Govt's “responsible fiscal philosophy” creating economic space for private sector

Senior staff reporter

Wednesday, May 22, 2019

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Chairman of Mayberry Jamaica Equities Christopher Berry, says that the responsible fiscal philosophy of the Jamaican Government has crossed party lines, and is firmly entrenched as policy for both political parties going forward.

He says that this has created economic space for the private sector, significantly lower interest rates and improved confidence in Jamaica as an investment destination.

“In addition, the Chinese Government and several of its companies have found a home in Jamaica, where they can ply their trade and earn reasonable returns. We feel confident that the economy will continue to expand and that the corporate earnings will also expand with this growth,” he added.

Berry was quoted from the MJE'S annual report for 2018, mirroring some extremely positive signs, which the broker is convinced will be reflected throughout the current calendar.

“In 2018, our Net Book Value (NBV) per share increased from USD$0.06 to USD$0.09, a 50 per cent increase, after fees and costs were deducted,” Berry noted.

“During that time, the JSE main market increased by 32 percent, the Junior Market by 19 percent and the combined market by 30 per cent,” he said.

He added that, at the time of writing his report (the first quarter of 2019), the Net Book Value per share had increased by 20 per cent, while the combined was up 1.6 per cent, leaving MJE trading at $10 or a 27 per cent discount to NBV per share.

“We expect earnings of our major holdings to be positively impacted by the growth in the economy,” Berry insisted.

Below is a short summary of what he expects from some of MJE's main holdings during 2019:

(1) Supreme Ventures Limited — The company is positively leveraged to improving disposable income and increasing its workforce. The management has dedicated itself to improving the profitability of Sports Betting, Virtuals and Video Lottery Terminals. The company recently launched its mobile betting platform and is seeing substantial growth being driven by this channel;

(2) Lasco Financial Services Limited — It completed its largest acquisition to date in 2018, and 2019 is expected to be the year to consolidate and grow this platform. This company is also positively leveraged to improving disposable income and increasing the size of the workforce.

(3) Caribbean Cement Company Limited- The construction industry will continue along its growth path during 2019, and we expect the company to increase sales volume this year and reap benefits of a new power plant next year. The first quarter results were record-breaking and we believe this will only get better.

(4) Caribbean Producers Jamaica Limited — This company is suffering from growing pains. Investments have been made in new warehousing and personnel. Expansion in the company's main customers, which are the hotels, continues at a fairly robust pace. Management is working hard to capture market share from competitors and to expand its share of the growing market.

(5) JMMB Group Limited — JMMB continues to be one of the most innovative financial groups on the island. The company has a strong retail offering and also caters to high net worth groups and institutional clients. Thecompany owns several businesses across the Caribbean. We feel they are leveraged to growth in the Jamaican economy, and they also operate in the Dominican Republic which has an even faster growth rate than Jamaica.

(6) IronRock Insurance Company — IronRock was our first investment in a start-up company. The company is guided by a very experienced team of general insurance professionals and is making its mark on the local scene. Their focus is to deliver products at lower costs than the competition.

(7) Blue Power Group Limited — One of our smaller holdings, Blue Power, is a low-cost producer of bathing soap. The company holds a relatively small, but growing part of this consumer staples market. We feel that they have significant room for growth.

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