ItsMoneyMark Newsletter #100

General Accident Insurance: Performs Well Above Average, Expectations in 2022

GENAC put in a gross premium performance, top line of J$ 15.11 billion for their year ended 2022. 

Net profit of J$ 597 million with Earnings per Share of J$ 53 cents. 

Comparatively to 2021, Earnings per Share, was + 112%. Huge!

As we like to say at ItsMoneyMark, pursue and stick with Companies doing things. Well, let us not forget that there is GENAC’s T&T and Barbados time, and growth to come too. At the end of 2022, GENAC owned, 75% of T&T and 80% of Barbados, known as GENACTT and GENACBB, respectively. 

Moving forward as GENAC’s foundation in these additional markets is laid out, do not underestimate the growth potential even more for GENAC and potential upside for profitability. 

Market Moves:

• ISP Finance Services (JSE: ISP) has advised the market that it will be tardy with their audited financial statements. Several entities listed on the JSE, Jamaica Stock Exchange have released similar corporate actions for their year ended 2022 audited numbers. ISP has advised that their audited numbers should be ready on or before April 30, 2023. 

At ItsMoneyMark we have a keen eye on this one, and we suggest the Market does too. Reason being, you will note, suddenly over the past few months, the micro-finance market, the micro-credit market has gone alarmingly quiet. ISP represents though an interesting proposition for someone, who is seeking to increase their market share, loan book size quickly via M&A. 

Keep your eye on them, as they versus a few other public micro-credit entities, seem to have an older management team, and board of directors, whereby some in the industry or in private equity tend to call this, “aging out” or an opportunity for someone. 

• GraceKennedy (JSE: GK) has announced the completion of another deal, that is, the acquisition of Scotia Insurance Caribbean Limited. GK has executed several transactions over the past 12-24 months. They have stated in the release that the company will be rebranded as “GK Life.” 

Over the past few years, and GK continues to signal their business strategy here, which we welcome, as they stated:

“M&A (mergers and acquisitions) continues to be a key strategic driver of growth for our Group as we move towards achieving our 2030 vision. Our M&A Unit is in discussions regarding several M&A transactions locally and internationally, and we are looking forward to what the future has in store.”

However, it is not the number of deals, its about the quality and the material size of the deals to GK’s bottom line or Earnings per Share. GK’s Earnings per Share recently was not impressive, despite it adding revenue, while its investor relations in our opinion tended to focus on the revenue add-on and revenue growth. 

We encourage GK to find the material deal/s that will materially enhance Earnings per Share for shareholders, and sometimes its just a carefully selected one or two, versus too many deals/ acquisitions. 

• Supreme Ventures Limited (JSE: SVL) keeps getting it right, with recent earnings up again double digit, but also, “company insiders” continue to gobble up shares. As we say at ItsMoneyMark, confidence, confidence & confidence, and that is, “skin in the game.” Always great to see. It essentially means, you have connected parties, related parties, directors, management investing side by side to you if you are a minority shareholder. 

Alignment at its empirical optimum. 

A few corporate actions on this matter have been released to the JSE, Jamaica Stock Exchange on this, and to note, on April 4, 2023:

“Supreme Ventures Limited (SVL) has advised that between March 29 to April 3, 2023, a Director purchased 958,272 SVL shares, a Senior Manager purchased 400 SVL shares, a connected party purchased 1,932,463 SVL shares, and a related entity purchased a total of 4,516,621 SVL shares and sold 958,272 SVL shares.”

• We have said for the past two (2) or so audited fiscal years that this one was going to get it right, but we have been off here, we admit that. 2022, was another “down or lower year” for Mailpac Group (JSE: MAILPAC), highlighting either the competitiveness in the sector and/or changes in the sector. 

In 2022, even the Revenue was lower for MAILPAC which is a surprise. 

By the numbers, MAILPAC’s operating revenue for December 31, 2022, was J$ 1.68 billion versus J$ 1.81 billion for 2021. The company’s net profit result was J$ 308 million for 2022, versus J$ 397 million in 2021. Earnings per share (“EPS”), 25% lower, registering J$ 12 cents in 2022 versus J$ 16 cents in 2021. 

MAILPAC as we have highlighted prior, needs to pick up the slack here, and if possible, seek to consolidate, or be more entrepreneurial, innovative like its earlier days. It has launched some items in recent times, and these can be allowed more time to see their performance, but MAILPAC is a high-powered brand, and as such, the market, and shareholders, expect to see that “power punch” and a clearly defined double digit earnings growth and respective strategy moving forward. 

• Purity, Consolidated Bakeries (Jamaica) Ltd (JSE: PURITY) made some progress in 2022, in terms of top line, but profits remained anaemic. Minority shareholders surprisingly remain quiet on financial performance at PURITY’s AGMs – annual general meetings.

On a positive note, PURITY registered top line growth to close 2022, at J$ 1.36 billion, versus J$ 1.079 billion in 2021. Net profit was better but just not in line with where “net margins” are in the sector or compared to peers where information is public. PURITY’s net profit for 2022 was J$ 13.8 million versus a net loss in 2021. 

Although market share growth was evident via the operating revenue line item for 2022, PURITY has a lot of work still to do after many years to get the profitability finally right.