Earnings Season - The State of the Market - 2020 Market Review (Part 7) w/@876Invests1

Episode Date: August 14, 2020

This week Part 7 of the full market review continues! @HDanhai & @RTRowe continue the conversation with @876Invests! They go on a run touching everything from Salada ($SALF.JA) to the SELECTS ($SELECTF.JA, $SELECTM.JA) with a little Seprod ($SEP.JA) & Sygnus ($SCIJMD.JA) thrown in for good measure…Portfolio tactics, analysis methods, facts v. feelings it's all here.(Guests: Henel Vidal, Schaunn Anthony Thomas, Nicholas Dundas) Come for the gems💎, look out for the yengs 🏍! Thank you to 876Invests1! 👈🏾 Give them a follow here. Contact Us Here 💻 [e-mail] Follow us on Twitter here 👇🏽 www.twitter.com/Earnings_Seasonwww.twitter.com/RTRowewww.twitter.com/HDanhai🔗Links🔗The EveryMickle JSE Market Data Telegram Channel 👉🏽https://t.me/MickleSignalsRed Stripe & Cassava - https://bit.ly/30W8D5j 🗣Shoutouts 🗣@RichardPandohie, @5Solae, @MsGillyJ, @johnhjack, @dmytroason ★ Support this podcast ★

Hi guys, welcome to this week's earning season. I'm Randy at RT, you're on Twitter and I am giving you guys a quick intro this week because what you're about to hear is part two of that conversation that we started at 876 Invest in episode 44. And those of you who listened to episode 44, and shout out to you guys, people who listen to every episode, but those of you who listened to it would know that we stopped right as we were about to get into Salada, I believe. So what you'll hear now is the start where we get into Salada. So listen out for that, enjoy the episode, and don't be surprised. And again, yes, this episode, just like episode 44, ends before the official ending. Again, it was a really long episode, so we decided to cut it up into three it was five hours guys i'm not doing that to you anymore i'm sorry i know i know some of you don't like the long episode some of you love it we're trying to find that nice middle ground all right so this is a little bit of the middle ground a nice relatively quick episode

depending on how you look at it um where we start off with salada and we run through all the way through you'll hear me again at the end where i just remind you guys to look out for the last piece and yeah look out for it salada big up to 876 invest again for doing this thank you guys for doing this and thank you guys for listening not just 876 invest but everybody oh one last thing guys uh just in case you guys don't remember who our guests from A76 invests are there is Enel, Sean and Nicholas right and I'm telling you this because I know you might not catch the voices at first so you're going to hear my voice and Dana's voice and I'm going to assume that you guys are used to our voices by now. But right after that, when I ask about Salada, the next person who comes in is email, right? A little after we finish with

Salada, we go to, I think, Cygnus and Sean actually speaks and then Nicholas Dundas, right? And I'm telling you that because you'll understand when you hear it, but I didn't want anybody to be too lost, you know? And you'll tell the difference between Sean and Dundas because Sean actually says, I think Dundas should give the most talking on this one. And then Dundas, Nicholas Dundas jumps in and says, well, I don't know. I just didn't want you guys to be lost when it comes to the voices, all right? Randy again, out again. Enjoy the episode. Alright, so coming up next we have Salada. Salada Foods. Anybody love this? Anybody like it?

Okay. Let me just jump in on this one so for salada i like the company but i'm a bit worried because of the the quota system that has been implemented where they have to sort so they have to increase their amount of jamaican coffee in their blends but like they haven't been able to have enough supply and also jamaican coffee is very expensive all right so first first question when did you hear about that we're not well you know it was the last time we heard news of the quota system the quota this was i think earlier this was... I think earlier this year. Earlier this year, yeah. It's been a while that they were appealing it. They were saying to the...

What are the names again? The coffee people. One of the boards. The coffee industry board, yeah. Or it could be the trade board. Trade, something like that. They're appealing it because they say you're really stepping in on the business more than just so. And they have been making moves with the whole cess around imported coffee,

which really was the aim of it was to cut down on your imported coffee being used or driving for our product, for our coffee product. They have made some moves around it because they have been buying local coffee in a certain way. And they buy it, and because of how they were using it, it's been working out for them. I think they were buying it in a way that it was cheaper overall for them than they were buying it before.

That might be a little confusing. So first, let's bring people up to speed. Salada does coffee. They import a lot of their green beans. The coffee industry board hit them with a rule that says that any coffee product produced in Jamaica has to have a certain mix of Jamaican green beans in it, right? Which is one of those things that's so nice on the surface, especially if you are in the business of coffee in Jamaica.

But the reality is that Salada has an entire business history built upon being able to keep the price at a certain product. And they can't use regular Jamaican green beans because the quality isn't where they want it to be. I am paraphrasing a bit here from the Salada side of things. Jamaican coffee people have been complaining. Coffee manufacturers, not the farmers. Farmers, of course, are the best. But the people that actually manufacture products for me. So so like coffee powder and stuff they have been complaining and saying

yo jamaican beans while they're more expensive than importing at the end of the day on a whole the quality is less we find damaged beans a lot we find the beans are at the level where we want them to be so yeah they're copy conductors so they really know what i'm looking for yeah it's it's twofold um and i i can't speak hopefully empirically as i just love coffee but i'm not i'm not in with any of these these companies so i can tell you that what is is i think at the top end or top end coffee is obviously world class we've heard that every day right um but to make the regular little mix coffee instant coffee that's a lot i have they can't one they can't just change a product mix like that imagine you can't you know you can't change what your product

is and they can't afford the expensive top end coffee and then if you're not selling that expensive top end coffee which usually means that you're sending it to Africa, not Africa, Japan or something like that. Yeah, Japan is the largest market for our coffee. Quite so. If you're not doing that, then chances are your quality isn't at that level. And if you are at that level, you have certain inputs that the price is wicked.

So you can't really drop. So sell out of cart. We can't afford the expensive product and your cheap product is poor quality we can't take it but they have been trying to take it they've been talking about how many um containers of green beans they've taken from the local market but up to earlier this year i remember they had an article where they're saying that the cess is killing them pretty much right they said that export sales went up but the profits slumped in 2019 because and they said it very clearly that the cess is what's killing them right they paid 90 million in

cess at a cost of us one dollar per 41 per in imported green bean how that works is that they can't stop them from making it but what the government is they put a tax on the imports of green beans which is to say well you don't have to use ours but if you're going to import anything we're going to charge you again that sounds very good as a personal point when you think in terms of business you might have three happy farmers and 200 unemployed people because i had a lockdown but interestingly if you look at the cess even with so they said the cess per kilogram the price of the price of coffee the price of importing it is still cheaper yeah yeah yeah it just it cuts the margin but it doesn't it doesn't it doesn't it's

not the point where boy i can where I can't import anymore I guess that's good on the government And I think Even when they import it's still Cheaper than what they pay For the same weighting For the same weighting of Jamaican coffee So they're still getting

Cheaper than Jamaican coffee But if they made it That was more expensive or as expensive as jamaican coffee then that would definitely kill them because the margin would be so so destroyed at that point because when i saw the article about it and i thought that the increase was really dramatic because they were increasing it from like 15 to like 30 30% for it to be Jamaican coffee. The requirement. That's a dramatic increase.

And it was very sudden as well. So I'd love to hear what the outcome of that is. So I think that the CES is giving Salah a rough time. They are lobbying with the government and they will eventually, I think,

find some parity, but it is hitting them in the books for a while. And we've seen the drop in profit. We've seen the drop in profit from it. You know, funny enough, I like it. I like the overall effect of it though, because it caused them to make their business more efficient. They had to.

Yeah. If you remember going right up to the implementation of the system business just kept cutting expenses more and more meaning they got more and more and more and more efficient but you can't grow a company by cutting it yeah you have to you have to at some point you have to grow by actually growing so i mean look at that. Admin expenses, same period last year versus now. 33 million last year, 35 million this year. 35.7 million this year. That is holding the ship tightly. Promotional expenses have gone up almost 70% though. Selling on promotional expenses. expenses um and that could mean that maybe you are calling a lot more of your admin expenses selling and promotional or or it could mean that you know you have to work harder to market your product because you have to sell it elsewhere and they have said that their sales overseas have gone up and marketing overseas does cost a little bit more so i was seeing where they push the mountain bliss or whatever but yeah coffee nice salada

nice still profitable um but not anywhere near the tune of where it was before and i should tell people what that looks like by the way it's a big drop it's big enough to mention right so in the three months last year up to 2019 they had made 76 million in comprehensive income that's total profit and in the three months up to this year 2020 they have made 6.2 million so 70 million just bono just like that that's how you can tax a company to death um but we'll see what comes out of it because the funny thing is if salada goes what's going to replace them anyway don't do not say a company name they have they have good leadership still so it's interesting no that's strong leadership strong connecting leadership yeah strong strong strong leadership legendary

leadership if anything um, the next company is the one that I know the 876 guys ready for this one. Signos Credit Investments Jamaica Limited. We don't have to say anything. Yeah, man. You guys can take this one completely. Who wants

to start it? Sean, Nicholas, or Henel? I think this one is done. That's supposed to get a more stocking on this one oh yes I mean I I well I'm asking the

signal takes up I don't want to say but let's say yeah I'm asking the show Jaja the man

sound like him on night yeah pressure I'm more than 50% of your portfolio more than 50% of your portfolio yeah I understand them ways it varied them differently

to tell you the truth I liked I think even now I was talking about it earlier where non-cash losses don't phase me. And that's another reason why I don't really have much to say about Cygnus. I think Cygnus is positioning themselves with wide arms to profit from Jamaica's rise. And, you know, obviously, I was talking about Jamaica as well. I think that they, how do I put this?

Cygnus, all right, so I think that a lot of portfolio is going to grow immensely now with the recovery of companies who are hurt from coronavirus. That's something that I look forward to seeing. What else did I mention? You said that confidently though, boy. Yeah, I mean, do you disagree? No no no I've had millions in and out of Cygnus

Over the last couple of months I'm not You're not going to hear me cussing them out I think they're a strong company I don't own them now but I think they're a strong company I mean It's just a matter of timing for Cygnus In my opinion because as i said and

oh this is the reason why i had uh i had it had come to my attention how people like to look at net profit and not and not cash flow which i can understand based on a dividend standpoint and dividend signals typically pays decent dividends um well they have well for me you know they know they're paid great i haven't touched that point um i see them use me as i add 400 and dividend points a big number for that um uh but going to that point that you just mentioned about net profit okay yeah go yeah you go ahead i want to hear what you're saying though go on man well i said don't be fooled by people looking i can say at least i speak for myself and then on this show don't be fooled by us looking at net profit to think that that's all we look at right we look

at the entirety of the business however we have to look at this is the same way you realize that everybody look at net profit is the same way we realize everybody look at net profit and we're going to look at whatever everybody looks at because that's what you make your decisions on you know what i've never heard anybody say that's not true i was going to say i've never heard anybody say that they're buying a company because of this cash position in fact no it is true i've never heard them say that i've heard people buy the company and then when it's when the company is going through obvious, rough P&L times, I hear them speak about the cash position as a clutch.

But you have to understand how I look at it practically, right? I have never seen a company go, hey, we have a lot of cash on our books. Profits are down. But here's what we're going to do, Randy. We're going to pay out a 40% dividend. They're never going to do that, right? That cash position is good to know. And they teach you it in accounting because it's your job if I hire you as my accountant to tell me that I am running out of cash.

But me as an investor, I'm never really going to see even a majority of that cash. So I only care to know that you can cover your bills and that you're solvent. And make sure that cash is going to into somewhere that gives me more money. And very often, I hear people talking about the cash position. They're not talking about what it can do with the cash position. They're just talking about the cash position. Just the normal. So Cygnus is the one I can show.

That's the reason why I look. Because I don't think it was a period last report it was one before that where I had noticed I think it was like a eight times increase in income from investments I think they had like 15 I'm not sure if it was a million on in dropout as they would call it and then the period after that wait that same period they had received about two million this period after they invested and same period, they had received about 2 million. The period after they invested it, they received about 7, 8 or so.

A whole lot. Right. I respect it. Like how, I always, the thing is, you know, I talk about cash

and I don't want it to be mistaken. I think that I ignore net profit. I definitely don't ignore it. No, I know you don't. I've spoken to you before. I know you have since. I don't think you guys need it.

I mean, like, direction, direction comes from the company. And I think that as much as I can appreciate how important it is, I think that we should be able to, especially if

you have investors who are thinking long-term, you should be able to look past a loss if you know a loss incurred knowing that the company would typically invest their cash well. Look on this to me though. You and I

have different... You can't say somebody should be able to look past a loss. You have different goals at the company. You have different timelines as a person. You can't tell me what is important to me. I can only go out there. I'm going to what's important to me, you go out there what's important to you. If it's important for you to stay in the company despite whatever, then do it.

You can't tell me that why you don't should i do this not doing what i'm doing you you're deciding that despite what i'm doing you're doing your thing cool so what so what i do is realize what's going on and take advantage of it so i know that signals you know they will be incorrect they will incur non-cash losses it's just a part of the line of business. It's still a loss. I hear people do that. People get up and say non-cash losses aren't losses. If I make a loss on investments, then guess what? It's just like you, Nicholas, buying into a stock, and the stock goes down, and then you're out of it,

and you made a loss. It's still made a loss. People need to have a big loss. Their big loss come from came from the thing their effects every day we talk about the effects right in jamaica jamaica we love the effects we love we love and hate it we love talk about how much money we made on our u.s holdings when things got up and i love and we hate when boys just hold them up we just made some jamaican dollars and u.s that are gone up and we have to convert to it and we boy the barely no cutter

rate gone up where it gone up how is it now that when signals to the we have we have a lot of people ignoring that and saying boy you know the fx loss whatever i don't hear people i don't hear people that try to discount i don't hear the same people the same energy with fx losses and fx gains investment losses non-cash losses and non-cash gains go get the same energy. Yeah, that's true. I mean, naturally though, naturally you can't expect it to be pretty stable.

That's not natural. That's cherry picking. That's cherry picking. I mean, that's okay for me at least. Well, from my standpoint because, I mean, I know what I expect

from signals. Exactly. And I think, think yes it's a business and it is significant and i can't ignore how significant it is you know and if i made it seem like that's the case then who is listening that's not the case it is significant it's a land business and we cannot ignore it you know fx loss that's a non-cash loss yes you know you know i hear the word non-cash but if you notice this and yes i will try to see in the camp because i don't put as much uh importance on it as um the cash losses you know

but it is a line in the business i can't ignore it especially for signals since it's the part of the business yeah you know um but i still since i can see that they generally do employ cash well i don't have an issue because i know why it's happening with my understanding of signals it's okay for me to see a 500 million loss knowing that all right that's just how it go in a few years that's crazy I'm exaggerating Think about this If I hire my accountant If my finance director If my finance manager comes to me and says

It's a $500 million loss but that's okay Yeah man We changed some things We changed some effects And $500 million No effects Is your job to apply that for me We changed some FX and about $500 million. No, my VIX. We are talking about it. You should not do that.

It's your job to avoid that for me. Let's just ignore it. Yeah. No, no. Don't get me wrong. I don't want you to feel like we're beating you up either because you're not necessarily wrong.

If my finance director can also come to me and say, yo, the loss is $500 million and I can go, oh, that's great because that's for the year? Yeah, that's great because can we can we that's for the year yeah that's great so we get to book this as a tax benefit yep that might if that's our plan that's fine but i don't want to unplanned losses and bringing it back to signal specifically

remember why they call cash dry powder is because they literally use cash as their business. So cash takes on a different role for them. So I can understand it being great and the need to pay attention to their cash position. So that's my actual issue with the non-cash loss at single stakes. So it's an FX. FX loss is very often a more real, a closer non-cash loss

than say an investment loss in a bond that eventually pays off all the money it should have paid out. Cool? So you took an e-sale on that one, but eventually actually got the money you wanted to get. So in reality, you never actually lost any money. Cool?

FX loss. Signals invest. If they're changing money from Jamaican to US, right? So that means they have a US investment that they want to go into. If they're changing, if they've got Jamaican dollars on this day and it's worth

50 million US, and then by tomorrow, when they actually need it, and they actually can't do it, it's worth 30 million US. They actually made a loss and they have less money to invest in the ventures. That's a very real loss to them every jamaican dollar that comes into that business if they're looking at a u.s investment it's a problem to them if when

they get a jamaican dollar if they get jamaican dollars and boy suppose a rate let's do something tomorrow that can't really do anything about then they have a problem they have a real problem with that because when they change it out, I have less money to invest. If they invest in it at 50, if they change the money at 50 million versus the 30 million, then they have more money to push forward. It's just more dry powder.

The conversion really affects them. It actually affects the business. Yeah. But that's, again, don't take that to say that that means that Cygnus isn't any issue. Yeah, because you know I love that company. Cygnus is great.

Yeah. Actually, the biggest thing I thought, you'd have mentioned this, Dondas, the biggest thing that actually struck me was that they actually had a placement with a company. How much was it, Danny? I think like 4 billion. Did I have that wrong? 4 billion. And they had to, right as corona hit there I think they cancelled it

they mutually decided that listen we don't know how things might be and this person here being the company not Signos so the company decided that listen how things are maybe it's not the best time for us to take this on now Signos took it and said hey you know what you might be right

so we took it back and so you see well you guys look at the cash flow statements. I think you'd have seen where the money actually was put back. So, they got back the money. And I don't have time to read the whole thing, but I want to get that number right. I believe it's $3 billion. Dry powder. Billion or million?

Bill. Mill. Correct. It's million, but it's US millions. So, that should be clear cygnus reports in u.s dollars so it's three million three point odd million that was sent up for the company was sent back um but i said earlier that during corona times you know those who have cash is a great time for them yeah and i don't think the the Signals guys are sleeping on anything.

Also, I believe they're going to push forward on the APO and so. I think it was approval whenever I get a date. I think Corona kind of slowed it up as well. Corona did slow it up, but you notice now they came back to tell you what it's the third time they're reminding us.

That thing that we told you about. The thing that we told you about yeah the thing that we told you about the APO we're going to ask for your approval soon then they go the thing that we

told you about we asked for the approval the thing that we asked for the approval before we got the approval hey we got that approval that we told you we got you know

we're gonna come with that they keep reminding us just put it out now you know the man who played chicken they want somebody to run out first yep somebody need to run out first.

Somebody needs to run out and do an APO quickly or do an IPO and remind us that Jamaicans have money. Barita set the trend as always. But that's in the Bs and we are now in the Ss. Signus, we'll keep it at Signus. But I think somebody will run out soon and break this deadlock but I heard your view has done this I don't know if Enel or Sean

I like Cygnus as well currently a shareholder I have a bit of a longer timeline on them because I just think the business makes sense that they're looking into alternative financing with a focus on medium-sized businesses in the region i think that space has a whole heap of room to grow and as a result of that i as i said before my timelines aren't necessarily as short so i will look for specific things that

i see and that i like so right now i like the way how they've been deploying their money the way how their portfolio diversifies the way how they keep reducing the amount of money that they have in jamaica since they're reporting us dollars they said look the jamaican portfolio was killing us on fx so they keep trying to diversify so that they have less risk on that. I really like the way what they're going about it. I think the leadership is smart and I think there's just continuous good things to come from them. Yeah.

You know? Yeah. I like the company as well. I think the space they're in, as Shana said, is one that has been underserved for quite some time in Jamaica. I wouldn't be surprised if especially because of corona one of the loans are one or more of the loans become a non-performing loan because i think currently they have none but i still think they're a very

good company because they're trading below book value i'm still trading below book value. I'm still trading below book value. You know, so overall, I think it's a very solid company. The leadership, again, Jason, I call those guys, brilliant. So, I mean, I don't really have anything bad to say about it.

Well, it's not to say bad or good, just kind of show it off. Yeah, yeah. If it's something, if it's how it is, it's actually bad enough, so you go.

You're not saying anything bad about the company. Yeah. Please, if it's something it's how it is and it's actually bad enough so you go you know yeah please we need to we need to start separating that emotional and that personal thing from

from the analysis of our company Cygnus itself is an amazing company doing amazing things but I sold all my

Cygnus shares some time ago right because I didn't want to take any more of a hit and I thought I could make better growth elsewhere and I'm happy I did. For that last couple of years,

to be honest, because next year or whenever, when things are normalized and we're not having those type of things, those shocks hitting the company again, then they're very well in a position where you have a loss compared to the same period, a profit compared to this loss

last year ago. You're good. Yeah, man. Exactly. And the truth is, the man will have more money on hand now than they did last year. And after the APO, they'll have even more money. And we know that all these guys take money for is to make more money on it.

So in terms of yeah looking over a time period in my view of a year or more cdnus is a great stock to hold but was it a great stock to hold between the end of february and now no that february drop was that that early march late february early march drop is a hell of a cliff. And Q2 might not be so nice to them. Q2, the ECLs might come in heavy. Sorry, Danai, I don't want to talk over you. I think we got a little mixed there.

Oh, sorry. I said Q2 might not be so nice to them. It might just be great, to be honest. But if they have, as Enel said, suppose a non-performing one just comes out of nowhere and ECLs, they hit them. It might not be so great for them, but if they're moving beyond that and they're coming back in, as you said, they have more cash

than ever, so they can make more cash than last year. They can invest properly. They can reach out to make good investments. They should be fine. Signals, everybody knows about this company. And hey, right now in the time they can save a couple of companies

that just need cash to be saved and they might get a deal at a better much better rate than they would have gotten it before so I really like I like them over the time period of a year and more but I didn't like them from

they fell from 25 26 come all that wiki drop all the way down to 80 and i think he hit 15 at one point yeah and it's still in that little range it's like and now it's in the 16 it's at 16 dollars now but yeah they're not they're not they are in my view undervalued but i believe they could also have their next quarter be a rough one yep and that's the april to june quarter so let's see yeah remember when you come to this thing man it's not it's not feelings it's facts yeah it's not the people it's a company itself yeah you think if someone was offering me 10 of signos snow and i could afford that I wouldn't buy it. 10% of the whole company. I think that immediately,

maybe that's what John Jackson was seeing with QWI. Maybe him look at him and say, yo, this thing is going to be great in 2023. Let's take the hit now, guys.

I'm hoping that's it. But watch, watch and see. Remember, Corona was at the time when he took the position, when he took the position in AXS2. Yeah, I went back.

I should, that's a good point, Dana. I should say that. Because at the time when we were talking, I don't remember much that I had chopped up. But at the time when we were talking, I think I was saying that to Dimitri, that he wouldn't have known. We didn't know that,

at least I don't know if I knew at that point, that AXS had taken a stake in them. But we did know that the sale had already happened and done. But I don't know if we knew that QWAI had taken such a heavy stake in them. I think that came out, yeah, in AXS. I think that came out a lot after.

So I just wanted to make sure we said that to cover it so people don't think that way. We're dreaming these things up. But Cygnus, I mean, can't say I still love it. Cygnus is one of those companies, you know, that you find industry people, everybody in the industry talk, everybody else in the industry about it.

It's kind of become this little echo chamber where we all say, oh, I love Cygnus. Oh, I do love Cygnus. Cygnus is great. Those guys are great. Who is buying the stock? We're not buying the stock yeah and those same signals are great people asking how much you had to sell but you still hold right i repositioned that's at 26 And I bought at 15 That's so nice I wish I was you Yeah

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surprise profits. Do you remember that Stignos third, Randy? Which one? That I did? Yeah. Oh, yeah, I did too. I explained. I have not explained any company since then. Just, yeah. I remember what happened after it yeah i remember that when after after i had it i believe a lot of people saw the value and ran in to buy it yep right to 30 definitely profited

after yep interesting well you guys your people i'm glad that the common story in the industry that signals is hard to understand yeah the business model is hard to understand you know yeah

well that sentence is popular yeah I mean if they say so yeah I'm on it signal is not mine

it's very complicated it's hard to understand if they say so I don't figure that they can't the people here are saying they can't explain what's next so next up we have select f Sajikor select funds we actually haven't spoken about this

in a long time yeah Sajikor select funds is a is an amalgamation of the stocks on the JSC's financial index. And they try to weight in the same way that it's weighted across the actual index. So they try to mock index, of course. Exactly. What's important for me to note here, which is something that I was saying from before

them, at least, as told many times as incorrect. I mean, you have a quarrel, it just comes out. They are not trying to do anything with Select F. They're not trying to buy and sell it to get it back at a cheaper rate. They literally just buy it and leave it. Now, I'm sure somebody in Sajikor might know that. No, well, you know, might do a little. I i'm not even going to the deep details of that as far as anybody's concerned on the front end our selective is is a grouping of stocks that should match the financial index so if we know

like right right now it would make sense if you own a lot of ncb i could see it making sense if you own a lot of ncb to maybe sell it um and wait for any dip in case they have a ecl and a dip in price in case right and then buy back in later kind of like what dundas did with signals sell at 26 and buy back at 15 now you have more for the same money um you you wouldn't be unusual to see a SelectF do that with an NCB or the same signal shares. But no, they just hold it. So all of them know it's coming. All of them know the hits are coming. Then just hold it.

Yep, index to the index. Exactly. And so I think when you're talking about SelectF, what you're really talking about is either just the highlights hitting them, anything in terms of the highlights of what's affecting their holdings and what your overall view of the sector is. That's what I think about SelectF, the sector stocks.

I mean, I don't want, I don't know if I talk, I might color the conversation. So I'll ask one of the guests if they can give their view. Dundas or Enel, I see unmuted. One of you can start off. I mean, I don't think there's that much to say about the select really. Just really, as you said, the merit index. So it's really, you know, what's happening with NCB and stuff.

Yeah, that's really what it is. Yeah, you put it. Okay. I like that. And it's what's happening with their share price. Yeah. I mean, we see what's happening. I mean, we spoke about it earlier,

about the whole expected credit classes, expected in that sector. That's pretty much it. Yeah. I mean, year to date, I don't think the sector has been doing that well NCB leads the sector, as you said and if NCB leads the sector, whatever happens to NCB happens to everybody else, and NCB continues to be down

I don't think it has ever had a dip this heavy, definitely not in recent history, meaning the dip from the 200 and odd down to where we are now at 133. And Sajikor, Jamaica. Is it Sajikor that's the second one, or is it Scotia? It's Sajikor, right?

It's Sajikor and then Scotia. Yeah. this is such a core right such a grand exposure yeah such a core is looking sorry such a core is looking not that heavy I want I'm not seeing it sorry okay so such a core I know is is I mean, the whole finance sector is looking kind of pressured, right? There's no two ways about it. They're looking kind of pressured, meaning they have e-sales coming and they know that they have e-sales not just from their own core business, but also from some of their holdings and we know that that sector is i don't know incestuous is the right word but they they they hold a lot of similar industry instruments and a lot of themselves so they do reflect some of them have the reflection of losses from one to the other sagicore themselves uh the share price is down heavily could you repeat that

it's about 45 now that's all where is it yes it is at 45.53 and it started the year what is this 72.58

wow wow started at 72. 58 now at 45 53 it's only 228 it's into 58 yes so it's gone almost 40% it's 62% of its values rates that no can imagine that and a million dollars in you know have six hundred and twenty seven thousand dollars in, you now have $627,000 in there. But that's not a real loss, right?

Yeah, God, wow. You see the reality of it. If you have any reason to recognize it, even if it's just that you own the shares and you borrow it against them, right? You might get a margin call. Your collateral is worth 40% less, roughly 40% less.

And that's on the Sajikor side. And Sajikor is a, I don't know if, could we call them a growing company? We could still call them a growing company. They're in a tight and a growing industry. Sajikor, Jamaica. And NCB, um, NCB, there's NCB,

we'll have to be at Dead Horse. It's, it's growing, but right now it has some losses to look forward to. I think the more exciting players in the finance industry are the smaller players. More room to grow. And they'd have to grow, they'd have to grow,

they'd have five, six hours to be worrying about. So. Yes. Yeah. But, no, maybe they do.

Like, J-Man B would be the biggest of the small guys. I was about to ask you to consider J-Man B as a small guy. Yeah, man. I consider NCB to be the big guy. I consider Sajikor and Scoti to be second or third. And after that, everybody, yeah, yeah after that everybody's small but is jm b still small that's a great question we i i want to find out the actual

figure but we were talking about it one day and when i had seen how much assets are under management by jmb in comparison to me anybody else i. I didn't know that it was so close. I don't want to say something else. I'm on the panic first. But it was a lot more than I expected. Okay, so that's how you wanted to measure them, not by market cap, by assets under management, which is fine.

Oh, well, I mean, if it's market cap, then we'll... No, no, no, yeah. There, yeah. But assets under management is a measure of a company's size also. I believe on that measure, Scotia is second. I could be wrong.

It's where I'm working from also. I know sometimes they're different. So what you'll find is that I remember a couple of years, you'd have like Scotia saying, oh, you know, we're the second biggest or the biggest or the second biggest. then you'd have and somebody else would be number three and the number three person would also say they are second biggest but they're not measuring by assets under management they're measuring by whatever allows them to be second right uh yeah it's it's it's a it's a good measure and yes gennady does have a lot of assets under management i cannot that which is a good measure of their ability to generate revenue yeah but if you think about it

as its under management is heavily tied to jmbs business which is mostly investments look at ncb which is banking insurance it's the whole financial suite so you can't really i can't use it as a the point of comparability to say jmb is in it isn't it's up there with scotia what is that what's our assessment management exactly yeah but if you now consider the um surgical financial corporation to be jmb's associate so it's under the JMB group. That's my point of saying, boy, maybe they're more besties. Yeah, no, they're

reaching into, they're dipping into the jar. Yeah, yeah, wait, you're scraping the bottom of the barrel with that one, you're right. Because, well, you know, I don't, I can't say no. It's a great question, Dundas. What do you guys think? It's a great question, Dundas. What do you guys think? It's a good question.

If they are reaching the levels of... No, just your actual question. Like, is J-M-M-B still a small player? I don't think so, no. I think J-M-M-B is a big player now because we're not looking at J-M-M-B for investments anymore. We're looking at JMB group limited.

That's going to, I mean... But how much do you do that as a banking group? How is the commercial bank looking compared to the big guys? I mean, it's budding. So, I mean, you can't really drive a bank. It's budding so small. That's my thing i'm like you are them establishing investments banking and such and such is still young so yeah i think if you put banking then i'd put them as young but for financial overall i don't know if i'd put them as small overall and send them expanding so they're trying to get big

yeah you're probably still small but they're the biggest of the screen yeah they're like the biggest of this one yeah that's it yeah basically yeah i want to feel the smallest they're the middle child they're in that chance they're in the transition right i take your point i take your point that because you know the banking is new and it's fresh and they put stuff among the levels but I mean if you're supposed to, we kind of already said that based on cap, cap 3, you know it was a far apart but they had a different. we have to still I mean NCB have cap markets them have insurance them have the bank

as well so I mean you have to do it if you're going to compare everything you're going to compare everything that's true

and I'm thinking that because because RMB is getting here and you know we're not looking at just the rest of them even though that

the bank is small and you know the group is not as powerful as a group they do insurance too the small i think yeah i would say they're the biggest or the small personally because they do do those other things but it's great it's very much great when you're comparing across the

companies you have to really compare everything because like for example i know somebody who bought a car recently using jmmb and they said they didn't know when they didn't know that jmmb did insurance and when they said it to me it even shocked me because i have been a jmmb shareholder on and off and when i was like it didn't even connect in my brain that jmmb did insurance because i have them as the investment company and the bank so yeah those other sectors are really young and growing so i think saying that they're the biggest of the small if you have to compare them with the sector you have to compare everything that they do so you can't say they're established in investments and so they're big in investments but the bank is what two three years old for example

and then you say oh well the bank is small but the investment is big i don't know if that's really fair to the other guys who do it and to the industry as well even to yourself analyzing it like that's true because you might not you might not analyze it correctly but you might you're right in that one one product that you have from there might cause him to lead into another one and to your point further to your point let's not also get blindsided by just jamaica right they're not just in jamaica true they're in trinidad they're in domrep um a little pensions in domrep i think in trinidad they actually have a commercial bank, they had a commercial bank in Trinidad before they had one in Jamaica and now with them

having an associate in insurance that is also a major a major major thing right and an associate that pays out US dollar US dollar dividends yeah I mean they receive about half a million dollar worth of US dollar

dividends already just this year in 2020 from their surgical financial but you said comparison um they group under segment report that i believe the group the financial and related services and a separate banking and related services right so banking they're pulling revenue of 7.7 billion up to the end of last year, 2019. The 31st of December, which was their nine months, so they don't have their full year report yet because that has been delayed, delayed, delayed. I suspect it will be delayed until Q1 is ready. But they currently have $7.7 billion coming from that,

and it is profitable to the tune of $1 billion. Well, it's almost unfair to compare them to ncd's bank right but what i wanted to say that is that you have to remember that like for ncb my personal view consumer banking is like a loss leader to keep their name out there right and and of course the poor revenue and the power that the license gives them. But, I mean, the bank, all right, the bank make a loss up to March. Up to March 31st, NCB, the bank, the consumer section, actually made a loss, $275 million loss, right? So I'm not really looking for GMMB to suddenly be grand in consumer banking.

I don't expect banking to actually be that strong a sector anymore in terms of profits, right? Nobody's looking for you to make a whole heap of money anymore off you can't give me a whole heap of fees because that's bad PR. You know, you're doing it already.

You can't fly it up to increase your profits from fees. And you can't make a great spread off of the loans anymore because competition is forcing you to keep loan rates within a certain level, right? If it's a 10% loan, there's a certain percentage that just cannot come to you. So you might be eating maybe three out of the 10% as profit. Yeah, that's a margin business right there,

which is why NCB's growth has come from um the corporate side of the banking game and of course the the investments markets investments exactly cap markets and insurance exactly insurance is going to be the thing that that flies in both life and general so maybe that that tweet, you see, we're coming back to it again and again, which is insurance is the new banking. Yeah, that's where the real growth, I think, can come for the sector. But until the growth comes for both NCB and and sagicor and jmmb um you're not going to necessarily see a huge jump in my view in select f unless some grand news within this finance space causes people to expect

things from the companies and then jump onto the share price but just looking at what i expect as i see the industry going forward you know know, they have a couple of quarters. The thing about this, we know that we just said that NCB, Scotia, Sagicor, all of these guys, GNAC, all of them have some amount of losses, ECLs that they're going to have to report, right? So it's no surprise if the next few quarters involve them having heavier losses, right? Nobody's surprised if they hear that. So if those next few quarters

have our next few losses and uh select f follows the entire sector kind of expect the sector to kind of stay down indeed and yeah i know it might it might seem kind of simple but that's how i look at it i mean it's just the truth yeah there's just no unless something major comes along and blows it out of the water and the thing that was supposed to do that

was select F what was Sajikor Financial but that arrived just in time for Corona yeah one other thing too that

kind of affect them was the dividend policy so all any dividends they get they would get from ncb and surgical would be delayed i would know that would affect them as well well all the yeah all the big guys in this big dogs yeah yeah in this sector can't pay out a dividend and we see where

that actually affected select f select f's decision to pay a dividend. Even though they are receiving, so you can't knock it out. It's the thing that hurt you might end up helping you later on. Even though they are receiving strong dividends, because they did, like JMMB did receive those dividends from Sajikor Financial. Yeah. As far as I know, right? But they have that money on their books. Also, they have the money that they would have usually paid out as a dividend also on their books so a whole heap of cash sitting there when

things kind of ease up they might be able to do something interesting with it or maybe even before who knows but as it is now I have no great um love of of it um I actually had a large position in select if some time ago I no longer have it. When things look up, maybe I'll go back in. Hi, everyone. This is Jillian, aka MissJillieJ on Twitter. I'm having

virtual Excel Intermediate and Advanced classes this week. It's August the 15th for Intermediate's August the 15th for intermediate, August the 17th for advanced. They're online. Sign up through my website, Financial Sensibility.

Financial, C-E-N-T-S-I-B-I-L-I-T-Y dot com. Financialsensibility.com. See you there. And in the same vein, the next step that we have is select MD which is the next fund yeah a little better balance though no isn't it better balance than the huge weight the large waiting man it's there well not to the extent that it is anything there what is the NCB of

of select MD MD the manufacturing and distribution index I think it's Wisinco right Wisinco you have GK in there oh yeah GK yeah yeah Big Dawg's got GK in there too I'm not saying that you're wrong.

It could be with Sinko. The GSC does have their fun page up. Do they tell you where things? Yes, they do tell you they're waiting. Yeah? I don't know if I would swear to it, but they do tell you they're waiting. Yeah, and the waiting thing yeah and the the way thing that they have the biggest one is is those two with sink on gk but they're close to each

other yeah you don't want to index or the rsec md well they tell what do you mean oh you mean oh you mean does select md tell us the weighting of their holdings i mean for jc stills but cool ah well i look on the jc page but i'll be honest i don't try i don't trust any of them so i take everything with a grain of salt i don't know if if this is just the way thing that they have their episode data or whatever yeah uh but they're at a nav of 79 cents currently and their stock price is 80 cents. Is this the one that you're saying is close? Yeah, this is what I was talking about. I think this is close just accidentally.

Why do you think that? I think people are trading our own enough? Not necessarily, but I think people have a little more confidence in it because of the nature of it. So you know that what they call are companies that will be operating at a consistent level throughout Corona. So I think that's the idea, but I don't think it necessarily tracks the NAM.

Okay. But why do you think that? You think it tracks companies that will be operating at a consistent level well no not throughout yeah yeah yeah continue throughout corona yeah uh well i mean the two big 30 percent of of its makeup is is a little over 30 percent is with sink on gk right and right behind that you have carreras with eight percent so 38 and carib cement with another 10 point odd so it's a 48 so roughly half of it in fact i'll throw in the other big doctor which is separate so between separate carib cement carreras gk and risinko you have almost 60 percent yeah almost 60 percent of the fund right there right so do you think so you're saying that you believe that those companies will continue to have the profit

output that they have had for the last um the last few years you don't think corona will affect i don't think how realistic is that i don't think it will in the profit will increase. I think it will be more of a flat quarter. Well, the next two quarters, really. Okay. But with the consideration of what? With the consideration of what? Of what? Let's say GK is in.

Hmm. So, okay. When you consider something like GK, I'll take GK on its own. Yeah. GK is, is money from abroad. Yeah. Really? That's where they make the most of the money.

And we've heard where that has dipped 20 percent that's the last time i heard that that has it now i did hear that like direct to bank has gone up that's a funny thing too i think that they may not have gotten the heavy hit that we may have yeah because well interesting story interesting story i actually um do business through that um the rest Western Union and before huh hmm oh not that somebody said something so before so before like when I used to use it it was a bit combo summer because you'd have to like call in and give you information every time somebody has sent something for you but no it goes literally direct to your bank so

you don't have to call anybody it's all electronic now so they've really streamlined that service you think about stuff like that i think i wonder what was the point of that yeah like i don't get it i don't know if it's because of certain things. I guess you guys know what I'm talking about. But yeah. The chopper phone business? Yeah, yeah. I don't know if that was it.

I don't know if that was it. But this does certainly put an impediment. Yeah, it increases efficiency. And it puts an impediment in the in the way of the trap of home business because a bank account does have a certain amount of identity exactly yeah um and they did say yeah they did say that that business has increased with them but that nice point i think was something else what was the point that was but Dana's point I think was something else what was the point Dana?

I'm not sure Andy which one? oh sorry no okay I thought you were saying something along the lines of as to how much that has impacted their business the popularity of their business because I don't know I mean we've heard about the heavy unbanked

so being able to send money to a bank account doesn't necessarily mean that you're going to catch everybody because yeah heavy on bank yeah yeah on the flip side gk is is two things food and and finances and the finance side of things might again might do well in the in a year in two years in three years in fact it might be very exciting in two or three months however they do if they're a finance

group then they face the same ECL pressure so what do you think about that? what's the bulk of the finance revenue from? you're taking know money transfers money transfer not very yes i said money transfer wouldn't face e-sales in the it wouldn't be facing e-sales no no no but it would just fall however there is more within the group and and in the place yeah okay there's an expense line in places where, in other places, more than just follow them.

Okay, I get you. I remember they have heavy insurance, you know. Especially in Oahu. Heavy, heavy, heavy. Yeah, and they got more. So that is a nice iffy thing as to what could be happening within them. Wasinko might be more straightforward.

How do you guys feel about that? Wasinkco, I expect, I expect Wisinco to do well. Not actually, we can't use it, well,

okay, can't hear. Okay, so we can use it to jump to Wisinco. Well, yeah, I mean, yeah, you can touch on

Wisinco. No, either one works. If you have a point on it, you can tell us now. Okay. I think they do well in the same line because they've been operating consistently through this entire period.

I don't see an item or anything that has affected their business significantly for me to say they'll have a bad quarter. What about schools? What about parties? What about hotels? Yeah, that's my favorite. Big things like corporate clients, hotels, schools and everything there. I know there's an increase in consumer consumption. It's my favorite, both with Sinko and Sepra. consumer consumption it's my favorite boat we sink and separate where i know people who have been home are buying more but i don't know if they've been buying enough more to match up for the fall off from those other clients much upon more because you match up on more yeah open the hotel fridge and you see water you see um sprite you see coca-cola everything

school's not there anymore and party stop keep, you know how water was in the party space, that's not there so what can we make up for that fall yeah, so I think we need to not fall into the risk that I see happens all the time with the industry guys on the talk you say it because it's so nice

and it's natural and we just don't think about it because you think even you said it yeah you think like even you said it just so you know yeah you just say no not just that because that does happen and i'm not going to not that but you just say you know like we've seen because been operating as normal but they haven't really it's corona time nobody could be operating as normal school stopped early there was no early parties early in the year. There's no carnival. There's no summer parties happening right now.

People now flying from foreign. And that's just on our side of things. On the tourist side of things, which bring more people here, nothing. 2.8 million people in Jamaica. 4.8 million tourists come to Jamaica every year. In addition to the 2.8 or 2.9 million Jamaicans that live here. 4.8 million tourists or visitors to the island every year in addition to the 2.8 or 2.9 million jamaicans that live here four point odd million tourists all right or visitors to the island every year and for the first six months of the year that dead mostly let's say let's say the last three months are dead february till now that is a big

lick now granted domestic can carry a lot of it right however and and we think or did say that they're looking at exports and they start a little bit of the exports I believe but realistically I mean maybe they owe me drinking more water but I mean I drink more water and I go to drink more water at the bar you know Chesa you know the ships I just one person i just one place sell ships i can't get my ships right nobody know i really do road like what i mean to do road so that must impact them in some way yeah and the lockdown is one thing but the lockdowns even the lockdowns matter even the parties matter right people ask why yeah the restaurant no it's not really open but fully

exactly people ask i will still have curfews now i think it's to stop i'm sure there's some crime management yeah i think it's like crime management yeah but but let's be serious there is also heavy entertainment in jamaica at night yep that's what's my thing like our party every single night so if you have if there's a curfew and you can say all right you can easily figure out where party is happening if no party is happening and go deal with it exactly exactly so that is actually i think i'm obviously i mean i'm not broke but i don't know but i i think that that is a huge part of why the curfew exists but we have to consider that in terms of we think or not. I mean, say if a dance keep everywhere, every night, usually,

but no dance now keep like one time, then it must affect them earnings, right? Yeah. Yeah. We've had this discussion before, you know, we're talking about, I think it was me and Sean as well. Yeah. We're saying that yeah we're saying if it makes sense to think that the increase in domestic

spending would offset the hotels and you know even even not processing the hotels then comes entertainment that we really didn't talk about entertainment actually like now i'm thinking about it it probably was really significant for them. I mean, what else is significant? You know? Remember how much distribution points we think we have in our brother? Yeah. All of them. Like, it's crazy how much product they move out and how much of it had to just stop.

That's true. That's true. Dana, you were saying something just now. Oh? I thought you were saying something. No, I was saying we're not partying, man. So you don't know. When you go to a party, the water is...

You don't drink any other water at a party. It's water. It's true. Right? It's only water. Do you guys have an idea of what the breakdown is? Like how much percentage it'd be towards the tourism and entertainment side of it? From the distribution side.

I know you're thinking. I know the report. Check the report. I know you're thinking. you're thinking it's a really good data measure yep and that's exactly how you think what portion of their sales go to schools

what portion of their sales go to the hotel industry and that is a completely locked down industry, right? We just know we see people going back. We just know we're seeing people being, we see advertising happening for the sector and we see it happening locally. So there's a whole heap involved in it.

Imagine that. And if it continues, I wouldn't be surprised if you see, I shouldn't say that. I was going to say I wouldn't be surprised if you don't see layoffs at Wissinko, but I don't know the internals of Wissinko like that to say whether or not they need layoffs. I know that I've seen where they've tried over the years to try and keep their workers

pretty much. But at the end of the day, if it comes down to the numbers not being able to support the team size, you have to shrink your team. Right? Yeah. not being able to support the team size you have to shrink your team yeah and we know it hit them if you read the last they actually had a little bit of sensible comments I remember from their their their last quarterly report I believe they're saying that they did see some fall off in April, but they were, it wasn't as bad as expected, but still. And that was April, right?

I mean, granted, we're going through some heavy lockdown. I think in April is when St. Catherine would get locked down completely. Yeah, yeah. Yeah, yeah. So they actually had some, what they call, a forward-looking comments from it. Ah, although revenues for the months of April were lower than our original targets, they were better than we had anticipated at the beginning of the month, given the circumstances. And the circumstances being Corona.

Expenses for April have been reduced, and we anticipate this trend to continue for the remainder of Q4. And their Q4 is the April, May, June, I think. four and their q4 is the April May June I think as we head into May and June we should see an uptick in demand for our higher gross margin beverages which should increase overall gross margin of 34 35 percent from the new low of 32 percent so you notice that also then higher margin things stop selling so no that would if i'm doing deep research i was thinking i go in i start looking to see what is their higher margin products i suspect these are the products that are around um hotels and also around entertainment

i would believe i don't know what i'm going to assume that like water is a big one for them in terms of margin because it boom, there we go. Right. And you know, you got boom, Craven here, White Rum, boom. And I'm not even going to go into the thing. But yeah, you get, if that now go on, not now go on. So if the place is locked down, I think when they wrote this, they were expecting by now things would have eased up a bit. when they wrote this, they were expecting by now things would have eased up a bit.

And so this is kind of why, these are the kind of forces that push the ending of a lockdown because if the man in the cell more water, boom in a brother. Yeah, and if the construction site is not open, boom in a cell.

I don't know how left off bars in the markets for them bars is a huge one for them right everybody boom special yep yeah so it is a consideration there for both gk because it's also hit GK same same industry competitors so this also hit GK is hit and we sink oh was was it I say that we have a friend said friend separate now might be a different case Richard Ponder you look like you know in the cure but you're fine no of products they have, you know,

a lot of them are wholesale items. It's not necessarily that we're single. You're not buying condense milk at a party. Is Seprad not the next company? Seprad is our next company. So that is a good... Thank you for that. Segway up.

So yeah, Seprad is our next company, so it's a good one to go into as we close off the select MD point, which is that, and I don't want to feel like we're all banging the industry down, right? I agree where was it Dundas or was it Enel who said that? It was Enel, I think, who said that there will be some continuity

of income. We're not going to stop drinking water. We're not going to stop buying stuff. We might not buy it in the same way so the mix might change so they might get more sales in the supermarket and the shops less sales from the bar but eventually we will bounce back and these companies will survive in the meantime though i mean i don't turn might just be i don't i forgot to mention about um weinka's energy plant as well. So that should offset some of their expenses.

Their spend? Their expected decreasing income from not having the bars and schools and so on. Yes. Oh yeah, yeah, yeah. Yeah, the expense can go down. But you can't grow a business through cutting expenses.

The JP snacks. Again? The JP snacks. The JP snacks is also something major. Yeah, the distribution deal for them, right? Well, it could be home because of the school thing. So there may be more snacks. Yeah.

Yeah. I'm sure there's a change in the consumption, a rise in the consumption. Well, I mean, I know I've been buying more snacks. Yeah. Yeah. I'm sure there's, there's a change in the consumption and a rise in the consumption. Well, I mean, I know I've been buying more snacks personally. So, I mean, like,

yeah, the Corona wave finally reached me. Yeah. Nah, I'm not going to lie to you. Nah, I'm not going to lie to you. Yeah.

Yeah. So, um, changing consumption because like certain markets have started to react in certain levels. So, yeah yeah so um yeah yeah yeah so there is there is a change that has to happen so um in the short term it looks

a little different but nice segue earlier for Seprad which is our next one so Seprad is a little different now how you feel about that I really like Seprad. Seprad currently is about half my portfolio, honestly. I don't know. So Sean, hold on. Sean, you did say earlier,

say Signos is half your portfolio. No, that was not that. Oh, don't let that. Okay. No, no, no. So Seprad is half your portfolio. Strong pick again, brother man. I like, holy pottings I like with Seprad is half your portfolio Strong pick again brother man I like Holy pottings I like with Seprad

I like the fact that the sugar is basically written out So automatically You know you have You're comparing numbers to those heavy losses That you're not comparing to So Abibu site in there What I'm really saying

March quarter You're comparing a better business this year to a weaker business last year. Yeah, than I made it earlier. So I like that. I thought about that. I think I really, really like that. We see where they're going. I think the amount is very significant.

Shall I mention the last quarter? I remember that it was 139 last year this time and this year it was just 15. In terms of 15 million loss coming from the sugar operations?

I realized there was a 6% increase in the revenue. Made a little note about that. But the net profit from the continuing operations went up 43%. From 450 million to 647 million. Yeah. So I was like, you know, with a 6% increase in everything,

that shows the managing expenses. Exactly. So it means that the hits are leaving. So strong point there. But they're not sleeping on that alone. They are doing, I mean, Separatists are massive. Yeah, man. I see them focusing more.

When I checked their annual report, I see they're focusing more towards distribution. They're going to try to streamline that build a few more warehouses and make sure they have their distribution network really tightly set up you know so i like that as well because i think that you know naturally when you have distribution you can manage costs again so it that's another point of the face of consumer consumer indeed I saw the exports them pushing exports again the surge milk to Trinidad

we also know they've been exporting them so them put another focus another one of their pivots is towards focusing on the export with beti, swizzle cool fruit those kind of products that they have over there so i'm really liking the types of moves i'm seeing them make i agree so i i as i say i have half my

portfolio in there so i'm really liking what i think they have to carry come and the final thing is the dairy factory move and yes that to too. They consolidated that. Yeah. And the next thing they have... So Nestle is moving back into the milk market. Yep. Since Nestle came out of the milk market, I didn't buy any milk at all because of how

brand loyal I was until when they come back and buy back a box of milk. For years, I haven't had cereal in Jamaica at all just because of there was no Nestle milk. Wow. And they have a lactose intolerant milk now.

Yep. Sorry, milk for people who are lactose intolerant. Which is the majority of Jamaicans. Not the majority of Jamaicans. Milk drink are Jamaicans, milk drinkers oh yeah and guys

cheese is milk and ice cream is milk and butter and butter I know people like I know people like me tend to pretend that ice cream isn't milk

and that we're not lactose intolerant. Anyway, I believe in that. I believe in ice cream, but I do also believe in Sepron. Strong, strong, strong, strong company. Too many business lines. That milk point being regional is also a huge thing. And controlling the distribution, like like you say is also great yeah and are they i don't know if i have that wrong are they still undervalued on a pe basis they're

24 times so maybe they're not undervalued maybe they're fairly ish yeah well the thing is what i'm looking for future profits so with the sugar of the books and the new things that are coming online then you might see a shift in the kpe downward yeah i mean keep in mind you know that quarter here the march quarter here i think it was net profit was up 102 percent i think yes that's correct that's correct that's correct and that is their three month report report, right? Three months. Yep. Three months ended March 31st. So if you look ahead, 24 is not coming off of this. Yeah, it's just, to me, clear. Even with a corona hit?

Even with a corona, they're comparing to those huge losses. So even if they take a hit, I don't know if it's going to be the same kind of hit that those previous losses were putting. The kind of strain that it was putting on the books. Especially as we said earlier with their products being a lot of household products from the get-go.

So the hit may not be as wide as we see in Coo. Who had all of those other bars and parties etc to boost their sales I remember they have that deal with Red Stripe as well

what deal with Red Stripe are they the ones with the deal with Red Stripe where Red Stripe wanted I think cassava to use in their beers instead of importing and borrowing yep yeah what's the deal exactly um they were going to partner with red stripe um i'm not sure if so one part yeah i think he did so one party is going to provide the land and then the other

party is going to provide the labor i'm not exactly sure they're watching there they have thing there uh they have the sugar lands yeah they're not producing sugar anymore but they still own the land so they're looking for something to do with it they had a red stripe they are negotiating and they're also speaking to coconut industry board about that so what they're looking for is that cassava they'll grow cassava on the land and red stripe will just be the person to sell it to. And with the coconut industry board, they wanted more coconuts and coconut products. So what they'll do, they grow the coconuts on the land. Basically, lease the land from Seprad so they get that income.

And then the products, they'll make other products more than just coconut. So coconut water, packaging, that type of thing there. And Seprad separate put that into their operations and sell and distribute them so there are a lot of stuff so i'm not sure i'm not really sure on what exactly they're going to do the line yet because i haven't seen anything definitive on we're going in this direction but that's the two talks they were having coconut and cassava so we shall see i haven't heard any mention of it since i've seen the cassava article was september 2019 so send me that cassava article so i'll put in the show notes um and i like when i hear that

two growth options from them require two industries like that coconut and cassava one it helps a lot about it helps a lot of other farmers but let's be realistic i mean coconut industry board owns a huge chunk of separate part of separate if separate is gonna ask them for something that's gonna allow them to make money and also allow separate to make money i suspect they're gonna hear a yes uh i think it was i think the coconut was approaching them i was sending that link as well oh wow i and on the other side you have um you have you have what was the other people you said who were the other people that you said sean you're not muted sir it's done this month oh sorry Dundas man oh sorry

thank you general Dundas sorry what were you saying sorry I forgot my point there are two people needed for it one is a coconut industry board which I like and they were saying Red Stripe with the cassava and Red Stripe which they seem to have a very close thing

they do have a plant together like an energy plant I can't remember I can't remember that I know Red Stripe have an energy plant i can't remember i can't remember that i know red stripe but i don't know if it's both of them yeah i don't know if red stripe have a co is it called a cogeneration plant um who knows the cool manufacturing agreement withle. Or they're working on an agreement with Nestle. I have to check exactly what it was said. I think they're going to utilize

the dairy plant and Nestle will use space in it to manufacture a very local dairy operation. Which is still I'm looking at the article now and I'm realizing it's an old article. 2014 old. Six years old.

And it was Wissinko saying that they identified a partner for their cogeneration plant. And they will join Bear Maker Red Stripe and Poultry Producer Jamaica producers, which have invested in cogeneration plants so i guess maybe it's just it's not maybe the same plant maybe just like them yeah who knows uh what i'm seeing a 2020 article that references the plant and it still just says we see in conrad stripes so it doesn't seem that separate is in there oh yeah this one was on march 8th 2020 where they're talking about jps and they're referencing some companies that came off the grid already and when they mentioned in the jp the red stripe plant they say mentioned we sink and red stripe and what is it combined heat and power yeah so it's a combined heat and power plant with Wisinco and Redstripe,

based on what this article is saying. Okay. I'm seeing one where it says Seprad invested in two LNG power plants. Yeah, Seprad uses a lot of power on their own. I mean, they're major, major, major companies. Seprad, again, is one of the – I call it a pension company. companies separate again is I wanted it I call it a pension company if you if you have a I don't know if you have a a pension need I wouldn't tell anybody to make it their pension but I if you

made your pension you would not necessarily be in a bad place so I mean I really like separate in the long term long term meaning over the next year and over more than a year 10 20 years you can't go wrong owning seprad if you bought it now all right uh so next up we have sagicore sagicore which we kind of touched on already so you're kind of easy yeah which one of the guests do you want to take it? Enel, Sean, Nicholas, Dundas? Wait, isn't that Scotia? It is Scotia.

Oh, yeah. It happened to me all the time. I remind myself by saying G is Scotia. So S-G-J is Scotia Group, and S-J is Sajikor. Yeah. But, yeah, Scotia Group, group what you guys feel about this one i don't i don't have much thoughts on scotia overall that's like they give good dividends but that's for what i'm looking for it's not really there you know i don't see much

room for growth so i really haven't looked in i mean um i've heard i've heard um ryan stroud mentioned something before where he's saying big up ryan five solid definitely what indeed indeed praising praising the the dividend from them right that as well as um looking for a possible um buyout buyout you know he did yeah i think they're existing yeah he did mention that i have said that so yeah i think we said that on the last one yeah so that would be interesting to look out for it does not but you can't look over you have to own it from now right because you know the second that news hit you know the share price will fly I don't know

I don't know what else to really say on Scotiabank per se yeah honestly I don't have

a lot to say it's just they give nice dividends for me but then i'm not sure we saw some downsizing we see where they were going to sell the insurance and the insurance and didn't sell so i mean i'm here and i'm like i don't know if it was i'd have to check and see if it was sagicore who said all right we can't bother with this and don't sell us the insurance if it was kosher who said it or if they just both decided that hey look this is not going to work

right now so maybe that might give me some thoughts if when i check that but right now there's really not much on my brain for them okay well i mean the the the deal i believe it was let's say it's mutually called off right yes and then i had no and they had no expectation around around the trinidadian side of things but i we mentioned it earlier which is that the it seems like scotia is still up for selling and i i could just look at the leave in the region right they've sold off so many arms of their business within the region to other people, but they've kept the one in Jamaica and Trinidad. Okay.

You look like you want to leave. You're just looking for the right exit. So if somebody buys you, it might be a big deal, right? You might be in the right place. Who knows? Maybe one of those small finance players might level up and buy in. Who knows? Buy in the group and rename it, take on the risk.

That could happen. Outside of that, though, as the businesses know, it doesn't seem to be very attractive. Outside of the same thing you said, the dividends. They actually paid the hugest dividends last year. We said that last episode, that on an average basis at the 50 odd dollar price they would have paid an average of eight point something percent the yield was eight point something percent

in terms of dividends last year uh now with corona with them having to take on e-sales and all of that stuff i don't know how realistic they are in terms of growth prospects so outside of news i don't really see anything sending them spiking um and unless they don't have a special dividend which i could because that's what you do right but no they're also prevented from paying dividends because they're the b.o. they're under the b.o.j mandate b.o.j request indeed yeah so boring company not boring but they're the least active for their size within their sector i would say agree yes yes of course if you own a lot though you're looking for a contest but i kind of said this dividend cutting down the dividend again damn rough uh let me speed things up a

little bit we are now at sil sterling investments limited nobody know them yeah they're actually their last report was where was they had a good increase i don't remember exactly but i know that their profit margin was they had a good what was the cause of it um let me try i think they're comparing to a loss. My memory says I think it was a loss they had before. Let me see if I can get the statement right here so I don't chat any foolishness. What do I think we do? All right.

So we're seeing here. Where did it come from? Yeah. So they had a 27 mil bit of interest income. But while you look for it and get the details, I'll give a once over how I see Sterling. They invest in US dollar assets and they invest outside of the country. They try to serve in what they do as a as a protection or some would say a hedge in some respects against um local occurrences appreciation uh yes so yeah they do they do state

that um and they had a bit they had a few losses last year a few quarters including the first quarter that including the first quarter. Including the first quarter, which they're now comparing to profits. So 4.5 million US dollars worth of profit. Make sure they're in US dollars. I believe they do report in US dollars. Yeah, they do.

They're a big kicker for me for sterling. Wait, wait, wait. Stop. They report in US? I believe they they do big kickoff for me for sterling but wait wait wait wait stop they report the us i believe they do but i could be incorrect that is not what i'm looking at no they're reporting jdollars apologies i'm seeing here where they had a big fx hit last year they're always so if it exceeds so if it goes up then sterian goes well that caught us, if FX goes down Serian goes poorly that caught us

not poorly but he got us in so last year they took a big hit this year they had a gain on it so that helped revenue so that helped revenue a whole lot and then their expenses were up as well

a whole lot where was that one unrealized loss Their expenses were up as well. Where was that one? Unrealized loss. And structured notes. So that was a big deal there. They had bought into something. They had a right issue. And the proceeds from that they were going to use to buy, to invest more more increase their portfolio

Sterling is very tied to the FX rate as Rene says heavily tied to it if the dollar goes down and down and down Sterling is making money on that side what I'm seeing here is the effects last that they had last year

was the big thing because when you change when you carry it come back that's pretty much it because the fair value loss that they took this year is i mean it's bigger than the fx loss that they had last year but it pretty much it leaves back yeah the it leaves by the fx loss that they had last year, but it pretty much, it leaves back, yeah, it leaves back the FX loss and they did a bit better revenue-wise. It's profit versus a loss. Yeah, that's really what it is. It's profit versus a loss.

Yeah. Yeah. And it's on the same, similar sort of revenue. So the revenue was 21.8 last year and this year it's 27.7, but it's not being hit to the tune of 20 million. In FX losses. Inx losses exactly which is what really gave them a hard time on the growth side of the business that they they invest heavily in u.s structured stuff and and on the u.s the growth of the u.s market does help them and as we know right now as at this point at least the u.s market is flying

to high heights height higher heights than it's ever been so i suspect that sterling might actually have some good news to report for the q2 and i'm saying that without having done a deep dive guys so don't don't kill me if it's not um but do this market which which market exactly but i don't think it's u.s stocks they have everything i am and i think they do have u.s stocks or they are they invest in or their face they face the movement of u.s stocks they're probably in a couple of um they're probably in a couple of funds they mention it you know the s&p 500 well they might have just been mentioned in the S&P 500 and the Dow Jones because of it

but I believe they do have some exposure to the US market so as the overall US market rises they benefit I'm not sure if they have any stocks though we do have deep dive direct stocks maybe not

but you're not sure We'll do a deep dive. Direct stocks, maybe not. Maybe not direct stocks. I'm not sure. You'd have to go deep in there. You can hear from my lack of intimate familiarity with it, I don't own any. I bought some SIL ones because I bought accidentally thinking I was buying

DIL. Don't trade while you're tired. because I bought accidentally thinking I was buying BIL. Yeah. Don't trade while tired. As I put the order in and as far as I'm concerned, I bought some BIL and I checked my account the next day and I said,

but where did this come from? General. Yeah. It was a wrong buy at the time. That's the only way I've ever owned it but if they are tied to US earnings or the US market and if they get exposure to the US market they obviously might and and depending on the time you're at exposure so their quarter ended at the end of their Q2 ended at the end of june so if they're exposed to the u.s market and if the u.s market ended end of june

up or whatever they're in ended up i'm the listener you know to go and ask your licensed investment advisor about this or do your research on it then i could see them reporting a stronger q2 um in a space where not many people have in the finance space where not many people might have that that time period as good right and i don't think they have heavy e-sales if they have any e-sales at all i don't think they'll be exposed to it but it could be depending on what they hold and i don't don't know, I think they had something exciting. Did they have a stock split? I think they had a stock split, no?

Or a proposed stock split. That's where they go? Somebody had a proposed stock split. I think it's Sterling, but I could be wrong. And they put it off. You sure it's not the Jamty one? No, no. it was one of the

jamty i think there was something about um i don't remember you can scrap that you can scrap that yeah i i i remember it being them but i could be wrong um and we don't need it to be right what i do know is that they do pay dividends consistently and they'll probably continue to pay dividends consistently nice older money company i think that was a, older money company. I think of them as a nice old money company and a nice long money company. Yeah. Otherwise, sorry, Dana, you were

saying something? Did you hear that sound? That bike? Yeah, that was my background. Sorry about that. Oh. That is so frightening. For a second. They are pulling through. oh that I that I surprised for a second ying ying ying them a pull through

ying ying frightening Spanish don't believe in that I've seen it I know them reach hi guys Randy here reminding you that this is part

two of a three piece episode so the first part was episode 44 this episode is episode 46 and we will have the last episode where we wrap these companies at another time in the future but just wanted you to know understand why it is that it ended without our typical sign off and

i'll do the typical sign off i'm at rt row randy row on twitter and my co-host is danai and you guys also heard from enel sean and nicholas in 876 invest in this episode and they will of course be back when we wrap this one up hope you guys enjoyed it look out for the other one soon Hey guys, Taye Diggs here giving you some weak end movement. I don't know how to record the music and record it at the same time, so we're going to give ourselves some more music. Listen to the choreography. It's right, right, double up to the side, slow body roll. Two, three, more. Then stop, stop that COVID. Stop, stop that COVID. I'm gonna freeze.

Wait and freeze. Do your own freeze and squeeze those nips. Yes, it feels good to move, guys. It feels good to move. Everybody feels good to move everybody's stressed out nobody wants to die from covid we all know that black lives matter but you know what else matters