Andrew Green
, Staff ReporterIF YOU own shares in Grace, Kennedy & Company shares right now, you have every right to be smiling.
Despite Jamaica's difficult circumstances early in the year, good management has lifted the company's performance, said Mark Walters, vice-president for treasury at Dehring, Bunting & Golding (DB&G). He said investors have responded to this, pushing the share price to new highs.
"The stock closed on Thursday at $50.50," said Jason-Craig Watson, FirstGlobal Stockbrokers equity trading manager. FirstGlobal Stockbrokers Limited is a wholly owned subsidiary of Grace Kennedy. Starting the year at $38, the share price moved above the $50 level on Thursday. "The stock was lingering at about $43 before it started moving up on anticipation of the release of results at the end of October," Mr. Watson said. "It closed October at $46.50."
The September unaudited results which ultimately underpin the latest stock push showed group revenues for the nine-month period of $16.499 billion, an increase of 22 per cent over the equivalent 2002 figures of $13.505 billion. Net profit attributable to stockholders increased by $171.0 million over the corresponding period of 2002, moving from $895.6 million to $1.06 billion, an increase of 19.1 per cent. Earnings per stock unit was $3.30, compared with $2.77 in 2002.
The stock ended November at $48.50, before closing at $50.50 on Friday.
After the good results, Grace announced a 35 cent dividend for those holding the stock to November 27, the FirstGlobal executive said. That helped support the price as shareholders held on to the stock to get the dividend.
"Sometimes stock prices come off a bit after a dividend," Mr. Watson said. "That hasn't happened."
STRATEGIC MOVES
The company has made a number of strategic moves to improve its performance and attract investor interest, Mr. Walters said.
Within the Grace retail and trading division, Rapid & Sheffield Company Limited and Agro-Grace Limited in September merged with Hardware & Lumber Limited to create the largest wholesaler and retailer of hardware, home improvement and agricultural products in Jamaica.
Then in November Grace announced that its financial services division was undergoing major reorganisation and is to merge its commercial and merchant banking arms. The proposed date of the merger is March 31, 2004, and future plans call for its listing on the Jamaica Stock Exchange in the third quarter of 2005.
"The management shown a level of foresight and corporate governance that is impressive," Mr. Walters said. This has boosted interest in Grace, and this is not just coming from Jamaica. Grace is listed on the stock exchanges of Barbados and Trinidad.
The price of Grace stock is 10 times the earnings for the last four quarters, the DB&G analyst said. This is well above the 8:2 ratio for the conglomerate category, to which Grace belongs, as well as the overall market average price to earnings ratio of eight.
Compared with the local closing price of $50.50, the price of Grace stock in Trinidad and Tobago is TT$5.55. At an exchange rate of J$60.65 to the US$1, this translates to J$53.42 per share.
"This differential in price is causing movement locally," Mr. Watson said. "Anticipation over the prospects of the group is now driving demand from the region and especially from Trinidad."
Grace's share prices closed at $50.05 yesterday's end of trading.
