ItsMoneyMark Newsletter #72

Access Financial Services Limited, and Dolla Financial Services Limited

Rumble in the Bronx 

Leading microfinance firm, Access Financial Services (JSE: AFS) is in the market currently for up to J$ 2 billion corporate note/ bond, priced at 11% interest rate. It is unsecured with a 5-year tenor, and the arranger is PROVEN Wealth Limited. As of late, AFS has even been doing timely radio ads as well. The fundraise makes sense for both parties, as AFS’s loan book has been around J$ 4.0 – J$ 4.5 billion for quite a while now. Most micro-financiers fund their growth via debt, loan payables, corporate bonds, and so forth, and notably PROVEN Investment Limited is a top shareholder in AFS, at just under 25%. 

So, something has awoken the largest micro-financier suddenly? There is nothing like “competition” as the saying goes.  At ItsMoneyMark, we cannot guarantee AFS is the largest by loan book size, but our “gut” tells us it may well either be, AFS at J$ 4.5 billion in loans and advances as at their last audited statement or report, March 31, 2022, or JN small business loans. Either one could well, be in the pole position under this criterion, loan book size.

Just announced, and recently listed on the JSE – Jamaica Stock Exchange, Dolla Financial Services (JSE: DOLLA) is a much more aggressive micro-financier than AFS, with their branding, marketing, sales acquisition, etc. Additionally, and as announced by DOLLA, their Caribbean, Regional expansion plans while AFS has bet the house on the U.S. for now, which could change. DOLLA has promptly announced to the market their intention, similarly of tapping the market for up to J$ 1 billion, already approved by the DOLLA board, on July 15, 2022, via a bond. 

Once, we anticipate both bonds are 100% subscribed, and not factoring in organic growth, profits, AFS loan book should surpass J$ 6 billion and change, and DOLLA J$ 2 billion and change. 

Its not hard to predict at this stage, that it will be “fun times ahead at the O.K. Corral for AFS and DOLLA for the rest of 2022 and beyond”. 

As of this week, let us look at their respective market caps: 

  • Access Financial: J$ 6.31 BILLION
  • Dolla Financial: J$ 8.16 BILLION

Market Moves:

  • Jamaica Broilers Group Limited (JSE: JBG) has been consistently showing “insider” trades, which is a good sign of even better things to come potentially for JBG shareholders later this year, 2022 and for 2023. Could earnings get even better than the recent stronger than expected surge by 35% in year over year earnings, which took the market, the JSE – Jamaica Stock Exchange by storm. Could there be more M&A, or deals on the way in the U.S.? It is always a testament when you see company insiders buying up those share units. Let us go over and re-cap a few of these details, and trades:
  • July 19, 2022: Trading activity by Senior Manager, purchased 326,236 shares, a big one!
  • July 18, 2022: Trading activity by Director, purchased 88,388 shares
  • July 13, 2022: Trading activity by Director, purchased 76,038 shares
  • July 12, 2022: Trading activity by Director, purchased 563,939 shares, a big one!

One thing we re-iterate at ItsMoneyMark, that the last financial results for JBG’s year-end demonstrated, the core operations of Jamaica were a “dandy” as compared to the U.S. operations. As we always say, it comes back to core, and Jamaica delivered powerful, growth numbers for the last fiscal year for JBG

  • Carreras Limited (JSE: CAR) has been making changes over the past 6-12 months. Makes one wonder, what is happening or what is up with the Company. It could be something or nothing at all, but sometimes when you see changes to the executive team and/or board of directors, it raises an eyebrow if a larger corporate move may be at hand or in the making that could create value for minority shareholders… Again, this may just be dreaming. 

CAR advised of the Resignation of Director Juan Carlos Restrepo Piedrahita with effect from August 9, 2022. The company in turn announced the appointment of Ms. Verona Williamson to the Board of Directors as of August 9, 2022. Important to note, Ms. Williamson is the Company Secretary of the Board and as well the Finance Director of Carreras Limited.

Carreras Limited is currently trading around, J$ 9.50 and change, and the stock’s 52-week range, is J$ 6.80 – J$ 10.50. We had mentioned previously in our newsletter and ItsMoneyMark Earnings Report, that this bellwether always bounces back, and when Carreras was at J$ 8 and change, besides being one of the best dividend yielding stocks on the market, and it is still, Carreras was a “cookie monster special”. 

  • Portland JSX Limited (JSE: PJX), profit is coming increasingly to life, with their first quarter unaudited number more than doubling year over year. This is for the quarter ended May 31, 2022. 

The company made, profit for the quarter of US$ 793k versus US$ 354k year over year. That is earnings per share (“EPS”) of US$ 26 cents versus US$ 11 cents. PJX’s numbers overall and top line, as it usually is, given how the business model and company was designed, was driven primarily by, (a) net fair value gains, and good to see (b) dividend income was received in the quarter as well. Net fair value gains contributed 97% of total income and dividend income approximately 5%. Both totaled over 100%, as net foreign exchange losses were registered in the quarter. 

PJX’s total assets closed the period at US$ 42.2 million, and while we would like to see a MD&A, and more detailed discussion and analysis about the portfolio, the investments, attached to the financials, there are details, disclosure in the footnotes for which you can search. Their annual report typically supplies a robust write-up, but it would be good to see some additional information with the quarterly submissions and the audited submission as well. 

  • First Rock Real Estate Investments Limited (JSE: FIRSTROCK) has been reinforcing their name change in the market strongly from First Rock Capital Holdings Limited and they have now presented an update on their share buyback programme. This is good of FIRSTROCK to do, for their shareholders, and for governance purposes, accordingly. 

FIRSTROCK’s advisory is that they will continue with the previously advised share buyback programme, which was dated March 1, 2022, but that it will now commence on September 1, 2022. It did not start yet, per their updated advisory. Their plan remains the same, to make the purchases on the open market, with the clause, that the purchases will not surpass 10% of the Company’s capital. Where will the funding come from for the programme? FIRSTROCK advises that it will come from cash on the Company’s balance sheet. 

Quick perspective, FIRSTROCK share price on March 1, 2022, was on or around J$ 11.78/ share. FIRSTROCK share price on June 30, 2022, was on or around J$ 12.77/ share. 

FIRSTROCK share price is + 8.4% over that period or an under 10% movement.

  • Blue Power Group Limited (JSE: BPOW), we keep saying at ItsMoneyMark, we love their re-imaged or tweaked logo! It has a powerful vibe, emphasizing the blue even more, and gives off a “Berkshire Hathaway feeling” to the market… 

BPOW’s year-end felt the pain of the continued pressure being brought by the Dominica soap producer, provider, competition, lawsuits whereby they are utilizing CARICOM, the maker of the hotly marketed of recent times in Jamaica, “real soaps.” BPOW also mentioned the heat they are feeling from the increase of raw materials on their financials. 

As a result, BPOW reported much lower numbers, disappointing numbers for the year ended April 30, 2022, to the point whereby, before (a) other income, and (b) gain on sale of investment property, BPOW reported a loss. The loss for year ended 2022 before these items, finance income, and taxes, was a loss of J$ 35.1 million versus a profit line before these items of J$ 57.8 million in 2021. The items leading the charge in 2022 year-end, outside of the core business are outlined were: 

  • Other Income: 2022: J$ 62.3 million versus 2021: J$ 35.2 million
  • Gain on Sale of Investment Property: 2022: J$ 145.6 million versus 2021: J$ Zero

As a result, these items, carried the 2022 year-end, to a positive number, ending net profit, well above the 2021 year-end number. Profit for the year was J$ 193.5 million versus J$ 106.5 million,         + 82% year over year, or earnings per share (“EPS”) of J$ 34 cents for 2022. Revenue was slightly lower for 2022, registering J$ 526.4 million versus J$ 533.9 million in the previous year.

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