Susan Gordon, Staff Reporter
Dyoll building in New Kingston. - FILE
STOCK ANALYSTS say the news of the Dyoll Group's plan to launch into new areas has not changed the perception of the stock in recent times.
They say specific information including a time line on the group's repositioning strategy would be needed to stir any significant or favourable response from the market.
The stock which traded at a high of $23 in 2005 last traded at 59 cents.
Last week , chairman for the Dyoll Group and economist at the University of the West Indies Dr. Damien King, disclosed to the Financial Gleaner that the Dyoll Group would be going into new areas of investment.
He explained that the J$25 million derived from the sale of its coffee shares in Dyoll Wataru Company Limited (not $200 million as previously reported) would help to fund the new initiatives, hinting that real estate would be among them.
"From an analyst's perspective it is still unclear," said senior manager at Dehring Bunting and Golding Limited, Vernon James, speaking of Dyoll's repositioning strategies. "The 'when' factor is very important," he added.
He said people would want to know if the initiative would bear fruit within a year's time or within the next four years. Also, if the Group decided to launch into real estate, specifics on which branch of real estate would determine how investors responded to the stock. Would the Group venture into residential real estate developments similar to the Life of Jamaica type of developments at Winchester Road in St. Andrew or would it go into property management?
Whereas real estate can be profitable, there are also concerns on whether or not the properties (which can become illiquid) would be used as long term assets, impacting the long term future of the stock.
More critical to investors' response of the stock is the news of where the cash flow is coming from to fund such cash intensive investments, opined research and portfolio management specialist at First Global Financial Services Limited, Aisha Barrett.
Noting that the news of the company going into real estate was not new, she said earlier mention of such plan had not sparked new interest in the Dyoll stock. She said so far there is nothing mentioned indicating where the cash is coming form to fund these plans.
Investors will also want to know what portion of the $80 million receivable reflected in Dyoll Group Limited Audited Financial Statements for the period ended December 31, 2005 is realisable, one analyst said.
The Dyoll Group which consisted of Cayman Insurance Centre Limited, the defunct Dyoll Caribbean Financial Services Limited and Seville Development Corporation Limited with significant holdings at Drax Hall in St. Ann, encountered financial difficulties after the passage of Hurricane Ivan through Jamaica and The Cayman Islands in September 2004.
Effects of the disaster bankrupted the insurance arm of the Group.
