ItsMoneyMark Newsletter #79

The Boeing Company, cannot get a Win

The Boeing Company (US: BA) share price around US$ 138/ 139 price level, with its 52-week low at US$ 113.02. 

Share price headed lower this past week at BA, as the company agreed to a SEC fine of US$ 200 MM regarding or linked to 737 MAX disclosures. That is BA made misleading public statements in 2018 & 2019. 

Financially, it does get this behind BA, but people, analysts will never forget those crashes and that period. 

BA like some of the banks in the U.S. in the 2008 financial crisis, is one of the companies defined in markets as “too big to fail” however they need to try and get everything behind them more quickly as all the negatives, and losses have been like a “dragnet” over them and BA’s share price over the past few years. 

Apple continues Sports push, wins Super Bowl Halftime Sponsorship

NFL, one of the biggest shows in the World? An understatement. Look at this “sponsorship” deal alone they are getting just for the Halftime show, wow. 

US$ 250 million over 5 years from Apple, Inc. (US: AAPL) as Big Tech continues to make a push into Sports. Deal is with Apple Music for these sponsorship rights. To add to this! RiRi’s announcement over the weekend, seems to be working out for all parties already…

Market Moves: 

• FirstRock Real Estate Investments Limited (JSE: FIRSTROCK) continues to be on the move, gobbling up more shares via their share buyback program. This is their 2nd announcement to the JSE – Jamaica Stock Exchange in recent times, practically over the past 2 weeks or so. Things are happening. 

In this occurrence, FIRSTROCK has purchased shares as follows under the share buyback program: 

A total of 250,000 FIRSTROCKUSD shares were purchased between September 15, 2022, to September 19, 2022, and 40,000 FIRSTROCKJMD shares were purchased on September 15, 2022, under the Company’s share buy-back program. 

FIRSTROCK further advises as follows:

• The price per share for FIRSTROCKUSD was between US$0.04 and US$0.05.
• The price per share for FIRSTROCKJMD was between J$11.67 and J$12.00.

As we always say at ItsMoneyMark, “skin in the game” is important and based on FIRSTROCK’s share buyback program being material/ significant based on the % of issued share capital they are willing to buy back, the expectation is that “the supply side” should eventually become quite diminished. 

• Express Catering Limited (JSE: ECL), continues their rebound, with 1st Quarter earnings + 15%. Well needed for Express Catering shareholders and the rebounding story here. 

We would opine though, that we, and we think the Market also, expected a bigger number for the quarter, given the tourism “booming” numbers. Now, + 15% is nothing to scoff at, but we felt it would be bigger. 

By the numbers, for Q1 ended August 31, 2022, revenue hit US$ 4.91 million versus US$ 3.63 million year over year. Net profit registered was US$ 652.8k versus US$ 565k year over year. 

Total equity for ECL closed the quarter just under US$ 4 million, at US$ 3.99 million. 

• The EV, electric vehicle market is expected to hit an all-time high this year regarding sales again. 

In 2021, EVs hit 6.6 million units, and in the 1st Quarter of 2022 alone, EVs sold 2 million units. On track for another record-breaking year. Expectation is that 2022, EVs will account for 13% of all light body car sales globally. Phenomenal statistic, and significant especially given that EVs are surpassing that critical threshold of 10% +. 

As reported by the IEA, Paris based organization, International Energy Agency, objective is for the net zero scenario by 2050. 

• Supreme Ventures Limited (JSE: SVL), making some moves at Supreme Ventures Services Limited. 

The subsidiary of SVL, appoints Mrs. Clair-Kennedy to the post of CEO of this Company. Great move, bold move based on the detailed experience listed in the release. The appointment is effective November 1, 2022. 

To be clear, we get what the subsidiary does, but it is the one part of SVL that we wonder if it is P&L positive or makes sense to SVL Group? Or is it that it is a cost centre and is designed to provide shared services more so to SVL Group and its subsidiaries itself but is also “branded” to provide external services? 

Overall, we think this is the one area or sole area SVL needs to be clearer on for its shareholders.

• Dow Jones Industrial Average (US: DJIA), pulled back late last week, below the all-important and psychological level of 30,000 points. Breaking below 29,500 points today. 

Moreso based on the U.S. Federal Reserve “tone” and “outlook” comments on the stance on inflation versus the actual 0.75% or 75 basis points benchmark interest rate increase. 

One of the end results, not helping the DJIA and equity markets overall, are the U.S. 2-year Treasury Notes yield has surged to 4.3%, a 15-year high. 

Just a year ago, these yields were not just below 1% but way below 1%. So, whether it is high net worth individuals, pensions, institutions etc, there comes a point whereby, cash invested at these yields, rates are already or becoming attractive risk-wise comparative to equity markets.