 billion. If the share price overreacts, tapers off quite a bit from these negative results, it may be an opportunity… 

By the numbers, KREMI produced audited results for the year ended, February 28, 2022:

Gross Operating Revenue: J$ 2.085 billion, + 11.5%

Net loss: J$ 9.1 million, versus a previous year net profit of J$ 100.6 million

KREMI speaks to and alludes to at a headline level, inflation, supply chain, logistics issues during their fiscal year as the main reasons for reporting a financial loss. Admin expenses hit hard for the year-end for KREMI, with (a) utilities, (b) staff expenses (admin) and (c) repairs and maintenance all jumping very significantly year over year. Utilities alone, increased by approximately J$ 33 million, and staff costs (admin) by approximately J$ 18 million.

Expect KREMI to rebound, and potential price adjustments accordingly to buffer not just their raw materials issues but also their admin expenses line items in fiscal 2023.

  • Nike Inc (US: NIKE) beat Wall Street earnings and revenue expectations, however the stock is down from the US$ 111/ 113 price level to the low US$ 100s due to the results being lower year over year, and weaker earnings guidance from the CEO, moving forward. 

NIKE reported 4th quarter results for the period, May 31, 2022, and reported earnings of US$ 90 cents per share versus expected earnings of US$ 81 cents. Likewise, revenue was US$ 12.23 billion versus expected revenue of US$ 12.06 billion. Actual, net income for the quarter was US$ 1.44 billion, still good, but lower year over year, causing NIKE to head lower…

Interesting takeaways were, North America that accounts for the largest revenue share for NIKE, was approximately 42% of revenues, overall, despite a tough U.S. consumer market and China lockdowns, sneaker demand and sportswear demand held up per the results. One of the challenges, NIKE faced in the quarter, given shipping, supply, logistics issues, like most companies, was the skyrocketing of inventory, to US$ 8.4 billion, increasing by double-digit. 

NIKE as a result, is making new 52-week lows this week, on or around US$ 101.54 and change, and at a P/E of 27x… Market cap of US$ 162.5 billion. Historically and always has been a company that when the good times roll, rebounds nicely, may not give you as much of the bounce, as some other battered U.S. stocks with the DOW JONES at 30k – 31k points, but NIKE does give you a level of safety without the level of downside of some of those riskier plays, depending on your goals, outlook for H2 2022 and 2023.

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