NCB Financial Group (NCBGF) Limited’s additional public offering (APO) has received the green light from several brokers who’ve published their reports on the $5.10-billion capital raise.

The offer, which opened on May 6, sees Jamaica’s largest financial conglomerate seeking to raise to funds to reduce its debt pile and bolster the capital of its subsidiaries. The offer price to the general public is $65 per share while the reserve price for employees of NCBFG’s direct and indirect subsidiaries residing in Jamaica is $58.50.

Six brokers have published reports giving their assessment of the offer and all indicate that it is a good buy, with the offer price of the APO being lower than the estimated value of the shares.

VM Wealth Management Limited has given one of the most aggressive price targets of $79.76, based on their residual income model and market-based methods, along with a conditional participation recommendation. This is supported by the points that NCBFG has a diversified portfolio and geography, and has a strong balance sheet amidst improving macroeconomic conditions.

“Over the last year the global economy has been plagued with mounting financial stress caused by stubbornly high inflation. In response, local and international central banks have adopted the mechanism of hiking interest rates to strengthen the momentum of economic recovery, revive growth, and improve consumer sentiment. NCBFG remains resilient and steadfast implementing a restructuring exercise aimed to recalibrate strategies and institute measures to contain operational costs, improve margins, and increase shareholder value,” the VM Wealth report stated on risks to the price target.

Proven Wealth has given one of the more conservative fair-value pricing targets as evidenced by it estimating the shares are worth 70.86. This was derived from weighted price-to-earnings (P/E) and price-to-book (P/B) models. NCBFG’s size advantage, strong track record, tech-driven integration, and scope for simplification were highlighted as investment positives while the leadership and strategic change, cyclical business model, operational efficiency, and high competition were investment negatives.

“Averaging these two methods generated a fair value result of J$70.86. When combined with the expected 2025 dividend of J$1.74 per share, represents upside of 11.69% from the offer price of J$65 per share. Of note, the offer allows investors to obtain shares at a cheaper fee than that associated with purchasing units directly from the open market. As such, Proven Wealth recommends investors to participate in the offer,” stated the Proven research report.

JN Fund Managers stated, “In this APO the shares are being offered to the public at a price of $65.00 each while our fair value estimate is $74.36. This implies that the APO is at a discount of 12.5 per cent below our fair value estimate. As a result of the foregoing we assign a medium-risk rating to the security and recommend that clients participate in this APO.”

Sagicor Investments Jamaica Limited had an estimated fair value of $75.61 and a participate recommendation for the offer. Cumax Wealth Management Limited had an estimated fair value of $76.98 and a market weight recommendation. Scotia Investments Jamaica Limited had a fair value price of $73.84 using a dividend discount model, but a price target of $83.66 from a relative valuation method. Scotia gave no recommendation on the offer.

NCBFG closed the Jamaica Stock Exchange (JSE) on Friday at $62.82, with the stock having intra-day highs of $65 on May 10 and 13. This leaves the stock down five per cent in 2024 with a market capitalisation of $159.90 billion, however the stock price on the Trinidad & Tobago Stock Exchange (TTSE), where it is cross listed, closed up TT$0.08 to TT$2.62 or $60.17 on Friday. This leaves the stock not only trading at a discount to the JSE price, which is a rare occurrence, but also leaves it down 23 per cent on the TTSE in 2024. NCBFG’s book value was $62.84 at the end of March 31.

NCBFG has added Barita Investments Limited, Cumax Wealth Management Limited, JN Fund Managers Limited, Mayberry Investments Limited, Scotia Investments Jamaica Limited, and JMMB Securities Limited as selling agents to the offer which is set to close on May 27.