Jamaican stocks claw back minor gains after COVID rout

The Jamaican stock market made modest gains relative to its position a year ago, up four per cent on the main index and nearly six per cent for the combined indices at the end of the March quarter, but still has a steep climb back to its peak spot before the swarm of the coronavirus pandemic.

Ciboney Group Limited, a shell company awaiting an equity suitor, was the top stock in the quarter ending March, after unfounded rumours pushed it to record levels in the period.

The stock closed the quarter at 52 cents, valuing the shell company at $284 million, having spiked by 136 per cent from 22 cents. The former holder of resort assets had appreciated to four times that level in February, with a market cap of $1.16 billion, but fell back after the company issued a notice denying rumours of a prospective reverse takeover.

Discounting for Ciboney, a non-operating company with no revenue, Salada Foods would have dominated the winners. The coffee stock, which executed a 10-way split a day ahead of the quarter’s close, shot from an adjusted price of $3.06 to $6.66, up 118 per cent.

Sales are down for the coffee producer but a reduction in its debt servicing costs led to higher earnings in the December quarter, at 13 cents per share compared to 5 cents in the year-prior period.

Shares appreciate for myriad reasons, but their price generally return within a range reflective of earnings. Salada, a JSE main market stock, is now trading at 54 times its 12-month trailing earnings of $1.14 per share. Comparatively, within its sector, manufacturing stocks are trading at 19 times earnings, and the JSE Main Index at 28 times.

The Jamaican stock market is slowly regaining ground after its decimation a year ago when the pandemic began taking a toll on the economy. Its overall capitalisation has climbed back to US$1.77 trillion as at March 2021, but is still about $245 billion below the $2 trillion levels that prevailed just before the pandemic hit.

The JSE Main Index closed the quarter down 0.24 per cent or 955 points at 394,660, but up 15,477 points or 4.07 per cent relative to end-March 2020; the JSE Junior Index, rose 340 points or 12.85 per cent in the quarter to close at 2,983, and is 29 per cent ahead of March 2020 levels; and the JSE USD Index grew by 18 points or 9.72 per cent to 204.4, but is barely tracking ahead of March 2020 with a year-on-year gain of 1.3 per cent.

The top stocks in the period were Ciboney, Salada, tea maker Jamaican Teas, pharma distributor Indies Pharma, and hardware trader Lumber Depot, respectively, with gains ranging from 50 per cent to 136.36 per cent; while the worst performances were recorded by cinema company Palace Amusement, eatery Margaritaville Turks, air conditioning company CAC 2000, equity investor Portland JSX, and luxury bus operator Knutsford Express, with losses ranging from 25 per cent to 50.4 per cent.

Four of the top losers operate or have exposure to the entertainment and hospitality industry, sectors that have been decimated by the pandemic; while the top stocks operate in market segments that have held steady or outperformed under the pandemic.

The JSE Combined Index, which incorporates the three markets, rose 0.7 per cent over the March quarter to close at 395,189 points, and is 5.74 per cent year on year. The combined market’s pre-pandemic high was 508,130 points reached in January 2020, which puts its current value of 395,805 points on April 6 at 22 per cent below that marker.

business@gleanerjm.com