MOST LISTED companies continue to enjoy increased profitability as indicated by the spate of impressive corporate results released during the course of the week.
Investment houses and manufacturing companies, in particular, appear to be the major beneficiaries of the economic stability seen in the local landscape. Although the market has been slow in reacting to this favourable development, it actually provides first-mover advantages to investors in search of long-term value.
CORPORATE NEWS
PCFS recorded $274 million in net profits for its quarter ending March 2005 compared with $147.6 million at the same interval last year but given the increase in shares in issue, EPS gained only 15.9%, moving from $0.44 to $0.51. Mayberry Investments posted $157.3 million, an increase of 80.9%, and CCMB returned $364.9 million, an increase of 32.63%, for the same period. CCMB subsequently passed a resolution to have a renounceable rights issue instead of the previously proposed non-renounceable rights issue in respect of the 200 million new shares to be issued by the company.
DB&G reported $795.4 million for the year ended March 2005, which represented an increase of 48%. GraceKennedy posted $569.7 million for the three months ended March 2005, up 15% on the comparative quarter of the prior year while Kingston Wharves grew its net profits 135% to $81.7 million for said period. Lascelles deMercado posted $1.22 billion in net profits for the six months ended March 2005, an increase of 190.6%. Goodyear Jamaica Ltd registered net profits of $23.3 million, up 4.4%, for its first quarter ended March 2005. Its next annual general meeting is scheduled for July 13, 2005 at the Jamaica Pegasus Hotel.
Jamaica Producers reported $8 million in net losses for its opening quarter of 2005, against $52 million in prior year. GHL's net profits slumped 73.4% to TT$141.5 million for the first three months of operations for 2005. The next annual general meeting of Hardware and Lumber Ltd. is scheduled for June 16, 2005.
COMPANY SPOTLIGHT: DESNOES AND GEDDES LTD (D&G)
Fuelled by robust export earnings and lower costs, D&G recorded $1.3 billion in net profits (without exceptional item) at the 9-month interval ended March 2005, an increase of 18.82%. While domestic volumes grew by a meagre 2%, exports climbed 39% amid strong support from the U.S. and Australian market as well as new shipments to the European market, which pushed net sales to $5.9
billion or 18.87% more than the matching result for 2004.
Costs of sales rose 25% to $3.3 billion but a 6.14% reduction in marketing expenditure and flat general, selling and administrative expenses allowed trading profit to reach $1.37 billion or 20% higher than the comparative period. D&G also gained $32.6 million in interest income, almost identical to the matching result of 2004, which further pushed pre-tax profits to $1.4 billion. The third quarter was particularly profitable for the Beer Company as net profits surged 67.2% from the general upturn in exports and improved control over costs.
Sustained restraint over marketing and other overheads will be critical to D&G's continued success. Sales are expected to continue increasing given the recovery in the local market as well as the company's strong presence in the USA market and increased penetration of other international markets. The new draught beer line will allow D&G to capitalise on the growth in local tourism industry and, together with the MAG-5 bottling line, should also contribute to the group's efficiency thrust. D&G is high dividend paying company and so investors are likely to benefit from its projected success. Investors should benefit from adding D&G to their investment portfolios.
RECOMMENDATIONS
The Winner's Edge recommends that investors add D&G, Pan Jam/First life, Courts, NCB, JBG and Goodyear to their investment portfolios. Lascelles, LOJ and Grace are also good long-term options.
Please contact DB&G's Stockbrokerage department at 1-888-CALL DBG for further information on these and other stocks or visit www.mydbg.com for detailed analyses.
