Neal and Massy Holdings Limited

For the nine months ended June 30, 2012, Neal and Massy Holdings Limited (NML) reported a 21 per cent increase in EPS (inclusive of discontinued operations) from $2.82 in nine months 2011 to $3.40 in nine months 2012. Earnings for continuing operations increased 8 per cent year on year

This performance is attributable to a 12.7 per cent growth in Revenue from $6.3B to $7.1B for the period.The Integrated Consumer Portfolio performed strongly in the nine months, generating revenue of 5.7 billion or 80 per cent of the Group's Revenue. However, there was a marginal decline in the Operating Profit Margin from 7.6 per cent to 7.25 per cent.

Share of Results of Associates and Joint Ventures experienced a 24.6 per cent increase, while Profit before taxation and Profit after taxation increased by 8.7 per cent and 7.4 per cent respectively. There was a 15.7 per cent decline in loss from discontinued operations

A decomposition of PBT shows that Integrated Consumer Portfolio remains the largest contributor with an increase of 5.30 per cent in nine months 2012. Other Investments and Strategic Investment Portfolio increased by 10.15 per cent and 7.55 per cent respectively. The Chairman noted that the automotive and integrated retail businesses in Trinidad contributed greatly to the Groups' growth whereas Barbados suffered from compressed margins and increasing energy cost and Guyana enjoying the strongest PBT growth in the Group.

Despite a weak local and regional environment and continued losses from the Almond Group, NML has been able to generate healthy revenues and growth in the bottom line. If no further provisions are to be made for the disposal of Almond Beach Village, investors should expect a strong last quarter from the Group.

At a current price of $45.20 NML is trading at a P/E of 10.3 times from continuing operations compared to its 10 year average of 11.3 times (Exhibit 1). The dividend yield is 3 per cent. Given the relatively cheap valuation and strong operational performance BOURSE recommends a BUY.

National Commercial Bank of Jamaica Limited (NCBJ)

For the Nine months ended June 30, 2012, National Commercial Bank of Jamaica Limited (NCBJ) delivered a 21 per cent decline in Earnings per Share (EPS) from J$3.77 to J$2.98, as revenue remained relatively flat and credit loss provision increased. The Group declared a dividend of J$0.17 payable on August 27, 2012.

Operating Income increased by J$175M or 0.7 per cent from the nine months period in 2011.

Net interest Income experienced an increase of 3.1 per cent, due to growth in the net loan portfolio. Increasing fees arising from growth in the Retail and SME loan portfolios led to an increase in net fee and commission income of 12.6 per cent.

Gains on foreign currency and investment activities continued to provide healthy contributions to the bottom line. These increases were however offset by a 47.4 per cent decline in Premium Income from J$2.7B to J$1.4B, due to lower annuities sold during this nine months period.

Despite the Group's effort to improve its Interest Expense Margin and Fee and Commission Expense Margin in a challenging economic environment, rising Operating Expenses proved to be a great concern to the Group as all lines of operating expenses increased. The most significant of this cost was the Provision for Credit losses which rose 213 per cent before tax to J$1.8B. Increased staff costs as a result of negotiated salary increases led to further reductions in profitability.

NCBJ posted an Operating Profit of J$9.1B (down 21.2 per cent for nine months 2011) of which Wealth Management was the largest contributor. See Exhibit 2. The Corporate Banking Segment recorded an 88.9 per cent decline in its segment result. This reduction is mainly attributed to loan losses on a large non- performing loan and also because loan growth has become muted. The Operating Profit for the Consumer and SME Segment was also down 25.9 per cent driven mainly by reduced yields on loans. The Group's Profit before Tax and Profit after Tax, decreased by 19.1 per cent and 21.0 per cent respectively.

At a current price of $1.72 NCBJ has depreciated 20.4 per cent year to date and is trading at a P/E multiple of 5.2 times, above its three year average of 4.4 times. The dividend yield on the stock is 4.94 per cent. BOURSE recommends a HOLD.

GraceKennedy Limited (GKC)

GraceKennedy Limited (GKC) recently released its six months results as at June 30th 2012. The Group reported a 6.5 per cent decline in diluted EPS to J$3.44 down from J$3.68 in HY 2011.

GKC's Revenue increased 5.56 per cent or J$1.6B to J$30.5B while expenses rose by 5.8 per cent. Other Income declined by 24.2 per cent resulting in Profit from Operations of J$1.8B, a decline of 5.7 per cent. Net interest expense from non-financial services declined 9 per cent to J$158.2 million.

Overall Profit before Tax (PBT) and after tax both registered a decline of 5.1 per cent. Segmental analysis of PBT reveals that Money Services was largest contributing sector to the increase in Profit before Tax (see Exhibit 3) with a 27.76 per cent decline in Banking and Investments.

After recording a strong first quarter the Group was unable to maintain the momentum as the Banking and Investment segment struggled in the low interest rate environment. The Money Services and Food and Retailing segment will need to continue their strong performance in the second half of the year to compensate for any further possible weaknesses in the Banking and Investment segment performance.

At a price of $4.73, GKC is trading at a P/E of 8 times.. The dividend yield is relatively attractive at 2.8 per cent. BOURSE recommends a HOLD on this stock.