ItsMoneyMark Newsletter #92

Scotia Group Jamaica, continues to trade below 10x P/E on the back of 35% Earnings Growth

SGJ’s Balance Sheet: Loans, Net of Allowance for Credit Losses hit J$ 237.7 billion 

Scotia Group Jamaica Limited (JSE: SGJ) stunned the market, and got back to its winning ways, with above average earnings growth for its last audited financial reporting period, ended October 31, 2022. 

SGJ reported, earnings growth of 35%, year over year, with earnings per share surging to J$ 3.75 versus J$ 2.78. SGJ back to their historical numbers and winning ways! This is the year now, 2022/ 2023, to see if SGJ continues and repeats this. That is what the market, and Mr. Market wants to see. 

Key variable in the audited financial report, that really sends the positive signal, and allows analysts to potentially feel bullish, that the SGJ powerhouse, and stock market bellwether is back is:

• In SGJ’s balance sheet, loans, net of allowance for credit losses, for October 31, 2022 versus October 31, 2021 saw an improvement of 14%
  • J$ 237.7 billion versus J$ 208.5 billion 

Market Moves:

• More collaboration on the JSE, Jamaica Stock Exchange. FosRich Company Limited (JSE: FOSRICH) and Dolla Financial Services Limited (JSE: DOLLA) announce their well-received partnership.
  • “FosRich Company Limited, distributor of Electrical, Lighting, LED, and Solar Products, and Dolla Financial Services Limited, have partnered to bring affordable financing solutions for Solar Power Systems and Solar Water Heaters to the Jamaican market. This partnership will allow customers to access up to 90% financing for their solar products.”
  • At the recently held JSE Conference, Mr. Cecil Foster, CEO of FosRich, stated that his Company has demand for as much as J$ 2 billion for this partnership. 
  • FosRich’s market cap is around J$ 16.4 billion and Dolla’s market cap is around J$ 7.2 billion.

• 138 Student Living Limited (JSE: 138SL) has announced an extremely interesting, and material statement to the JSE, Jamaica Stock Exchange, corporate action. We are looking forward to receiving further details and information, post their board meeting, detailed below. Keep your eye on this one, especially if you are an existing stakeholder.
  • 138SL hereby advises that a Board Meeting will be held on February 7, 2023, to consider recommending certain resolutions to facilitate additional equity investment.

• Derrimon Trading Company Limited (JSE: DTL), saw a small but surprising trading in shares on November 22, 2022. It is somewhat of a late report, and not significant from a JMD$ dollar value standpoint, as doing the maths, under J$ 250,000 or even less here.
  • DTL has advised that a Senior Manager sold 50,815 DTL shares on November 22, 2022.

However, principally, from a corporate action standpoint, DTL continues to trade below its APO price. 

Of course, there is nothing wrong with a Director buying/ selling shares with which they are connected to, for liquidity purposes or whatever their personal reason may be once they are outside of what is deemed as the “black-out period” per the JSE, Jamaica Stock Exchange rules. 

DTL, continues to trade on or around J$ 2/ share, with its market cap just below J$ 10 billion. 

• Wisynco Group Limited (JSE: WISYNCO) has two (2) key dates coming up for your calendar.
  • The Board of Directors will consider a dividend on February 1, 2023
  • WISYNCO has its annual general meeting (“AGM”) that will be held in person at the AC Hotel on Thursday, February 16, 2023, at 10am. 
  • WISYNCO, despite extremely positive earnings growth, year over year, has seen its share price slip below J$ 17/ share.
    • Per ItsMoneyMark, Earnings Report, and Newsletters, WISYNCO is one to watch as one of the “foodie kings or best in class”, and we will leave this here, WISYNCO slipping below J$ 17/ share is very close to its 52-week low of J$ 16/ share. 

• Palace Amusement Company (1921) Limited (JSE: PAL) continues on its journey successfully with its plans around, (i) increase in share capital and (ii) stock split. PAL’s annual general meeting was a success and PAL’s members voted on and passed the resolutions required successfully. 

• Increase In Capital

BE IT RESOLVED THAT the authorized share capital of the Company be increased from 1,500,000 shares of no par value to an Unlimited number of ordinary shares such shares to rank pari passu with the existing shares in issue.

• Stock Split

BE IT RESOLVED THAT each of the issued ordinary shares in the capital of the Company be sub-divided into 600 ordinary shares with effect from the close of business on February 28, 2023, resulting in the total issued share capital of the Company being increased from 1,437,028 ordinary shares of no par value to 862,216,800 ordinary shares of no par value.

Bottom line is, look for PAL after this to make some big move on the “equity standpoint, and/ or conversion of debt or equity or something, as the current net losses or cash burn and the current debt burden is not sustainable over the short to medium term for shareholders.”