ItsMoneyMark Newsletter #91

Keep Watching KREMI, it is Just a Matter of Time before that Earnings and Rally Comes

The Cream of the Caribbean Signals it is Coming Back 

Do not underestimate this one just because of the recent losses (in 2021 comparative), or the earnings performance not being in line with historical performance (Q3 2022 report).

As usual, whether you “draw a line” from the MD&A, or from the earnings cycles of Caribbean Cream Limited (JSE: KREMI), the Company goes through these periods, due to one of these areas, or a combination: 

  1. Higher raw materials input costs (does not last forever) 
  2. The time & effort, costs, not just capex, associated with building significant storage and capacity to gain market share
  3. Manufacturing capacity, like point (ii), going for market share 

In the past, and in any one case, or the combined cases, the Board and Management of KREMI has delivered and eventually, that increased market share, defined as operating revenue, flows to KREMI’s strong historical net margin, and streams to the bottom line (net profit). 

Let us briefly look at the recent quarterly report by KREMI

  • KREMI is now trading within 5% of its 52-week low to lay the framework
  • KREMI is trading at or around J$ 3.30 – J$ 3.40 per share, with its market cap, just under J$ 1.3 billion 
  • KREMI’s 3rd quarter reported, operating revenue hit J$ 575.5 million, versus 500.5 million, year over year, for the quarter ended, November 30, 2023
  • KREMI’s 3rd quarter net profit rebounded to a profit of J$ 2.42 million versus a net loss of J$ 25.1 million, year over year 
  • Total equity declined to J$ 809 million, to close the 3rd quarter, as of November 30, 2023 

Market Moves: 

  • The Limners & Bards Limited (JSE: LAB) has announced the resignation of long time Director and Deputy Chairman, Mr. Douglas Lindo from the Board of Directors. Additionally, as Chairman of the Company’s Audit Committee. 

The effective date is January 31, 2023. 

The LAB has been trading around J$ 2.50 – J$ 2.70. The Company’s earnings, profitability has been 

solid, despite the CEO, taking on the acting CFO role (December 2022) and now this announcement as well of a material board change. The LAB at current levels, is priced around 20% of its 52-week low. 

  • Victoria Mutual Investments Limited (JSE: VMIL) continues to be on a surge, in terms of deals, investing in their people, HR moves, strengthening their balance sheet or raising capital recently to do more. During 2022, they really entered the investment banking & capital markets for their clientele in a serious manner.

Here is another announcement along these lines, as VMIL continues to trend in the right direction. On January 20, 2023, the Company, VM Wealth, announced the appointment of its new Head of Sales & Client Relations. Christine Benjamin jumps into the role, joining VM Wealth from Mayberry Investments with over ten (10) years of experience in investment banking and business development. 

VMIL has been trading on or around the J$ 4 price range, with a market cap of approximately J$ 6 billion. 

  • Honey Bun (1982) Limited (JSE: HONBUN) declares a nice dividend for their ordinary shareholders. HONBUN declared a dividend of J$ 12 cents per share, payable on February 17, 2023. 

Arguably, HONBUN, has not only won countless, and time and time again, JSE best practices awards for corporate governance, but the company is one of the most profitable companies on the JSE, from a profitability ratio analysis standpoint over the years. 

  • Interesting trades revealed and announced by Consolidated Bakeries Jamaica Limited (JSE: PURITY), better known as Purity in the financial and brokerage market, by analysts and investors. 

Once the dates announced are accurate, Purity has reported an extremely late, company insider trade to the JSE, Jamaica Stock Exchange, regarding a trade by a related party that sold 10.931 million shares during the period November 24, 2021, to February 7, 2022. This would be based on the start date, which is over one (1) year ago based on the trading date. 

Additionally, there was further company insider trading in Purity, on the other side of the coin, which is always better to see with a Director purchasing 2.811 million Purity shares on January 11, 2023. 

Purity’s management has really struggled since listing, with creating an upward trendline over the medium to long term of earnings. Purity’s market cap remains one of the lowest on the Junior Market and the Market overall, because of its continued earnings performance, with its market cap below J$ 500 million. 

  • #BerryBond, Mayberry (JSE: MIL) Bond IPO, Fully Closed now, and Highly Successful! 

Effective, and announced on January 20, 2023, all four (4) tranches of the Mayberry Bond are now closed, with the latest Tranche, being Tranche I, done deal. 

That means, J$ 5 billion closed plus the upsize, per the terms & conditions of the Prospectus. As we had mentioned previously at ItsMoneyMark, this gives Mayberry a ton of money to work with to continue to deploy it strategy, especially if the U.S. economic recession comes, or any other global headwinds regarding inflation and higher interest rates. 

Mayberry has been ahead of the game, as we are now seeing a few other financial institutions in the market now raising debt funds, or they are coming to market soon, with debt private placements. 

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