ItsMoneyMark Newsletter #77

Jamaica Broilers Group Limited, produces a Record “Tasty Chicken” 1^st Quarter

Poultry selling like “Hot Bread”

Listen, poultry, chicken, it is everyone’s friend, whether you roast it, curry it, bake it, jerk it, fry it, bbq it, fry it, brown stew it, fricassee it, whatever your style, everyone loves chicken, and this 1^st quarter brought to you by JBG, fondly called “Broilers” in the market is no different. As far as we can recall at ItsMoneyMark, this is a “record” quarter for the Chicken Boss, JBG. Do not take this quarter lightly folks, this is J$ 1 billion plus quarter, not may companies do this on the JSE – Jamaica Stock Exchange. 

JBG firmly establishes itself with this quarter as the “Chicken King.” 

Jamaica Segment, Booms for JBG, is an “Understatement;” They had a Phenomenal Jamaica Operations Result…

By the numbers, JBG produced, top line growth to hit, J$ 22.9 billion for the 1^st quarter ended July 30, 2022, versus J$ 17.6 billion, in the previous year’s comparative quarter. The quarter’s net profit was J$ 1.06 billion, versus J$ 275.4 million, year over year. 

Earnings per share (“EPS”) alone for JBG’s 1^st quarter was J$ 1.07 billion, vast number? No, massive is more like it!

Let us focus on the Jamaica operations and the segment numbers here. Jamaica revenue grew to J$ 13.68 billion from J$ 9.9 billion, an increase of 38.1%. Jamaica segment result hit J$ 1.87 billion, increasing from J$ 665.6 million, one heck of an improvement of 181%. 

In the Management Discussion & Analysis (MD&A), the authors of a company can do anything they choose to, hence it is called a MD&A. Yes, it must line up with the numbers, but they can compare to what period they choose. Interestingly, JBG compared their 1^st quarter to the previous quarter on a running basis versus year over year. This showed the profit % growth on growth to be paltry when it was huge when compared year over year… We have done the year over year analysis above which is standard for public companies to do, or any company when analyzing their financial results. We re-iterate year over year, per above, its huge.

• We do get it though, JBG is like a “national stock” and a critical “food supplier to the nation,” and they must be careful with, how much profit growth % they show? 
• However, they are a public company and therefore, the Jamaica operations, segment result being + 181% and the year over year earnings being + 269%, for the quarter should be well received by shareholders, right?

JBG’s share price, even with these results released late last week, remains below J$ 30. If JBG keeps at this pace, JBG’s P/E ratio could be at a paltry 7x, one of the not just lower, but lowest on the market. 

It could well be said that JBG’s MD&A – management, discussion & analysis is impacting the market capitalization of JBG based on their latest factual growth rate, year over year.

Market Moves:

• iCreate Limited (JSE: ICREATE), big money time! Rights issue coming up, not an APO, additional public offer to be clear for the markets. The company has announced the specific corporate action item to the JSE – Jamaica Stock Exchange, on September 12, 2022, and the official record date for its upcoming “rights issue” will be September 26, 2022.

Practically, one of the more exciting items about the rights issue in ItsMoneyMark purview, will be the deal with “Visual Vibe” as iCreate’s financial history has really been to get to the point of consistent, and stable revenue, EBITDA, and net earnings. Although the market does not know at this time, all the details, on Visual Vibe, the expectation is that this deal, and acquisition should bring into play, these three (3) positive factors to iCreate’s profit & loss moving forward. Just look at the top of the intersection of Trafalgar Road, and Knutsford Boulevard by the stoplight, and near NCB, for a sense of Visual Vibe and how well organized, coordinated and well positioned it is. 

• Indies Pharma Jamaica Limited (JSE: INDIES) is back in a big way, and back in the good books! We keep saying this about some of the JSE – Jamaica Stock Exchange Junior companies, and to keep your watchful eye on them, and do not give up hope if you are a believer in the Company from day 1, or along their journey, just because they might have had a poor quarter or two, or a few in a row… Fundamentally, it doesn’t mean it’s a bad company or investment. Well, here comes INDIES on the way back, and as we have mentioned before, like our newsletter on Paramount Trading – PTL, we just need to see another stellar quarter, which is a strong 4^th quarter from INDIES now. 

By the numbers, INDIES delivered a wow quarter, for its 3^rd Quarter!

• Revenue, + 28% to J$ 264.7 million 
• Net profit, + 71% to J$ 72.7 million
• Earnings per share of J$ 5 cents

INDIES net margin for the 3^rd Quarter, an astronomical 27.5%.

• BYD (SHE: BYD) Company continues to fly, with solid, and a big-time number of selling 487,000 passenger cars, pure battery powered for the 1^st 8 months of 2022, more than 3 times the comparative number in 2021. 

To add to this, BYD the Chinese EV maker, is planning to build a factory in Thailand, its first factory outside of China (that is wholly owned by BYD), to meet the demand for its product. Additionally, demand for BYD has been growing YTD – year to date in growing international markets for BYD, such as, Brazil, Australia, Singapore and more. 

• Caribbean Producers (Jamaica) Limited (JSE: CPJ) has had another change at the helm, with the sudden resignation of Mr. Todd Stromme as the CEO of CPJ. Mr. Todd Stromme, came in approximately 3 months ago, appointed June 1, 2022, with much fanfare and a robust bio, but has resigned effective September 5, 2022. Per CPJ’s market advisory, it places Mr. Mark Hart as the company’s interim CEO. 

Although there have been a few media results, stating “another CEO departs”, it may not be a bad thing, or it may be the reality of CPJ, that is, the stellar results or rebound in the company’s share price, market capitalization has been led during the period of when Mr. Mark Hart & team were the CEO or interim CEO. So, an analytical takeaway must be that CPJ keeps trying “independent CEOs” but perhaps the business is not ready for this based on the culture, how the company operates, where the key business relationships reside, and a lot more of CPJ secret sauce, like many other businesses. Of course, it speaks also to “corporate governance” and “business continuity planning” but we are sure with the board that CPJ has in place, they are working on that, but again it takes time, and timing is everything. 

CPJ’s share price is around J$ 13, and market capitalization presently, approximately J$ 15 billion or US$ 100 million. Its share price is about ½ its 52-week high. Opinions may vary or be slanted on the result of this corporate action, but the history speaks to, CPJ performing better under the actual management of the principal or major shareholder with the most vested, Mr. Mark Hart.

• Productive Business Solutions Limited (JSE: PBS) has successfully closed their cumulative redeemable preference share on September 9, 2022. PBS is not a company, which is highly covered by the brokerage, analyst community in Jamaica, but perhaps after this phenomenally successful issue, albeit a preference share, things may change, as this gives PBS a lot of money!

It also creates an interesting new financial mechanism, precedent in the market to the best of our knowledge. The financial security that PBS issued, is called, a “perpetual cumulative redeemable preference share,” key word being perpetual. 

Keep an eye out for PBS, as they may be a “sleeper” and their prospectus gave a lot of valuable information into their future, and how they view themselves as a business, which was not described or carried in the market previously. We like it!