Guardian to relist on JSE
Published:Wednesday | March 10, 2021 | 12:21 AM
Aiming for a better market reflection of the value of the company, Guardian Holding Limited, GHL, plans to cross-list its stock in Kingston after a seven-year hiatus.
The Trinidad & Tobago-based insurance conglomerate previously traded on the Jamaica Stock Exchange, JSE, as a cross-listed stock for 13 years, before delisting at the end of 2013.
But now that the JSE’s profile has been rising and equities are in demand by investors, Guardian Holdings sees it as the time to reunite. The announcements also comes just weeks after GHL became the first to list two bonds on the JSE’s newly launched private market platform, which offers a secondary market for the trading of corporate debt.
“The board considered that trading on the Jamaica Stock Exchange has become increasingly dynamic over the years, with a relatively large number of new listings and increased public enthusiasm towards equities,” said board secretary Richard Avey in a market notice posted on the Trinidad & Tobago Stock Exchange, TTSE.
“The GHL board expects strong interest in GHL shares by the Jamaican public,” he said.
As a subsidiary of the NCB Financial Group, Guardian is chaired by Patrick Hylton, who is also President and CEO of NCB Financial.
In Trinidad, the GHL stock trades at half the multiple of financial stocks in Jamaica. The multiple lags both in terms of price to earnings and price to book value.
Cross-listed shares tend to trade thinly, and some do not trade at all on the JSE due to inadequate volumes of shares to buy and sell.
The lack of liquidity was the reason for GHL’s voluntary delisting in 2013. Guardian said at the time that JSE transactions represented less than 1.5 per cent of trading volumes of the stock. It’s understood that the issue has been weighed by the company and its majority owner, and that there is a strategy being developed around the stock’s availability for trading when it returns to the Jamaican market. NCB Capital Markets is said to be central to the plan.
“Once GHL is listed, it is our intention to actively make a market for the stock. This will facilitate liquidity on the JSE,” NCB Capital said in confirmation late yesterday.
GHL currently trades at TT$21.88, or 6.5 times its annual earnings of TT$3.34 per share. One Trinidad dollar is equivalent to about $22 in Jamaican currency.
JSE stocks trade at double that multiple. For instance, NCB Financial at $140 trades at 27 times its $8.01 earnings per share. Rival financial conglomerate Sagicor Group Jamaica trades at $50.50, or 12 times its $4.01 annual EPS up to December 2019, and 14 times based on its annualised 2020 results.
Stocks in Trinidad tend to trade close to their book value, while Jamaican stocks trade in higher bands.
For example, GHL’s market value of TT$5.35 billion is 13 per cent higher than the TT$4.7 billion of capital on its books, while NCB Financial’s $350-billion market value is 75 per cent higher than its $200 billion of capital.
At year ending December 2020, Guardian made a profit of TT$774 million for its owners, up 12 per cent from TT$692 million in 2019. Earnings per share increased to TT$3.34 from TT$2.98.
Net income from insurance underwriting activities increased by 47 per cent to TT$1.4 billion, while net income from investing activities grew 28 per cent to TT$1.37 billion.
“All our operating jurisdictions experienced significant valuation movements on investment securities,” said Guardian, before cautioning shareholders about “the inherent volatility of equity markets, and of the fact that the appreciation in values registered during the year cannot reasonably be predicted to be recurring”.