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(Photo: Jamaica Stock Exchnage)

QWI reports first-quarter recovery

(Photo: Jamaica Stock Exchnage)

After a year of being pummelled under COVID-19 conditions, QWI Investments Limited is reporting a first-quarter upswing.

Directors stated that for the first quarter ended December 31, 2020, the performance of the company’s US investment portfolio produced a total return in US dollar of 22.1 per cent, which was far better than the movements in either the S&P 500 or the MSCI World Index — QWI’s main benchmarks.

Beyond the Jamaican market

QWI Holdings Limited is an investment firm listed on the Main Market of the Jamaica Stock Exchange (JSE) and is a subsidiary of Jamaican Teas Limited, a company listed on the Junior Market of the Exchange.

Since listing in 2019, the company has diversified its holdings from securities held only in Jamaican dollars to include those held in the United States (equities and share options), Trinidad and Tobago quoted equities.

QWI Investments, a subsidiary of Jamaica Teas Limited listed on the Main Market of the Jamaica Stock Exchange in 2019. (File photo)

The total value of investments for the year ended September 30, 2020, increased to JM$1.63 billion, up from JM$1.36 billion of Jamaican only quoted equities in financial year 2019.

Net profit for the investment concern, however, at year end plunged to a loss of JM$394.32 million, a reversal from a positive outcome of JM$248.6 million.

For the first quarter of the new year, however, directors have reported a profit before tax of JM$116 million compared with a loss of JM$121 million in the same quarter a year ago. QWI’s Net Asset Value (NAV) per share increased 6.5 per cent from JM$1.08 on 30 September 2020 to JM$1.15 on 31 December 2020 (2019 – $1.30).

Favourable market conditions

Directors noted that market conditions during the quarter were favourable as illustrated by the movement in the market indices of the main markets in which QWI participates.

In this 2019 photo, QWI Investments Limited’s directors gather with Marlene Street Forrest (third right), managing director of Jamaica Stock Exchange, for a photo opportunity during the company’s listing ceremony. (File photo)

They stated, too, that the company took advantage of the favourable conditions in the USA and realised gains of $34.5 million. 

The US portfolio produced an additional JM$33 million of unrealised gains and the Jamaican portfolio produced JM$64 million of unrealised gains. 

The total investment gain for the quarter was $132 million, which represents a $224 million swing from the $92 million of net unrealized losses in the year ago period.

On the local market, directors highlighted that QWI’s holdings in Access Financial Services has continued to decline, but that they believe it may now be at its bottom and is expected to increase as their credit business improves in 2021. 

Unrealised exchange losses this quarter totalled almost $11 million versus $21 million a year ago. 

Administration costs were little changed at almost $11 million. 

This quarter, the company recognised a deferred tax charge of $22.5 million versus a deferred tax credit of $27.7 million a year ago.

The company ended the quarter with equity capital of $1.56 billion, up from $1.47 billion at the end of September 2020, as a result of the unrealized and realized gains reported during the quarter. 

At the end of the quarter, the Company held in excess of US$3 million in equities listed in the USA and Trinidad and Tobago, including positions in several leading information technology and drug companies, retailers, defense contractors, and payment processors.

QWI’s total investments in local and overseas stocks amounted to $1.78 billion at the end of the quarter, of which 73.1 percent of the Investment Portfolio is in stocks listed on the Jamaican market. 

Directors outlined that the vast majority of the balance is invested in the US market. 

The company, meanwhile, continued to use some borrowed funds in its investment activities. At the end of the period, borrowings amounted to JM$224 million compared with JM$195 million in September 2020.