STOCK MARKET REVIEW FOR WEEK ENDING SEPTEMBER 26, 2002
THE SIGNIFICANT increase in market activity on the Jamaica Stock Exchange this week was confined to trading in a few stocks - Kingston Wharves, Cable & Wireless and Grace Kennedy. These three stocks accounted for 94.3% or 48.23M of the 51.16 Million units traded up to Thursday. Cable & Wireless declined to a 52-week low of $1.07. The heavy trading since last week suggests the presence of a large seller as trading is not wide spread. Kingston Wharves shares reached a new 52-week high of $2.50 on mainly intra-broker trades. Similarly, trading in Grace shares was mainly a single cross trade of approximately 15.5M units. Apart from the trading in these stocks the overall market remains low keyed as evidenced by the negative advance decline ratio of 6/16.
Some investors fear that the recently announced date for national elections, when coupled with the recent upswing in short-term interest rates could signal a longer run for the bear. Nevertheless, many stocks are trading at very attractive prices. We believe that the prudent investment strategy to adopt, as stock prices decline even further, is to focus on companies with attractive dividend payout ratios such as Carreras and Cable & Wireless, whose dividend yields are currently 14.00%. This compares favourably with the after tax 12.9 % earned on BOJ 90-day Repo. These stocks will fit nicely into the portfolios of long-term investors.
Stock Watch: Carreras Group
STATISTICS COMMENTS
Price: $28.00
52 Week H/L: 34.70/
22.00
2001 Dividend: $2.85
Historic .EPS: $5.43
Projected. EPS: $5.94
Price to Bk. Value: 1.11X
The Group reported a significant turnaround for the first quarter ended 30 June 2002: Net profits grew by 96.2% to $571.4M, operating profits grew by 16.2% to $615.5M and profits before tax grew by 71.8% to $771.8M. Revenues however declined a marginal 2.35% to $571.46M. These improved performances were achieved in part by a reduction in administrative expenses of $85M and an increase of $109.3M in other operating income. These results compare well with the Group's performance for the year ended 31 March 2002. Then, net profits declined by $504.9M or 17.6% to $2,355.2M for the same period in 2001. Sales declined marginally by 1.9% or $87.5M to $4.46B. The marginal increase in revenues is not unexpected, as the continued decline of interest rates and the gradual decline in the demand for their core products have affected the group's revenue streams. The Group has already begun to take steps to reduce total expenses and improve its efficiency, as evidenced in the improved first quarter results of 2002/03. We expect increased dividend payments going forward (2002 dividend distribution to date is $4.00). This when coupled with the expected growth in equities will enhance its capital gain prospects.
