Business

Loss-makers topped stock gains in January

STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com

Wednesday, February 05, 2014    

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LOSS-MAKING companies including C2W Music and LIME Jamaica were the top price gainers on the Jamaica Stock Exchange (JSE) in January.

The stock prices increased by over 106 and 56 per cent, respectively. During the period eight other active stocks made double-digit returns on the JSE combined markets.

Essentially, a fist of C2W investors doubled their money ($0.29 to $0.60) with the fluctuations of the ailing music publisher since New Year's Day.

"C2W traded 26,000 units in January, so even though it is a winner, it doesn't really represent any great investment or great confidence by investors," opined Wade Mars, assistant vice president of asset management at Mayberry Investments in an Observer interview.

The C2W rise when contextualised over 52 weeks actually has investors down 50 per cent. But the improvement came amidst the company announcing fresh royalty payments in the fourth-quarter of 2013 from Barbados at some US$20,600. These earnings came from the exploitation of the 'performing right' collections of radio broadcast, the company stated.

Over the period, LIME's stock jumped from $0.16 to $0.25, which reflected the trade of 34 million units.

"LIME has been doing a lot to get back to profitability," said Mars. "The financial results and accompanying statements have spoken about being profitable in the not too distant future, and they had an increase in price and volume of transactions in the month."

It posted a $585 million loss for the 2013 September, quarter which reflected a loss reduction by nearly two-thirds year on year. But those results came out in November and the rise occurred in January.

"Regarding LIME there was no fundamental change in the company to date but there was an increased demand for the stock," said Dayton Thomas equity trader at Stocks & Securities Limited in a conversation with the Observer.

Last September, LIME Jamaica CEO Garry Sinclair told shareholders at the company's annual general meeting that he expected operating profit to grow 25 per cent to some US$25.7 million this financial year ending March 2014.

It's rare for Jamaican companies to provide forecasts.

The results to date are "encouraging", according to management statements, but a timeline for profitability remains undisclosed.

LIME's response to Observer queries was pending up to print.

Other double-digit gains came from Carib Cement up 33 per cent, Hardware & Lumber up 32 per cent, Sagicor Investments up 25 per cent and RJR up 23 per cent, Lasco Distributors 11.5 per cent and General Accident up 10.4 per cent.

"I encourage investors to spearfish rather than set nets," Mars analogised about picking winners with strong earnings.

Market capitalisation at $439 billion on January 31, dipped $52 billion since 2014, based on JSE statistics.

Interestingly Lasco Distributors, Lasco Manufacturers, Lasco Financial and Caribbean Producers Jamaica (CPJ) were all in the top ten performing junior market stocks.

"For the first time, four of the 15 stocks on the Jamaica Select Index were from the junior market," said Mars about that index which represents the most liquid stocks on the exchange based on value, volume and trades. "It represents a level of confidence on a whole."

Meanwhile, stocks that had the greatest price declines included Jamaica Teas down 22 per cent, Supreme Ventures Limited down 12.6 per cent, and Paramount Trading Limited down nearly 10 per cent.

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