Month: April 2018

On Thursday, PepsiCo Inc. reported its quarterly review which was better than expected. Pepsi recorded double digit growth in some markets but failed to improve its results in the soda market in the U.S. as many persons are now more health conscious than ever before. Current trends are recording a shift in lifestyle behaviours where consumers are limiting their consumption of carbonated soft drinks.and are leaning more towards healthier juices. According to Beverage Digest, the consumption of sodas fell to a 31 year low in the US in 2016.

In an effort to combat this development, PepsiCo has introduced new drinks to the U.S. market that have yet to meet wild commercial success reminiscent of campaigns past . However, since Pepsi introduced four new flavours of Diet Coke there has been an increase in demand for its Coke Zero sugar beverage. Sales for Coke has outperformed other beverages and because of this, Pepsi has decided to increase its marketing spend on colas.

Revenue in PepsiCo’s beverage unit in the U.S. fell by 1 per cent; as soft drinks account for nearly a third of total revenue for PepsiCo. Overall revenue was USD$12.6 billion compared to the forecasted value of USD$12.4 billion. There was a 14 per cent increase in sales in Europe and the sub-Saharan African markets. On the other side of the globe, sales in North Africa the Middle East and Asia increased by 7 per cent.

In addition to beverages, PepsiCo also markets popular brands such as Frito Lay chips and Quaker Foods, which have done better on the market than beverages. Frito Lay sales increased by 3.4 per cent while Quaker sales remained unchanged due to negative pricing.

PepsiCo is currently trading on the NASDAQ at USD$103.26 per share.

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Recently, it was reported in international media that two black men were arrested in a Philadelphia Starbucks after the store’s manager called the police. It was later reported that they were waiting for an associate for a business meeting. A video recording of the incident went viral as customers expressed outrage and disbelief at what happened.

According to YouGov Brand Index, Starbuck’s reputation has been damaged as the company’s Buzz score fell from 13 to negative 8 since the news of the incident became public. YouGov measures the public’s perception of company brands based on what they hear or experience. Scores can range from -100 to +100 with zero being neutral. YouGov interviews 4,800 people every day and conducts over 1.5 million interviews per year.

Starbucks has since been trying as hard as possible to tackle the ‘negative press.’ They first apologized and then reported that all 8000 plus stores in the US will be closed in the afternoon on May 29 in order for employees to undergo anti-bias training. They will be trained on how to make all customers feel welcomed. This training will be critical to the future success of Starbucks.

Surprisingly, Starbucks’ share price did not fall significantly. On Monday, the stock closed at USD$59.43 and on Thursday closed at USD$59.22. Evidently, the company’s response to the incident has somewhat appeased customers and investors. However, the company’s bottom line may be affected as it is estimated they may lose between USD$6 million to USD$8.7 million in sales once the stores are temporarily closed.

Many persons describe Starbucks as a ‘third space;’ a comfort space which is neither home nor work. The coffee may be expensive and not well known for being of superior quality but customers enjoy the brand and the space. This is why it is crucial for Starbucks to effectively address the situation and ensure it does not repeat itself.

Even though the incident is not a one- off situation, we at SSL continue to recommend the stock to our clients as it has consistently performed well over the years.

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With a total of nine initial public offerings (IPO) confirmed so far to be launched in the first quarter of 2018, the volume of listings to the Jamaica Stock Exchange strongly indicates that the total number of companies to list will surpass that of 2017. 

There has been noted increase in companies choosing to raise capital by offering part ownership through shares on the stock exchange. This is partly due to fringe benefits of listing which include an entity avoiding taking on additional debt, and five years break from paying income taxes. 

What kind of companies tend to go to market you wonder? Firms ideally should have a marketable value proposition and have at least a few years financial statements to help fulfill the process of filing a prospectus. They should be willing to adhere to the regulations that govern publicly traded entities and should be prepared to offer long term value to shareholders. 

The Jamaica Stock Exchange got a boost of confidence in 2015 when Bloomberg noted the 39 year old entity as the best performing exchange in the world. For this year, medical tech company Elite Diagnostics and new financial entity Sygnus Capital are among the first expected to launch prospectuses in January. For the first time ever in the stock exchange’s history, an educational institution- University College of the Caribbean will seek to offer shares to investors. 

Additional proposed entities on the roster for a 2018 listing are Caribbean Insurance Brokers, Everything Fresh, Winchester Medical, Medican JA and others.

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PanJam Investment Limited has expanded its interests recently to include a 20 percent minority stake in a micro financing company, Term Finance Jamaica Limited. The micro financing company is a subsidiary of Term Finance Holding Limited, which has an 80 percent stake in the  company. Term Finance operates in six other Caribbean countries in addition to Costa Rica.

But what makes Term Finance Jamaica Limited stand out when there are many other similar micro financing companies?

Term Finance operates solely online and who wouldn’t prefer that approach. We live in a technological age where the click of a button on a smartphone or a computer is more widely acceptable than walking into an office. It is more efficient, faster and saves time. This is not only beneficial to clients but also to the company as they save money from not having to set up and operate a physical branch.

Term Finance began operating online in Jamaica in September 2017 but went live in November and in just four hours of business, the company issued its first loan. The secret is in checking the applicant’s credit score. Once this is completed the process takes little to no time. The company achieves this through algorithms and proprietary systems and technology that help to reduce costs. Term Finance wants to ensure that their customers are able to save money in the application process  and also through the low interest rates. The company’s three months loan is priced below 10 per cent but in other countries the rate is at 12 per cent.

Term Finance Jamaica Limited is looking to increase its loan book in 2018 and hopes to achieve this through more frequent engagements with the public.

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