Despite its core real estate business remaining resilient with a 92 per cent occupancy rate up to June, the market volatility exhibited in the stock and bond markets during the second quarter pulled PanJam Investment Limited’s net profit attributable to shareholders from $1.32 billion to $107.50 million, nearly a tenth of 2021’s performance.

The drop in profitability was largely driven by the $280.51 million reduction in investments measured at fair value through profit or loss, relative to the $868.95 million gain which was recorded in the prior period. The notes in the report stated that the unrealised losses stemmed from its local and global stock and bond portfolio compared to the unrealised gains it achieved from its Jamaican equities portfolio in Q2 2021.

“Our portfolio composition represents PanJam’s position as long-term investors, while our results reflect only short-term volatility therein,” stated the report signed by Executive Chairman Stephen Facey and chief executive officer Joanna Banks.

The last time the company saw a decline in its investments was in September 2020 when it recorded a $6.18 million reduction in its consolidated income statement. These pale in comparison to the $1.08 billion and $61.26 million reduction for March and June 2020, respectively, when the novel coronavirus thrashed the financial markets and led to a mark down in asset prices.

PanJam’s consolidated investment portfolio at fair value through profit and loss stood at $9.37 billion when the year started and currently sits at $8.78 billion. The JSE Index declined by 2 per cent to 384,185.82 points for the second quarter and is down 3 per cent for the first six months from the 396,155.61 points that started the year. This is in contrast to the Junior Market Index which was up 3 per cent to 4,349.44 points for Q2 2022 and up 27 per cent for the half year from the 3,428.30 points at the start of 2022.

However, the S&P 500 and Nasdaq Composite were down 16.1 per cent and 22.3 per cent for Q2, respectively. The S&P 500 was down 20 per cent for the first half of 2022 which isn’t just the worst start to a calendar year since 1962 but falls into the technical definition of a bear market. The Nasdaq Composite is down 29.2 per cent for the first half of 2022. According to co-chief investment officer at Winthrop Wealth Andrew Murphy, CFA, the market is down due to increased inflation expectations, the Fed tightening monetary policy, the Russia/Ukrainian war, and COVID-19-induced shutdowns in China.

PanJam is an investment holding company with interests in real estate and investments spanning a number of markets and sectors. The company’s investment portfolio spans interests in associate companies such as regional tourism player Chukka Caribbean Adventures Limited, Caribe Hospitality Limited which operates the Courtyard by Marriott in Kingston, Outsourcing Management Limited which trades as itel and financial conglomerate Sagicor Group Jamaica Limited where it owns 30.23 per cent valued at $60.18 billion by its indicative Jamaica Stock Exchange (JSE) price.

Despite the market decline, PanJam has increased its investments locally on the JSE as it became the number nine shareholder in Kingston Wharves Limited at the end of the second quarter with 11,064,715 shares or a 0.77 per cent stake valued at $423 million. Its other major investments include its number two stake in Sagicor Select Funds – Financial of 251,981,715 shares or a 4.06 per cent stake valued at $113.39 million and a number eight stake in One on One Educational Services Limited of 72,500,000 shaSres which will have an established market value on Thursday, eptember 1 when it lists on the JSE. PanJam acquired this stake through the conversion of a $50-million convertible promissory note. PanJam also has a number five stake in JMMB Group Limited of 56,500,000 shares or 2.89 per cent valued at $2.37 billion. PanJam had originally purchased 100 million shares in JMMBGL at $26.53 in September 2018 valued at $2.65 billion and has realised profits since then by selling shares between $31.02 and $46. PanJam also owns 288,200 shares in Sagicor Financial Company Limited valued at CA$1.82 million ($217.88 million).

PanJam’s operating expenses shot up 31 per cent as the company was hit by inflationary pressures along with other expenses associated with the opening of the ROK Hotel, Tapestry Collection by Hilton which opened on July 19. As a result, PanJam recorded an operating loss of $550.09 million compared to the operating profit of $747.43 million for Q2 2021. Due to the relatively higher share of profit from its associates, PanJam’s profit before tax amounted to $97.90 million, a 93 per cent decline from the $1.41 billion in the prior period. PanJam’s consolidated net profit amounted to $112.50 million after a tax credit.

PanJam’s total revenue for the six months is down 52 per cent to $1.05 billion while its consolidated net profit is down 50 per cent to $1.18 billion. The earnings per share (EPS) was $1.10 compared to the $2.19 for the prior six months period. Its trailing 12-month EPS is $5.69.

PanJam’s total assets are down 5 per cent to $64.15 billion with its deposits and investment in associated companies at $425.55 million and $34.82 billion, respectively. Total liabilities and equity attributable to shareholders amounted to $15.37 billion and $48.43 billion, respectively.

PanJam’s stock price is down 7 per cent year to date at $60.38 which gives it a market capitalisation of $64.38 billion. This compares to its book value of $45.51 and its price to earnings ratio of 10.61 times.

“Our current economic environment continues to be impacted by geopolitical tensions and ongoing supply chain disruptions. We continue to see markedly higher interest rates and increased inflation, although central banks expect this upward trend to ease in early 2023. While we believe that uncertainty will continue for some time, PanJam’s long-term investment horizon remains both relevant and appropriate to this environment. Our investment strategy has allowed PanJam to survive and thrive, and we are committed to playing our part in Jamaica’s return to its pre-pandemic economic trajectory,” the report closed.