AS it gears up for its debut on the Jamaica Stock Exchange (JSE) this Thursday, Massy Holdings has pointed out how the Jamaican equity market will serve to fuel its growth ambitions over the next five years.
This was revealed at the company's annual general meeting which was held in a hybrid format with some executives present at the Hilton Trinidad and Conference Centre in Port of Spain, Trinidad and Tobago. Massy's cross-listing will make it the second-largest company on the JSE behind NCB Financial Group which has a market capitalisation of $315.42 billion. Massy closed at TT$106 ($2,395.60) on the Trinidad and Tobago Stock Exchange (TTSE), which gives it a market cap of TT$10.49 billion ($239.28 billion). Massy had TT$13.54 billion in assets at the end of September.
“By cross-listing on the Jamaica Stock Exchange, we see this market as a real potential for future access of capital. Given the depth of that market which is a great option for us, [even though] we have no immediate plans or needs. In due course, it gives us great opportunity and great optionality to do so,” Massy Chief Financial Officer (CFO) Ian Chinapoo told the Jamaica Observer.
Despite Jamaica only accounting for five per cent of group revenue totalling TT$598.31 million and six per cent of profit before taxation of TT$62.90 million, Massy president and CEO Elliott Gervase Warner explained that the company is looking to deepen its reach in the country. Massy Gas Products (Jamaica) Limited announced in September that it was looking to build out the operations for the storage and distribution of medical oxygen.
“One of the opportunities that I think we'll have in Jamaica with our cross-listing is establishing more than one entity within the Jamaican economy and country. So, we have [on] an ongoing basis been looking for opportunities to strengthen our investments in Jamaica. Right now, we have Massy Distribution and Massy Gas Products (GASPRO) in Jamaica. Certainly, we look forward to the opportunities for us to make further investments throughout our portfolios in Jamaica, but as the chairman emphasised, there are no immediate opportunities in front of us, but that doesn't mean we wouldn't be interested in looking in case anybody has any ideas that they may have as opportunities to bring to us. We'll happily listen to assess opportunities,” Warner stated.
While executive vice-presidents David Alfonso and David O'Brien with responsibility for Integrated Retail and Motors and Machines, respectively, didn't indicate any intention of entering Jamaica through Massy stores and car dealerships, Chinapoo outlined that the company would consider Jamaica's remittance market for its financial segment.
“The Jamaican market is truly a dynamic and big growth market with potential for Massy's remittance business. We will simply investigate the opportunities there. It's very competitive as well, so, we'll make our moves cautiously, but optimistically,” the CFO replied.
Despite Chinapoo stating that the holding company doesn't plan to raise capital now based on their TT$2.03 billion ($45.97 billion) in cash, the memorandum sent out to shareholders outlined the way in which the cross-listing will serve Massy. Apart from price discovery on the JSE, it is expected to increase liquidity and trading activity of the Massy shares as well as enhancing the company's image and appeal to international investors.
“This strategic shift is a key enabler for the achievement of growth targets set through 2024, which would require significant growth across all portfolios of the company. Enabling the growth needed will require the company to access capital through a number of different sources including debt, equity, mezzanine, etc, and through a number of new capital markets. The cross-listing of the company's shares on the JSE is the first step in accessing new capital markets in preparation for sourcing the additional capital needed to drive growth and shareholder value going forward,” the memorandum stated.
With the 20 to 1 share split approved, the measure will take effect on March 11 which will see the share price decreasing to about $TT5.30 ($119.78) but shareholders receiving more units equivalent to the split factor. Chinapoo outlined that the reason for the split came down to the Jamaican retail investor and their perception of affordability. They noted that Guardian Holdings Limited's recent cross-listing and subsequent price decline was a lesson for the board in coming to the decision. It would also provide Trinidadians the opportunity to gain access to hard currency by transferring shares from the TTSE to JSE.
When a shareholder asked if Massy would consider a second stock split if the price starts falling due to Jamaicans fearing share prices above $100, Warner responded, “We'd love to see ourselves successfully cross-list and great activity with the shares. Let's see where it goes. Maybe the sentiment will change when more Jamaican companies start to grow and go above $100. NCB Financial Group is already at $127 and I don't expect that to stop growing. GraceKennedy (GK) was featured in the list of the top 22 to watch in 22.”
GK and NCBFG were used as the barometers for the upper and lower limit of the listing price. The '22 to watch in 22' was a listing of growth companies compiled by the Jamaica Observer.
After a record-breaking year of TT $639.83 million ($14.50 billion) in net profits from continuing operations, Warner explained that the company will be deepening its presence in Guyana and Columbia. The company opened numerous Massy stores in Guyana in 2021 and will be looking to add more gas products, trucks, lube and brands to the South American country which discovered oil in May 2015.
“Each of our portfolio businesses in Guyana will be expanding based on the opportunities that arise there. The deepening of our footprint and businesses is really going to be driven by the performance and strategies within our portfolios. You can expect acquisitions and growth into new territories for 2022,” said Warner.
With Massy acting as a sponsor of the JSE conference and Warner being a speaker, the CEO was excited about the opportunities to be unlocked on Thursday. He also commended the 12,000-strong Massy team members and the company's focus on bringing an energy of abundance to create greater value for stakeholders and shareholders.
“I think that shareholders and the investing public are becoming increasingly aware of what we do, how we perform and generate the results that we do. The results have been commendable, and people can understand that this isn't an accident. The fact that we're going to be listed on the JSE is a vibrant stock exchange that will bring additional interest to the Massy share. It's certainly not going to hurt in terms of the performance of the share price. I think the performance of the group continues to justify the share price.” Warner closed.