Month: June 2018

Another Jamaica Public Service Rate Hike?

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As we enter the sweltering temperatures that signal of summer, it is safe to say that the Jamaica Public Service (JPS) is anticipating a spike in revenue from an increase usage of appliances. Typically, during the months of June to August, Jamaicans brave the heat with the use of air conditioning units and fans. Additionally with children being home for the holidays, parents receive higher than normal utility bills when compared to months where children are at school for five days per week.

In recent times, JPS has submitted a request for a new rate review to The Office of Utilities Regulation (OUR) on May 3, 2018. They are seeking to refinance USD$179.1 million of its existing long-term debt that is based on an interest rate of 11 per cent per annum. This review, if approved, will translate to a 1 percent increase in charges to customers. The Jamaica Public Service possesses this power under the Electricity License, 2016, which makes provision for “extraordinary rate reviews owing to exceptional circumstances that have a significant impact on the electricity sector/ or JPS”.

Being a pure monopoly in its field, JPS has the power to dish out rates that Jamaicans must accept or choose the alternative of solar power. JPS has been plaguing the country with high rates since its inception and being safe from competition, is able to project high costs on customers.

With the improvement in Jamaica’s business environment, is it time for another company to show their competence and offer their services? There is always the possibility that the Jamaica Public Service will be forced not only to reduce rates but increase their level of efficiency if they fear losing market share. Perhaps it is time for more options to present themselves, especially in light of the new rate review.

 

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The era of the Millennials

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The subject of millennials has been the topic of discussion in countless conversations across corporate boardrooms and social media platforms over the years. This term describes both Generations Y and Z, who are individuals born between the years of 1981 and 2001.

In recent times, there has been many negative connotations attached to the term that has brought about a stigma against millennials, which has had an adverse effect on the way they are viewed in society.

Time and time again Baby Boomers (individuals born between 1946-1964) have stressed how entitled millennials are; most often because of how drastically their lifestyles differ. Researchers deduce that the main difference between Baby Boomers and Millennials is the advancement of technology.

What individuals have access to today is light years away from what the generation before even dreamt about. This affects the way decisions are made by millennials as well as how they craft priorities.

Millennials are further criticized for not owning homes and starting families by a certain age while empirical evidence suggests that many cannot afford to do so. Additionally, it can be argued that the quality of job satisfaction has plunged since finding fulfilling employment has been more difficult.

There are Baby Boomers who may think they despise Millenial’s sense of entitlement. It should also be taken into consideration that bad economic decisions from decades ago continue to plague Jamaica which further deepens the financial burdens borne by the current workforce. Issues such as inflation, currency depreciation, perpetual debt and undesirable savings offerings are a few of the economic depressions that force young adults to alter priorities. The cost of living that previous generations enjoyed  compared to the cost of living today.

Regardless of economic struggles, both the local and international financial markets have provided opportunities to gain wealth through buying, selling and holding equities and bonds. Instead of saving money in a commercial bank with subpar interest rates, millennials have found viable investment deals that may not have been available decades ago.

The discipline of investing is an important lesson that parents can teach children as well as their counterparts as it is becoming more and more trendy. Investing has proven to be even more profitable than playing it safe with a regular savings account.

We salute broker houses and securities dealers for playing the role of an efficient middleman in accommodating these investments. The highlight about broker houses is that a single individual is not required to have extensive knowledge about the workings of the stock market to realise valuable returns on investments. When you can receive up to 30 percent within a year in performances, there is no incentive to leave money idling in a savings account.

In the past,  Millennials have been criticized for their lack of savings or making proper plans for retirement. Empirical research states that the current savings plans available are still under regulations that were implemented decades ago. Contributions to pension plans are voluntary, most times tied to employers, and is dependent on the discretion of your employer to contribute anything substantial.

Furthermore, the fraying of economic and social safety nets over the last 40 years has left pensions vulnerable to emergency withdrawals and subject to change in value based on interest rates and inflation. Economists have argued that the stipulations for retirement have to be changed or regulated for Millennials to have an ounce of benefit from them in the future.

Millennials have found that delaying traditional goals until their later years has created time to focus on career development and preparation for these plans they have stalled. The availability of new investments schemes has granted the opportunity to gain more in wealth in ways deemed unconventional.

 

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Tax on Coffee May Reduce Profit for Salada

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Many may think an 80 percent increase in profit and a 19 percent increase in revenue just halfway through the financial year would be reason to celebrate for a company, but that isn’t the case for Salada Foods Jamaica Limited.

The Company is anticipating a levy on coffee beans this year which may very well derail most of the gains the company has made so far. Salada is expecting a significant impact on operating revenue stemming from imminent  government taxation and while the company cannot predict what may happen in the coming months, they are preparing for possible pitfalls ahead.

Effective April 1, 2018, Salada is expected to pay USD$1.41 per kilogram for imported green beans and USD$2.40 for value added products. Currently Salada pays USD$1.52 per pound for imported coffee in addition to USD$2.52 per pound for Jamaican coffee blended with the imports. The company already finds it difficult to get the grade of coffee needed to meet the 20 percent quota for local beans for coffee blends.

Initially, the company did not suspect they would be subjected to the coffee tax as part of an ongoing effort to protect local farmers. The assumption was that the tax would be on roasted and ground coffee sold to hotels. On the contrary, their assumptions were incorrect and despite instant coffee being of a different grade, it was also targeted.

For the six month period ending March 31, 2018, Salada reported an increase of JMD$77.89 million in sales of JMD$404.37 million in 2017 for the same period to JMD$482.27 million in 2018. While net profit increased from JMD$44.9 million to JMD$80.2 million, Salada saved 22 percent on expenses in order to achieve this result but the tax on coffee may very well thwart their efforts.

Salada is the sole manufacturer of instant coffee in the Caribbean region and currently trades at JMD$13.00 on the Jamaica Stock Exchange.

 

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Second Largest Jamaican Denominated Bond Issue For NWC

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For years, privately owned companies have had many different channels through which they have access to much needed credit. Financial institutions have awarded eligible entities with loans to assist with several operational activities. Recently, with the evolution of how capital can be raised, many companies seek the help the public through the issuing of bonds or the help of an Initial Public Offering (IPO). These measures grant companies the opportunity to facilitate repayment of debt, infrastructure updates, expansions, among others.
The most recent, and second largest bond issue in Jamaica was done by the National Commercial Bank Capital Markets on behalf of The National Water Commission (NWC). Investopedia describes a bond as is a fixed income investment in which an investor loans money to an entity (corporate or governmental) which uses the funds for a defined period of time at a variable or fixed interest rate. Bonds are used to raise money and finance a variety of projects and activities. Owners of bonds are debtholders, or creditors, of the issuer.

The issue by NWC will be a total sum of $15 billion Jamaican Dollars. It will allow the company to finance the debt it has racked up attributed mostly to the depreciation of the foreign exchange rates, as their loans are foreign currency denominated. This will also assist with mitigating the currency risk they face without having to use most of their revenue (which is the case now) to finance debt. The bond will further be used to develop much needed infrastructure and network to regions across the island which don’t have access to consistent running water.

NWC is a private company which provides a necessary utility to Jamaica, this therefore makes them one of the country’s biggest assets and therefore needs to be protected. Prime Minister Andrew Holness aired his pride for the company in a press conference held on May 15, 2018 where details of the bond were provided. He believes that this bond is the first step to making the entity a publicly traded one, which will further benefit customers, as well as the economy as a whole.

 

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Why is Nestle Spending over US$7 billion on Starbucks?

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On Monday, Nestle announced that it will pay US$7.2 billion in cash for the rights to sell Starbucks coffee products in grocery stores and restaurants worldwide. The deal will allow Nestle to market, sell and distribute Starbucks brand. Many may ask why Nestle would spend so much on a segment which only generated US$2 billion in revenue about 9 percent of Starbucks total revenue. The deal is priced three times more than sales.

Nestle is the world’s leading coffee brand, however, in the U.S. it only accounts for 3 percent of the coffee industry. The company’s coffee brand, Nescafe, is viewed as boring by the younger generation and its other high end brand, Nespresso, has not garnered the appeal of many consumers.

The deal was made in an effort to recapture their appeal to trendsetters. Furthermore, Nestle is facing heavy competition from JAB Holding Company who has spent over US$30 billion to build its coffee empire. JAB Holding includes coffee brands such as Keurig Green Mountain and Peets. But the deal should help Nestle keep JAB at a distance.

Starbucks accounts for 15 percent of the coffee market in the U.S. According to market research firm Mintel, a jar of Nescafe and a bag of Starbucks coffee bean cost the same, but Nescafe makes more than three times the cups of coffee Starbucks beans make but despite this calculation, consumers prefer to use the more costly brand.

Starbucks plans to use the US$7.2 billion from the deal to fund stock buybacks and the deal would give them access to more markets. Currently Starbucks sells its products in 28 countries compared to Nestle which is operational in 190 countries. This expansion is something Starbucks would not be able to do on its own without spending a massive amount. The deal is said to prove profitable in the long term.

 

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Black Panther Boosts Walt Disney Co. Earnings

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One of the most recent box office explosions, “Black Panther” has proven to be more than just excellent cinematic artistry, but a great profit boost for Walt Disney Co. [NYSE: DIS]. Their second quarter profits have soared past estimates predicted by Wall Street advancing to USD$1.84 in earnings per share, while sales rose to USD$14.5 billion, compared with predictions of USD$14.1 billion. The worldwide movie phenomenon boasted USD$1.3 billion in ticket sales since its release in February and is still playing in theatres across the globe. These numbers have caused a ripple effect for Walt Disney Co.  through an increase in theme park visits during a typically slow season as well as the boost to a television business that’s being negatively affected from an overall decline in pay-TV viewership.

Additionally, more movie releases, such as “Avengers: Infinity War” and the upcoming “Solo: A Star Wars”, can assure the company’s profits for the first half of the year in their studio segment. Up to May 6, 2018, Disney is responsible for a third of the domestic movie business, as reported by Box Office Mojo.

Regardless, Walt Disney Co. faces an uphill battle with their cable division, as it portrayed a 4 percent loss is profits year over year. They are currently taking steps to boost earnings in this segment through the acquisition of 21st Century Fox Inc., but they face significant competition as U.S. cable company Comcast Inc. is rumoured to also place a bid for said company. This among other factors has propelled the company’s stock price to remain largely stagnant in recent years. Strong competition from companies such as Amazon.com Inc. [NASDAQ: AMZN] and Netflix Inc. [NASDAQ: NFLX] has ignited investor uncertainty, which caused the stock price to average about USD$100. This price has caused SSL to recommend it as a buy for clients. The company has the potential to increase share value if their current investments are successful along with the benefits they are set to reap with the present movie releases and increased ticket prices and sales to theme parks.

 

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Credit Card- A Blessing & A Curse

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Everyone knows that little rectangular piece of plastic that several individuals carry around in their purse or wallet. This is what we call a credit card, which is issued by a financial institution, most commonly banks, for consumers to purchase goods or services at the initial expense of the institution. This I like to call short term borrowing.

Do not get this confused with the other rectangular card called a debit card. They are two different types of spending, either spending your own money (debit) or spending the banks’ money (credit). The word credit merely means providing the resources or money to another party without immediate payment.

As Jamaicans, we can relate as many shops or wholesales offer regular customers the benefit of ‘Trust’, where they take the goods and pay at a later date. It is the same concept, just that a credit card allows you to purchase an item or service (the retailer gets their funds) but you pay the bank at a later date.

The phrase short term borrowing is used because minimum payments are due every month end at a specific date to lower the principal and interest and if those payments are not made, then the card is blocked from usage.

Based on a 2016 survey, over 67 percent of persons over the age of 65 was in possession of a credit card and in Q2 2017, there was about USD$ 780 Billion in credit card debt in the United States.

Credit cards can be a blessing, but how? When used responsibly and how they are slated to be used, there can be numerous advantages. Firstly, when making a reservation, for example at a hotel, a credit card is needed to either hold the reservation or be on file in case there has been any damage during your stay. Secondly, they are amazing for emergencies, when you don’t have ready cash to deal with medical bills, buying food etc.

Additionally, before the introduction of debit cards, credit cards were the only source available to allow online banking which is deemed more convenient to consumers and also provides security against fraud. Some banks ever offer bonuses, giving cash back and miles for travelling. However, one of the main uses of a credit card is to be able to have good credit history so that it is easier to get loans and even lower interest rates.

However! The Curse! – Most owners of credit cards do not use them properly or responsibly. What persons make the mistake of is making their credit limit higher than what they can afford or even higher than their monthly paycheck, which makes it difficult to repay when in debt and causes financial distress. Persons tend to even have 3 or 4 credit cards which may result in more debt and then is only able to make the minimum payment, fall short of it or even pay late. This can cause a problem.

To avoid getting bad credit and decreasing your chances of getting a loan, being able to rent or even getting employed, be smart about your credit cards, make on time payments, more than the minimum if possible, stay within your limit and have self-control.

If you generally cannot pay for an item or service that it is not an emergency or need, do not charge your credit card. If you know you have no self-control, do not get a credit card. Do not get another credit card if you don’t have to and always try to pay your bill on time.

Do not fall for the temptation of credit cards, they are there to give benefits not put you in debt. It is important to live within your means instead of finding a different source of income by loan.

Be smart and have good credit or stay away!

 

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Supreme Ventures Limited Testing Mobile Betting App

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Supreme Ventures Limited (SVL) has reported that the company has made progress on its mobile betting app project but will not reveal all the details to the public until testing is complete. The company has partnered with Advanced Integrated Systems Limited to use its Quisk platform to roll out the app. The app is being tested with sports betting before any other game.

Advanced Systems Limited has however indicated that the patent is still pending and authorities have not yet implemented any legislation to regulate online gaming. Another ambiguity lies in the regulation for online payment in online gaming.

The Bank of Jamaica is responsible for the regulation, however, the bank’s oversight does not include online gaming on a mobile device. The Betting, Gaming and Lotteries Commission (BGLC) stated that they will accept any payment method the Bank of Jamaica approves.

According to SVL having a mobile online gaming app will make it easier for persons to place bets. The use of Quisk will allow for faster payouts and access for the funds to be used to place more bets throughout the day. Mobile money will provide automatic audit trail for each bet and the banking sector will still be able to monitor KYC data or know your customer data.

For the quarter ending March 31, 2018, Supreme Ventures Ltd (SVL) reported a 14 per cent increase in revenue from JMD$13.39 billion in 2017 for the same period to JMD$15.29 billion. Profits increased by an impressive 49 percent from JMD$418.3 million to JMD$618.4 million. Lottery games continue to show increased growth in profit compared to the previous year, from JMD$556 million to JMD$796 million, a 30 percent increase in growth. However, horse racing continued to lose even more than it did in 2017 form JMD$19 million to JMD$40 million this quarter.

Nevertheless, Supreme Ventures  Ltd (SVL) continues to soar with an earnings per share increase of 49 per cent from $15.77 to $23.45 and we at SSL recommend our clients to include this stock in their portfolios. The stock is trading on the JSE at $12.20.

 

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At What Age is the Ideal Time To Buy A Home?

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The answer?

There’s no right age to buy a home.

But what should be the determining factor is where you are in your own life. Purchasing a home is the most significant investment most owners make in their lifetime, and your status as a homeowner can help you or hurt you financially speaking.

Perhaps most importantly, it affects your quality of life.

When Should You Buy?

Buying a home can benefit you at any age, young or old, as long as the conditions are right. You might be ready to buy when, at a bare minimum, you:

  • Can afford the monthly payments and expenses of home ownership;
  • Can get approved for a good loan (or better yet, pay cash);
  • Plan to keep the home long enough to recoup transaction costs from buying and selling, as well as any price declines;
  • Can afford the risks, including surprise maintenance expenses or your home losing value in a weak market.

None of that is meant to suggest that you’re irresponsible if you don’t buy a house at a certain age. Owning a home can be an expensive, time-consuming, and frustrating endeavour. Renting comes with its own set of challenges, but it’s a lot easier to pack up and leave when the only thing holding you down is a one-year lease.

At What Age Do Most People Buy?

It’s important to live your own life, but it might be helpful to know when others typically buy.  There may be good reasons behind the fact that homeownership rates increase with age. On average most become homeowners later in life.

Age Range    Homeownership Rate

35 to 44 years old    58.9 percent

45 to 54 years old    69.5 percent

55 to 64 years old    75.3 percent

Age 65 and over    79.2 percent

Reasons for Buying Young

If you have the ability and desire to buy young, there are potential benefits to getting an early start.

Build wealth: Assuming things go well, owning a home is a route to increasing your net worth. The forced savings of your monthly payments help you build equity in the property, which you can use for another property or other goals.

Price appreciation: There is no guarantee that your home will gain value, but that is what happens in many cases—over the long term. Real estate can help hedge against inflation, assuming your property keeps pace with rising prices.

Reasons for Waiting

If you’re not feeling rushed, that’s okay. Waiting can pay off in several ways. Making a home your own and moving can be a pain, so you may prefer to minimise the number of times you buy and sell.

More certainty: As you get older, you develop a clearer picture of your ideal home. The future is always uncertain, but you gain more information about several factors as you age:

  • Your work location, or your ability to work remotely;
  • Your income available for housing payments;
  • The size of your family, if any;
  • Financial strength.

Instead of being house poor and dealing with your property in your 20s and 30s, you can spend those years saving for a significant down payment, travelling, or doing anything else you want. What’s more, you can build credit over the years to get the best loan possible.

 

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Record Profit for NCB

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For the half year period ending March 31, 2018, NCB has reported record profit of JMD$11 billion. Patrick Hylton, Chief Executive Officer of NCB, lauded the bank for being the first listed institution on the Jamaica Stock Exchange to exceed JMD$10 billion in earnings in six months. Hylton is optimistic that this will not be the last record profit set by NCB as he further boasted about the sustainability of the company’s business model which will push the bank to continue on this path.

NCB reported an increase in revenue of 25.2 per cent from JMD$36.8 billion in 2017 to JMD$46.1 billion for the same period in March 2018. JMD$1.5 billion has been attributed to the company’s acquisition of the Clarien Group. Net profit increased by 17 per cent from JMD$9.46 billion in 2017 to a record of JMD$11.04 billion in 2018. It has been reported that this is because of an increase in demand for investment securities as there is a reduced availability of government paper.

Wealth, Asset Management and Investment Banking performed exceptionally well and have proven to be the main contributor to the company’s operating profit with JMD$4 billion, an increase of 6 per cent from the previous year. Treasury and Correspondent banking is now the second largest contributor after only achieving JMD$3.96 billion in profit despite a 10 per cent increase from the same period in 2017.

NCB utilises advanced digital technology in order to provide enhanced solutions for customer experience. This has been well received by customers as is evidenced in its financial statements.

We at SSL continue to recommend NCB to our clients as we look forward to another stellar performance form the company in the coming quarter.

 

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Allergan Set to Release Game Changer Depression Drug

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Allergan Plc [NYSE: AGN] is a multinational pharmaceutical company that produces both drugs and conducts research and development within the same industry.

It is no secret that AGN specializes in ophthalmology, women’s health and aesthetics products, one of which includes a well-known product and their best-seller, called Botox.

Botulinum Toxin, most commonly known as Botox, is a non-surgical cosmetic treatment which is used worldwide. It is a wrinkle treatment that cripples repressed muscles that is administered by injection through the skin at the site of fine lines and wrinkles.

Generally used by women, Allergan has started advertising a Botox treatment specific to men. This proves that men are starting to be more conscious about their physical appearances, just like women.

Botox’s reported sales has exceeded, fell just below or breaks even with estimated sales. The last two quarters however, sales reported exceeded that of estimated sales, with Q1 generating $817.3 million globally. The company usually has competitive advantage with the fact that Botox is hard to replicate, however, in recent times, Revance Therapeutics Inc announced that they were developing a carbon copy of the same product that research shows the possibility of it lasting longer than Botox.

This news of course places some concern of the longevity of the company and how much longer it would be able to be on top. However, competition is something that also drives growth, it pushes a company to ensure there is maintenance of quality and that research and development is invested in, to add more products and services which allows for the company to maintain and acquire more market share.

SSL posits that it was a good move for Allergan Plc to provide a product for men. Women too long have been looked down upon for trying to enhance what they were born with; times have changed and now men are looking for cosmetic enhancements too.

In recent times we have even realized that men don’t only wear toupees but are now gravitating to wearing wigs just like women. This is a way that Allergan has now not only grabbed the attention of women, but also that of men, broadening their market share and keeping their name above all others.

Additionally, the company has a new drug that analysts say could be a game-changer for depression. In Jamaica and many other Caribbean islands, mental health is something that is still taken lightly by many people; however, it is wide-spread and prevalent.

Information on both products are in the pipeline, so we will see where these products will take the company and continue to watch its growth.

 

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A Frank Look at Gender Disparity in Indian Culture

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In countries such as India, traditional norms are still surpassing the ever-changing mechanisms of modern society. In particular, gender disparity within their workforce still mimics that of century old practices, where women are expected to take care of homes, rather than play the role of “breadwinner”. Though different in each caste, women have tried for years to push barriers and enter male dominated fields even when faced with severe backlash. Some have managed to succeed and create new norms for generations to come. Kundapur Vaman Kamath, founding chief executive of ICICI Bank Ltd., developed a generation of female bankers. Among them are Kalpana Morparia who now leads JPMorgan Chase & Co.’s Indian operations and Madhabi Puri-Buch, who is a stock-market regulator.

Regardless of Kamath’s guidance, Indian women are still facing difficulties in trying to actively participation in the workforce. Approximately 21 million women dropped out of the workforce in Indian villages between 2005 and 2012, while fewer took up employment in cities compared with the period 1994-2005. Because of these numbers, younger generations have opted to stay longer in school to grant themselves adequate bargaining power in the work world and increase their chances of employment. Regardless, older women still fall victim to the expectation of staying home because of lack of pressure to contribute income to households. This wasted labour supply drastically reduces India’s economic potential as labour capital is not being maximized or used efficiently. Many would argue that the male dominated culture of India is the main cause of gender disparities in jobs, but it is also mostly the result of a lack of opportunities that are available to women in both urban and rural areas that are safe, and socially acceptable.

According to a new study by McKinsey & Co., gender equality in the workforce could drive India’s business-as-usual GDP upwards of 18% by 2025. If this study stands true in practicality, then it proves that equality can drive efficiency. Many believe that the act of granting equality means only taking from the rich and giving to the poor, which lowers the incentive of the rich to produce at the capacity that it did before. However, in this case, the workforce would just be more accommodating to the participation of female labour supply so that they can also contribute something meaningful to society. Until policies are changed in the favour of female workers, India’s chance of a higher GDP is stagnant. Women have proved for centuries that they are capable of bringing forth fruitful returns in whatever seeds they sow. Having their talents and knowledge being put to use in a professional capacity can positively impact economic development and growth.

 

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Chukka Eyeing IPO as a Possibility Amidst Expansion

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Chukka Caribbean Adventures recently disclosed its intention to list on the Jamaica Stock Exchange. The news came just as the company reported it will be expanding into two more regional markets as well as improving its service offerings in Jamaica.

Chukka recently issued a $2 billion dual currency bond in order to refinance its debt and fund its expansion. The bond was arranged by Sygnus Capital, who on Wednesday opened its own IPO, and Sagicor Investments Jamaica. The Jamaican dollar portion of the bond has a fixed coupon of 8.50 percent while the U.S. dollar portion has a fixed coupon of 6.50 percent and will mature in five years. There will be a quarterly interest payout on the bond. Chukka currently has a debt of just over 10 per cent and the company is hoping the bond will yield savings of 25 to 30 percent on interest costs.

Chukka is looking to expand its partnership with Carnival Cruise Line whose bigger ports will serve as an advantage to Chukka. Locally, Chukka has been improving its offerings at different locations. The company has adventure tours in St. Lucia, Belize, Turks and Caicos and Jamaica. Chukka Jamaica has seven locations across Jamaica’s North Coast including Negril. In recent times, there has been expansion of a water park, bar and restaurant at its Trelawny location late last year and the addition of a zip line at the Dunn’s River location costing USD$2 million and USD$1 million respectively.

Chukka expressed satisfaction stating that the demand for the bond on the market was high and the interest rate was even more competitive. The company hopes to forge meaningful and beneficial relationships with institutional investors as they continue to explore financing options for growth.

 

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Amazon Rollouts Could Harm More Companies

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Amazon.com, Inc (NASDAQ: AMZN) has been rolling out new efficient measures, which have been threating to areas such as delivery affecting FedEx and UPS sales. In addition, Amazon intends to rollout a new payment system to offer retailers discounts from credit card fees, which could affect big names such as Paypal Holdings Inc., JP Morgan Chase & Co., Citi Group Inc., Mastercard Inc. and Visa Inc. to name a few.

Swipe fees are a USD$90 billion a year business for companies such as JPMorgan Chase & Co. , Citigroup Inc., and networks such as Mastercard Inc. and Visa Inc. and payment processors like First Data Corp. and Stripe Inc., who earn a portion when customer swipe their cards or click “buy now”. Furthermore, credit card transaction fees amount to about 2 percent and .24 cents for debit cards, but big stores such as Amazon and Walmart have negotiated for lower rates based on their large sales volume daily. However, Amazon is willing to forfeit profitability for a long-term gain acting as a so-called payments facilitator like Paypal by exporting or offering to pass this discount to its merchants who agree to take on the Amazon Pay service.

As a result, this means Amazon will group its smaller merchants to help them reduce the cost of accepting electronic payments. Furthermore, since Amazon’s announcement, Paypal shares dropped 4.1 percent on Wednesday, erasing most of its gains of 3.7 earlier in the year. Visa also fell 0.9 per cent.

Moreover, The drawback to this is that many small merchants are sceptical about divulging certain information with Amazon, which may compete with them to sell similar products on its own site. Amazon operations’ main intention is to get a piece of other retailer’s e-commerce revenue to becoming the ultimate one-stop shop.

 

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Cambridge Analytica Speaks Out Against Allegations

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Cambridge Analytica has finally stepped out to deny allegations made against them in the case of widespread misuse of data from millions of Facebook accounts. Cambridge Analytica held its first news conference since allegations surfaced that the Facebook data was used in the aiding of Donald Trump win in the 2016 presidential election, which was represented by Clarence Mitchell, the company’s publicist.

After months of allegations resulting in salacious scandals, Cambridge Analytica’s reputation is still being dragged through the dirt. This has resulted in even the CEO of Facebook Mark Zuckerberg, having to publicly apologise for his company’s wrongdoing especially where privacy policies being questioned.

Furthermore, Mitchell went on to say The company has been portrayed in some quarters as almost some Bond villain, in which he said, Cambridge Analytica is no Bond villain. Also, in denying the claims of having nothing to do with Facebook’s Data aiding Trump’s campaign and even Brexit campaigns, Mitchell stated that the data collected from Facebook was gathered by another company, who had contractual obligations but, deleted such data when the uproar started.

Facebook’s share price had been taking a head-on blow having gone down to as low as USD$150.00 per share and the losing almost USD$50 billion in value for its shareholders.

On the contrary, a former employee of Cambridge Analytica, Christopher Wylie also made claims that the company has connections to the successful campaign such as taking Britain out of the European Union.

Moreover, Mitchell is adamant that Cambridge Analytica did not break any laws, but has admitted to ordering an independent investigation because, he insists the company is being victimised with wild speculation based on misinformation, misunderstanding, or in some cases, frankly, an overtly political position.

Also, Mitchell stated that to think political consultancies can use data to influence votes is “frankly insulting to the electorates. Data science in modern campaigning helps those campaigns, but it is still and always will be the candidates who win the races”.

 

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Facebook Profits Spike Despite Scandal

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It is fair to say many investors got cold feet and panicked since the data privacy scandal, dubbed the Cambridge Analytica Scandal, made the news on March 19. In an effort to minimize their loss, some investors sold shares in Facebook causing the stock to decrease in value by 14 per cent since that time. Many persons feared that the stock price would spiral downwards as usership would decline and tighter regulations would cost the company.

On the contrary, it did not. Facebook released its earnings report on Wednesday and it was better than predicted. Monthly active users in the first quarter increased by 13 per cent compared to the same period last year, totalling 2.2 billion users. Daily active users in the U.S and Canada, increased from 184 million users last quarter to 185 million users this quarter. Net income rose to USD$4.99 billion or USD$1.69 per share from USD$3.06 billion or USD$1.04 per share in 2017. Revenue was even better than expected, totalling US$11.97 billion from an estimated US$11.41 billion.

These are positive results for the world’s largest social network which has been surrounded by negative news for weeks about the role the company played in the recent elections, divulging personal information about its users. Facebook generates revenue by selling advertisements which is personalized to each user based on search history, age, gender, interests and friends list.

Coming from the scandal, Facebook could see increased regulations which may decrease ad profits as data used to target ads to users will have to be reduced. However, based on how the market responded on Wednesday, it is clear Facebook is in a good position to cope with regulations and the company will indeed get through this. The stock now trades on the NASDAQ at USD$159.69.

 

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Setting Financial Goals

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If you don’t know where you are going, you might wind up someplace else. – Yogi Berra.

This important quote can be applied to almost every aspect of life including investing. A key to earning fruitful returns on investments is having a defined end game and setting financial goals. Ask yourself, what are my goals? What do I wish to achieve in approximately five or ten years?

A new approach to managing wealth is goal-based investing, which emphasizes investing with the objective of reaching specific life goals instead of comparing returns to a benchmark. Individuals use different milestones in their lives to set the precedence for investments goals. For instance, whenever investors may have children they tend to start funds that aid preparing for college tuitions, or saving towards the purchase of a home. These goals will influence the time proximity as well as the level of aggressiveness necessary to achieve the end game. Successful investments involve defining measurable and attainable goals. These include applying a dollar amount to whatever an individual hopes to attain, as well as a time horizon in which they hope to accomplish such.

Investing is just like building a house. There is no way the house can look the way you want it to without a well thought out design and detailed blueprints. Without financial goals, an individual may not end up where they want to be, or have adverse results because of lack of planning. Important to note; it is not just about having an end game, even though it is highly necessary, but one will also need to set objectives to meet end goals. Many people who need assistance in setting objectives to meet personal goals will seek the aid of a financial advisor which is wise especially if one is ignorant about or is new to investing. These individuals are qualified to give guidance on how exactly one can achieve financial success, as well as grant smart advice on the steps to getting there. They can assist by laying out different options and help to find investments that match your risk tolerance that will be appropriate for and in line with the goal. Just like the goal itself, these objectives must be measurable and attainable within the set time span. Achieving financial success is a process and must be treated as such. It is never too early to start saving for milestones that seem to be far away. Students entering the working world need to be educated on the importance of retirement funds and setting aside funds for (possible) future dependents.

Investing doesn’t only involve daily trade requests you may send to your brokerage house, but also, it is about the goal you wish to achieve.

 

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Disappointing Cash Flow Outlook Lowers Lockheed Shares

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Lockheed Martin Corporation [NYSE: LMT], on Tuesday, fell by 6.1 per cent to USD$336.49 as the weapons supplier failed to raise cash flow projections for 2018. A little puzzling and disappointing for investors as the company is the number one weapons supplier to the U.S. government who recently spent far more on defense than they did in the previous year.

Lockheed recorded modest profits in its first quarter review and even surpassed estimates from analysts. In light of this, Lockheed raised its 2018 forecast. Additionally, the company experienced increased sales of the F-35 combat jets. Lockheed, however, blames pension contribution for which it stated caused “negative cash from operations in the second quarter.”

The annual cash flow forecast was the only aspect of the company’s financials which was not revised higher. Lockheed is however optimistic that the outlook for cash flow may change as “it is still early in the year and cash is trickier to predict.”

Controversy is seemingly affecting the company’s ambition to raise its financial outlook for the coming quarter as news surfaced of the US Department of Defense having stopped the delivery of the F-35 jet disputing a production error and the responsible party. The F-35 jet is responsible for about a quarter of Lockheed sales and without it the company’s growth potential may be significantly impacted.

In 2018, Lockheed projects that the company will make revenue between USD$50.35 billion to USD$51.85 billion compared to its previous forecast of USD$50 billion to USD$51.5 billion. In the first quarter of 2018, which ended March 25, Lockheed made net income of USD$11.16 billion compared to USD$789 million for the same period in the previous year. Net sales increased by 4 per cent from USD$11.21 billion to USD$11.64 billion.

 

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Why Bother to Plan for Retirement?

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As you probably know already, Retirement is when a person’s work life comes to an end after they have either accomplished all they need to financially or have reached the legal age to do so. However, some do not take this period in their lives as seriously as they should, thus not putting the proper measures in place to secure their future.

One downfall of persons is that they do not start making steps in saving for retirement until they are close to the age. This should not be so, as a pension plan alone is highly unlikely to be able to sustain someone, let alone allow them to live comfortably after.

According to the Senior Manager at JN Bank, Sharon Smith, good management of your money on a monthly basis is very vital in planning for retirement. As early as earning our first pay cheque we should be thinking about how we will be able to save toward a comfortable retirement and not only about the next party, hotel or country we’re headed to.

This isn’t to say that people shouldn’t be enjoying their lives doing what they love; but there should always be balance and priorities. Going to one less party for the month and redirecting the money that would have been spent, towards an SSL Brokerage account is one way to contribute towards your pension plan. It is not about the age we are at now, it is about the age of retirement and the growth we want to achieve.

Saving through a pension scheme is actually a lot better than people may think. For one, you cannot benefit from it until you have retired, unless there is a serious need for it like health issues. Secondly, the one that will catch person’s eyes, is the fact that it is taken out of your salary before PAYE is deducted, which then lowers your tax threshold. We all know that persons wish they were taxed less.

There are many other ways to make investments to add to pensions savings, like investing in real estate to earn income from rentals or even investing in stocks and bonds that give income, growth for your capital and also preserve your capital. The younger you are the more aggressive you can be, investing in more growth stocks so that your money can expand. As you carry on in age, you can then shift your focus on stocks and bonds that give both income and growth, which generally fluctuates around the same price level so there is no loss in capital.  Lastly, when you are very close to retirement or even in retirement, you of course would not want to take on the risk of losing all you have earned or saved, which oftentimes results in you being a more conservative investor; looking into more bonds than stocks that give good yields and also preserves capital.

Investing is not always easy nor is it always safe, but it is always worth a try. The majority of wealthy persons today have some form of investment.

Don’t you want to be like them so you can travel the world, live comfortably and not have to be dependent on the state that does not even provide enough to sustain anyone?

We still see elderly persons on the street trying to make ends meet, selling produce or even goods. At that age you should be relaxing at home, babysitting your grandchildren or even travelling to places you have never been.

Retirement age in Jamaica is 65 years old. Take retirement seriously! Start saving and investing now!

 

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Berger Directors Misguided Minority Shareholders to Sell Shares

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We must all remember September 2017 when news emerged of a Trinidad based company called ANSA McAL which offered to acquire shares of minority shareholders of Berger Paints, through its subsidiary ANSA Coatings International. ANSA offered to buy each unit for JMD$10.88 despite the value per share being at JMD$11.60 at the time. Unfortunately Ansa only received JMD$6 million of the JMD$105 million units they had requested and the stock was not qualified to be delisted.

Many rejected the offer as it was seen as unfair and minimal, which was right as the stock was valued more than the JMD$10.88 they offered and even more now that it last traded on the Jamaica Stock Exchange at JMD$19.10.

Directors at Berger Paint Jamaica thought otherwise. They highly recommended that shareholders take up the offer which they described as a fair price. A few of the directors along with a few employees stated they would accept the offer, according to Berger Paint. However, after releasing its annual report in December 2017, it was revealed that all the directors of Berger Paint Jamaica still had all their shares listed and only one employee sold her shares.

It was later reported that the registrar did not receive the forms of acceptance from the directors during the application period. The directors, however, are adamant that they did in fact submit the acceptance forms but the applications are no where to be found. Shareholders are now questioning the poor judgement of the directors who were tasked to protect their interest but instead ill- advised the minority.

In its financial statement ending December 2017, Berger Paint Jamaica reported revenue of JMD$1.9 billion, a 21 percent decrease from JMD$2.4 billion the previous year. Net profit also took a hit, down by 45 percent from JMD$316 million to JMD$174.1 million.

 

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