- JBG
- Strong brand recognition and island-wide reach locally.
- Strong growth in revenue from the USA market to sustain growth amidst some degree of market saturation in the Jamaican market.
- Potential of upside to EPS from normalization of gross margins as supply constraints abate.
- Inelastic demand for its products.
- Wisynco Group (WISYNCO)
- Substantial cash reserves and low debt creates strategic flexibility
- 75% export growth in its last quarter is encouraging
- New facility in Hague, Trelawney expected to contribute to greater efficiency in serving the surrounding region.
The manufacturing sector is expected to continue yielding positive returns and commendable margins. However, close attention will have to be placed on the rate of increase in shipping and freight costs, which have contributed significantly to the increase in aggregate prices. The recent increases in inflation have been mainly driven by upticks in the prices of the food and beverages, and this is expected to continue within the near-term.
- Jamaica Producers (JP)
JP, Eppley and French Company, Vinci Construction Grand Projects (VCGP) intend to form a Special Purpose Vehicle to build, design, operate, finance and maintain a 15 million gallons treatment plant in St. Catherine; the project is estimated to cost around US$60 million. Once completed, water produced by the plant will be sold to the NWC under a purchase agreement. We believe that JP has enough liquidity and is well capitalized to take advantage of this opportunity and other projects of this nature.
- Future Energy Source Company (FESCO)
With new service stations and a head office now open paired with the reopening of schools now and back to work mandate from the government for public sector workers, Fesco will be in a unique position to sell more fuel to its dealers and customers as demand is set to increase significantly.
- Honey Bun Jamaica Ltd (HONBUN)
Between August and September 2021, in separate transactions with a combined value of approximately $150M, JMMB Securities and Cals Manufacturing became the respective fifth and sixth largest shareholders of HONBUN following the purchase of large blocks of shares in the company. HONBUN, which has been one of the Jamaica Stock Exchange’s best performing stocks year-to-date, saw Revenue for its FY ended September 30, 2021, increase by 28.10% to $2.15B, surpassing $2B for the first time. This performance was on the back of growth in local and export sales. Net Profit for the period was up 31.15% from $166.75M to $218.69M.
- FosRich (FOSRICH)
We expect the construction sector to remain robust for the near-term on the back of ongoing public and private developments across the island. Lending rates are likely to see some marginal upticks in the near term which would essentially increase the cost of borrowing to fund projects, however, the expected increase within this timeframe is likely to have minimal impacts on the velocity of funding. FosRich is expected to benefit from the booming construction sector.
- GK
GK continues to produce a solid performance on the back of improvements in all business segments coupled with greater operational efficiencies. For its third quarter ended September 30, 2021, GK realized a 26.34% increase in Net Profit to $6.23B versus the $4.93B reported for the same period in 2020 amid an increase in Revenue of 11.20% from $86.13B to $95.78B. GK has performed well despite the current economic environment, and we expect this to continue in the near-term largely on the back of inorganic growth measures currently being pursued.
- FTNA
Fontana Limited recently announced it successfully raised $500M in additional capital via private placement, as the company moves forward with its plans to develop a warehouse and distribution centre in Kingston, a new store in Portmore as well as to explore acquisition opportunities as it grows its brand. Having concluded its most successful FY in June, Revenues for the first quarter of its 2021/22 FY grew by 17.33% to $1.31B versus the $1.11B for the comparable period in 2020. Gross Margin for the period declined from 35.46% to 33.78% as the company continues to absorb inflationary increases in freight, delivery, and other charges caused by supply chain disruptions due to the coronavirus pandemic. Net Profit for the period was up 35.19% to $61.13M.
- LAB
For the nine (9) months ended July 31, 2021, LAB saw its Revenue increase from $686.15M to $942.02M or by 37.29% when compared to the prior period in 2020. This growth was driven by growth in its production and media placement segments by 62.20% and 39.40% respectively. Net Profit for the period increased by 31.87% from $107.81M to $142.18M largely due to a 462.22% increase Finance Income. We anticipate that the company will continue to improve on its performance in the near term as the outlook for the media and production space is positive at this time.
- Express Catering Limited (ECL)
We expect that air travel demand will continue to increase as most Caribbean islands have reopened to international tourism, and several islands have begun adopting two-track entry regulations for vaccinated and unvaccinated travellers. Since the emergence of a vaccine, there has been an increase in visitor arrivals which has triggered a demand for goods and services locally. ECL may get the necessary boost it requires as globally tourism continues to recover which bodes well for airport traffic and business operations at ECL.
