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Will Jamaica’s Barita Investments maintain its “outperformer” status?

Barita Investments Limited on Tuesday earned the title “outperformer” from Bloomberg TV’s What’d You Miss? co-host Caroline Hyde who, in an interview with Jamaica Stock Exchange Managing Director Marlene Street Forrest, highlighted the financial service provider’s performance on the index.

Managing Director of the Jamaica Stock Exchange, Marlene Street Forrest (left) on Bloomberg TV’s What’d You Miss?

“I’m just digging into the outperformers of individual stocks here. Barita Investments up 410 per cent in the last 12 months. The [Jamaica Stock] Exchange itself has traded and you’ve done rather well; it’s up 180 per cent,” the co-host pointed out.

This, however, is not the first time that Barita has caught the attention of Bloomberg analysts. In fact, earlier this year, in an article titled “Welcome to Jamaica, Home of the World’s Best-Performing Stock Market”, the financial publication noted that by the close of 2018 Barita shares had gained 630 per cent in value.

Bloomberg TV’s What’d You Miss? co-host Caroline Hyde

At the time the article outlined that the Jamaican company’s growth was due to a “changing of the guard”, with Paul Simpson being “responsible for last year’s best-performing stock.

“His Cornerstone United Holdings Jamaica Ltd took over a controlling stake in brokerage Barita Investments from the latter’s 82-year-old founder, Rita Humphries-Lewin — the only woman whose picture hangs in the Exchange boardroom’s gallery of past chairs,” the article continued.

Deputy Chairman of Barita Investments, Paul Simpson (Photo: Jamaica Observer)

Notwithstanding JM$8 billion dollars raised through bond and private placement for the takeover — and turnaround — of Barita, the Bloomberg article credits Simpson’s disruptor mindset as the reason for the company’s extraordinary performance up to the end of 2018. It adds that part of his strategy includes recruiting Jamaicans who have walked the halls of Ivy League universities and Wall Street companies to join his management team.

What Bloomberg may want to know is how has the company maintained its position as Jamaica’s leading stock since then, and will it continue to do so?

Barita Investments New Kingston head office (Photo: Jamaica Observer)

Since January of this year, Barita Investments Limited has engaged in two rights issues — the first for over 260 million shares between February 5 and March 25, and the second for approximately 78 million shares between September 2 and 20.

Subsequent to the first rights issue, the company reported revenues of JM$1.16 billion and a net profit of JM$516 million for the six months ended March 31. At the time, these represented increases of 137 per cent and 947 per cent respectively.

“For the quarter ended June 30, 2019, the group reported net profits of (JM)$911.9 million, which represents a third-consecutive quarter of record profits.”

– Barita Investments Limited Chairman Mark Myers

Revenue increased from JM$329 million in the second quarter of 2018 to JM$769.9 million for the same period this year or by 134 per cent. Profit for the second quarter increased by 363 per cent, from JM$88.1 million to JM$408.3 million in 2019.

Added to this, earning per share increased from JM$0.08 for the six-month period in 2018 to JM$0.85 per cent as at March 31, 2019.

Barita Investments Limited Chairman Mark Myers disclosed in a statement, “For the quarter ended June 30, 2019, the group reported net profits of (JM)$911.9 million, which represents a third-consecutive quarter of record profits.”

“…our focus on growth and diversification has continued to bear fruit as the group experienced a 690 per cent increase in net profits to (JM)$1.4 billion relative to the corresponding period ended 2018,” the statement continued.

Managing Director of the Jamaica Stock Exchange, Marlene Street Forrest on Bloomberg TV’s What’d You Miss?

Just as in the period prior, earning per share were unprecedented, jumping to JM$2.26 per share at June 30, 2019, when compared with JM$0.30 in the same period in the prior year.

What does this mean for Barita, or more so analysts looking on?

When a company authorises a rights issue, it is expected that earnings per share will decline, as the volume of shares issued will increase drastically and net profits rise marginally.

Barita, however, has debunked this logic, demonstrating that quarter after quarter the company continues to break records with respect to both revenues and profits.

So, with financial year 2018/19 reports left to be published, will Barita continue to baffle pundits with more record-breaking results?