THE MARKET has been trading relatively high volumes with marginal effect on the main index, over the last few weeks. The shares of Cable & Wireless and Jamaica Broilers traded approximately 4 million units each and Life of Jamaica traded in excess of 1 million units. For the week to date, the index gained a marginal 48.76 points to close at 38,766.60 points. Though the movements in the main index over the last month have been marginal, shrewd investors have taken positions in the 'value stocks'.
The shares prices of Grace Kennedy, Radio Jamaica and Jamaica Producers Group have closed at new 52-week highs of $40.00, $10.45 and $3.56 respectively. These gains follow the release of strong quarterly results.
CORPORATE FOCUS
Jamaica Producers Group.
Price: $10.0052
Week H/L: 10.45/ 4.36
2001 Dividend: $0.44
Hist. EPS: $0.35
Proj. EPS: $0.36
Price to Bk. Value: 0.59X
The Group has strategically retreated form the high-cost cultivation of Bananas by writing off $421.61M of its 2001 net profits. The success of this policy is reflected in the 2nd qtr performance to 15 June 2002, where revenues grew by 14.14 % to $6.75B, while net profits grew by 351% to $261.3m (which included a $142.7m gains on sale of investments) over the corresponding period in 2001. Of significance is the fact that the revenue base of the Group has shifted with the sale of the Fresh and Processed Division exceeding those of the Banana Division? However, the Banana and Growing and Shipping operations in Jamaica continue to show losses. The Group faces a challenging future and the outlook for the company will depend on the success of the ongoing restructuring programmed.
OUTLOOK
As we move ever closer to the next General Elections, we maintain that investors should continue to focus primarily on the fundamental of listed companies while continuing to be cognisant of the mood of the main financial markets. We have had relative social and political calm over the last few months and these augers well for the financial markets in general. Following on the move by the BOJ to reduce the nine months and one-year Repo rates this week, we expect investors focused on the medium to long term to look even closer at the equities market.
