ItsMoneyMark Newsletter #81

DOLLA Financial, Upsizes Bond, to JMD$ 1.5 billion 

Loan Book could easily hit JMD$ 3.0 billion Soon

DOLLA, DOLLA, DOLLA continues to blaze its trail, with the recent hiring effective October 3, 2022, of Ms. Deveta McLaren, effective October 3, 2022, earlier this week, as Chief Strategy Officer (“CSO”). Anyone who tells you, this is not a blow to Access Financial Services (JSE: AFS), would be like someone telling you in the supermarket, the Dow Jones Industrial Average (US: DJIA) is always gonna go up, or Markets will always go up… Like yea, never listen to that type of person, as the financial adage goes. 

We wrote in a newsletter some time ago, that, based on the valuations, it could be just a matter of time before we saw the shoot-out between DOLLA and AFS, like the country & western, O.K. Corral vibes. Well, we saw it, then it never happened, no one got conquered yet, but clearly, both companies, came, saw each other, and are going to fight toe to toe… 

The financial markets added some fuel to the frying pan this past week, with the following announcement: 

DOLLA has successfully raised JMD$ 1 billion through the issue of a Bond. DOLLA has exercised the right to upsize to JMD$ 1.5 billion. The closing date of the Bond Raise has been extended to October 18, 2022, to facilitate this. 

As of June 30, 2022, the latest available quarter for DOLLA, DOLLA’s loan receivables, net of ECL, was JMD$ 1.047 billion. Based on this corporate action, organic growth, projected profitability for DOLLA in Q3 2022, and projected growth for DOLLA heading into Q1 2023 (their book grows faster than AFS), simply put, DOLLA is catching up fast to AFS based on loan book to loan book or earnings comparative criteria, versus other criteria that can be used speculatively. 

Market Moves

  • Future Energy Source Company Limited (JSE: FESCO) has been seeing some major trades by company insiders in recent times, over the past week or so. This has become the absolute norm for FESCO on the JSE – Jamaica Stock Exchange. So, we would caution, do not over analyze, or read too much into FESCOinsider trades,” as practically they have the one of the highest if not the most traded shares on the JSE now in our opinion by connected parties, directors, managers, etc, in terms of measuring by “activity.” 

This means # of trades, and you will tend to see a lot of buying, and a lot of selling or vice versa. Our reference here, is the following reported trades: 

– Director sold 1,104,629 shares of FESCO on September 29, 2022

– Director sold a total of 10.083 million shares of FESCO on September 28 and September 29,  2022

– Director sold 350,000 shares of FESCO on September 13, 2022 

FESCO has been trading around J$ 5.45, approximately in its 52-week high/ low mid-point. 

  • Mailpac Group Limited (JSE: MAILPAC) has an important annual general meeting (“AGM”) coming up. 

It is scheduled for Tuesday, November 1, 2022, at 10.00 AM and will be fully virtual. The agenda, all resolutions seem normal, but it should be exciting in the sense, that Directors are expected to be pushed by minority shareholders and analysts regarding (i) share price performance, the market cap of the company and (ii) growth rate, growth expectations of the company. 

MAILPAC’s share price is trading around J$ 2.26 per share and YTD – Year to Date share price performance is negative, down 38%, placing it as one of the lower performers of the JSE YTD. 

It is expected investors will want to hear how MAILPAC will get back to earnings growth. 

  • Spur Tree Spices Jamaica Limited (JSE: SPURTREE), enters agreement to buy 51% of Canco Limited. Big Money Time by Spur Tree

Canco Limited is the well-known brand “Linstead Market.” A few notable points here, Spur Tree has been aggressively loading up on Ackee deals, M&A, based on Exotic Products, production and now Linstead Market. Spur Tree, as they would say in financial markets is “bullish, long” on Ackee and Ackee production, gaining valuable foreign exchange (US$) as it exports canned Ackee. 

Back to Linstead Market, if you google them, and recall from many years ago, their brand was ahead of Spur Tree at one point, any many other good brands. We recall there were a few announcements or Market murmurs that they were to go Public as well. At the end of the day and based on this, it did not pan out, but it is intriguing the 51/ 49 split. Let us see what that means in the future and what happens there. 

Will Linstead Market go public one day and provide upside to SPUR TREE not just with potential profits but equity as well or is there a buyout clause around the 49%. Mr. Market awaits more info on this and the strategic plans. Time will tell. 

SPUR TREE’s market cap, a healthy J$ 6 billion. 

  • Massy Holdings Ltd (JSE: MASSY), has been more active in recent times, not just with trading activity by “company insiders” but also, with other corporate actions. In this case, MASSY announces some Director changes. 

– Mr. David O’Brien retired as an Executive Director of MASSY’s Board of Directors effective, September 30, 2022.

– Mr. Vaughn Martin was appointed as an Executive Director of MASSY’s Board of Directors effective, October 1, 2022. 

  • Sterling Investments Limited (JSE: SIL) calls an EGM – Extraordinary General Meeting to make a meaningful change, seemingly favourable to shareholders. 

SIL has called the EGM for November 12, 2022, at 8.00 AM in St. Lucia, to primarily discuss, the resolution/s for the transfer of its asset portfolio to a wholly owned Cayman based subsidiary, Sterling Investments (Cayman) Ltd. One of the resolutions, goes on to specifically state, interests held in securities held in SIL’s portfolio of investments, held with brokers carrying on business in the U.S.A. and Europe. 

To note, SIL, does mention that the basis is due to the changing regional and international regulations, that the Company, SIL, is seeking to makes changes to its corporate structure while also optimizing shareholder value. 

At ItsMoneyMark, we are not “tax experts” but the move by SIL, like many other financial group, or financial company announcements in 2022, comes across as a tax efficiency move, although it is efficiently and conservatively branded as “regulatory”. After all, tax efficiency, does improve potential returns. 

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