• Buoyed by robust revenue grow (+16.7% or $128.58Mn), Caribbean Flavours and Fragrance Limited (CFF) reported a 115.3% year over year rise in net profit to $132.82Mn (EPS: $0.15) for FY 2023.

• The improved revenues outturn was driven by the company's continued efforts to refine its sales approach strategy, as it focused on closing new business deals, introducing new products to its various partners, and deepening its sales strategies in the markets that it serves.

• Notably, the rise in revenues outweighed the 6.0% expansion in cost of sales, resulting in a 41.8% (or $95.78Mn) increase in gross profit. This growth in gross profit translated to a 6.40 percentage points increase to 36.1% on the back of better management of its inventories, efficiency gains from the manufacturing processes, and the change in its product mix. CFF successfully launched its new ingredients portfolio which provides new emulsifiers and enzymes poised to revolutionise the quality, texture, shape, and visual appeal of baked products while extending their shelf life in the market.

• However, the company’s operating and administrative costs increased by 16.69% (or $25.64Mn) as the cost of attracting new talent, and other professional fees relating to product development rose.

• CFF aims to continue offering new solutions to the market while refining its current product offerings and solutions through research and development. It anticipates that through these initiatives it will gain greater acceptance in local and overseas markets.

• CFF’s stock price has appreciated by 1.2% since the start of the year and closed Thursday’s trading session at a price of $1.69 per share. At this price, the stock trades at a P/E ratio of 16.9x earnings, which is below the Junior Market Manufacturing Sector average of 25.4x.

(Sources: Company Financials & NCBCM Research)

• During the closing news conference of the four-day CARICOM summit in Georgetown, Guyana, which ended on February 28, 2024, Barbados Prime Minister, Mia Mottley, announced that nationals from the Caribbean Community (CARICOM) will have the ability to travel throughout the region by the end of March.
• PM Mottley noted that leaders will meet again on March 15th, before then, the remaining policy issues are expected to be settled. “There was just two policy issues referred to heads for us to settle and they will meet on the seventh of March, the legal affairs committee will sign off on the draft on the eighth of March; and the heads of government will meet on the 15th of March with the hope that we can sign off in time for the deadline given in Trinidad of the 31st of March for the free movement of people,” PM Mottley said.
• CARICOM nationals have the privilege to freely travel within participating nations to engage in lucrative commercial endeavours under the CARICOM Single Market and Economy (CSME), which is governed by the Revised Treaty of Chaguaramas. However, currently, nationals only enjoy the freedom to relocate within the region for six months without any interrogation. As such, the objective of the CARICOM leaders is to facilitate the unrestricted movement of nationals throughout the region beyond the current six-month restriction.
• Beyond the facilitation of people’s mobility, regional leaders are also dedicating efforts to tackle the issue of company formation within the region. At present, when a CARICOM national intends to establish a company in another member state upon relocation, they are obligated to make a payment. This is one of the next initiatives that the CARICOM members hope to rectify.
• This was first discussed last July at the 45th Conference of the Heads of Government in Trinidad where a deadline was established to conclude the process of enabling the free movement of CARICOM nationals.

(Source: Guyana Chronicle)

• The Central Bank of the Dominican Republic has unveiled plans to conduct the First Census of Foreign Direct Investment Companies (Ceied) in the country, spanning from February 28 to May 31 of this year.
• This comprehensive survey facilitated through electronically distributed forms, aims to collect “timely” and “detailed” information to provide a comprehensive overview of the status of foreign direct investment (FDI) within the nation, according to statements from the issuing bank.
• President Luis Abinader, during his accountability speech to the National Assembly on Independence Day, highlighted a noteworthy milestone, revealing that foreign direct investment in the country reached an impressive $4,381Mn last year.
• This figure stands as a record, underscoring the growing significance of FDI in the economic landscape.
• The Ceied initiative is expected to furnish valuable insights into the dynamics and distribution of foreign direct investment, contributing to a more nuanced understanding of its impact and potential areas for further growth and development in the country.

(Source: Dominican Today)

• China's manufacturing activity contracted for a fifth straight month in February, an official factory survey showed on Friday, raising the pressure on policymakers to roll out further stimulus measures as factory owners struggle for orders.
• The official manufacturing purchasing managers' index (PMI), compiled by the National Bureau of Statistics (NBS), fell to 49.1 in February from 49.2 in January, below the 50-mark separating growth from contraction and in line with a median forecast of 49.1 in a Reuters poll.
• Seasonal factors may have affected the figure, as the Lunar New Year (LNY) fell on Feb. 10 this year and saw factories shut as workers returned home for the holiday. However, a survey by the Caixin/S&P Global released just after the official PMI showed manufacturing activity expanded steadily as both production and new orders grew faster. Taken together, the PMIs highlighted an uneven economic recovery.
• Dan Wang, chief economist at Hang Seng Bank China, said the dip in the official PMI was also due to a sharp contraction of new foreign orders. "Weakened demand from overseas seems to be a permanent, rather than temporary phenomenon" because of the economic slowdown in developed markets as well as the relocation of domestic supply chains.
• New export orders have shrunk for 11 consecutive months in the NBS manufacturing PMI, while a year-long contraction in employment in the factory sector pointed to persistent strain on businesses.
• On the other hand, the official non-manufacturing PMI, which includes services and construction, rose to 51.4 from 50.7 in January, marking the highest reading since September last year, thanks to robust activity during the LNY holidays. However, construction activity nudged down by 0.4 percentage points as property-related activity was still in contraction.

(Source: Reuters)

• The personal consumption expenditures price (PCE) index, excluding food and energy costs, increased 0.4% in January and 2.8% from a year ago, as expected according to the Dow Jones consensus estimates.
• Headline PCE, including the volatile food and energy categories, increased 0.3% monthly and 2.4% on a 12-month basis, compared with respective estimates for 0.3% and 2.4%, according to the numbers released Thursday by the Commerce Department’s Bureau of Economic Analysis. The respective December numbers were 0.1% and 2.6%.
• The moves came amid an unexpected jump in personal income, which rose 1.0%, well above the forecast for 0.3%. Spending decreased by 0.1% versus the estimate for a 0.2% gain. January’s price rises reflected an ongoing shift to services over goods as the economy normalises from the COVID-19 pandemic disruptions.
• Services prices increased 0.6% on the month while goods fell 0.2%; on a 12-month basis, services rose 3.9% and goods were down 0.5%. Within those categories, food prices accelerated 0.5%, offset by a 1.4% slide in energy. On a year-over-year basis, food was up 1.4%, while energy fell 4.9%.
• Both the headline and core measures remain ahead of the Fed’s goal for 2% annual inflation, even though the core reading on an annual basis was the lowest since February 2021. While the Fed officially uses the headline measure, policymakers tend to pay more attention to the core as a better indication of where long-term trends are heading.
• “Overall, the report is meeting the expectations, and some of the worst fears in the market weren’t met,” said Stephen Gallagher, chief U.S. economist at Société Générale. “The key is we’re not seeing the broad nature of increases that we had been more fearful of,” he further explained.
• January’s consumer price index data raised fears of persistently high inflation, though many economists saw the rise as impacted by seasonal factors and shelter increases unlikely to persist.

(Source: CNBC)

• Mayberry Jamaican Equities (MJE) concluded its financial year ending December 2023 with a substantial net loss of US$15.89Mn, a significant decline of US$49.09Mn (or 147.9%) compared to FY 2022.
• Net unrealised losses on investments in associates of US$14.53Mn (-142.5%) was the primary driver of the falloff in earnings.
• The persistent high-interest rate environment caused by elevated inflation levels continued to negatively impact the stock market throughout the financial year and the stock prices of its associates.
• Notably, total operating expenses decreased by US$1.73Mn or 55.4% to US$1.39Mn, which tempered the impact of weaker revenues on the bottom line. With the losses incurred on the funds under management, there was a reduction in the incentive fees paid to the Investment Manager, and this accounted for the reduction in expenses.
• Net Interest Expense also increased by more than doubled (+152.3%) to US$4.19Mn due to increased borrowings through margin loans from its parent company, Mayberry Investments Limited, for new investments.
• MJE’s stock price has increased by 9.5% since the start of the calendar year. The stock closed Wednesday’s trading session at $10.89 and trades at a P/B of 0.8x, which is below the Main Market Financial Sector Average of 1.4x.

(Sources: Company Financials & NCBCM Research)

• The Bank of Jamaica (BOJ) has confirmed that it has stopped issuing old banknotes as part of its ongoing transition to polymer notes. During the BOJ’s Quarterly Monetary Policy Press Conference, Deputy Governor Natalie Haynes emphasised the institution’s commitment to adhering to the two-year timeline for the complete demonetisation of the outdated currency.
• Haynes outlined the steps required for the full withdrawal of the old notes from circulation. Currently, these notes account for 40.0% of the total currency in circulation. The cessation of issuing “old notes” commenced in November 2023, marking a significant milestone in the transition.
• Despite the ambitious timeline set by the BOJ, challenges persist in ensuring a smooth transition. Haynes acknowledged ongoing issues with some Automated Teller Machines (ATMs) and highlighted the banks’ progress in accepting and dispensing the new polymer notes, with an impressive 99% ATM acceptance rate.
• She further emphasised the necessity for comprehensive ATM coverage before announcing the date of demonetization. The old notes, collected by the central bank, will be destroyed after the date of de-monetization.

(Sources: BOJ & Caribbean National Weekly)

• Trinidad and Tobago's natural gas reserves fell by 8.0% between 2020 and 2022, according to the latest gas audit.
• The Express Business has confirmed that according to the audit done by DeGolyer & MacNaughton, the country's proven, probable, and possible reserves fell from 23.265 trillion cubic feet (tcf) of gas in 2020 to 21.953 in 2021 to a low of 21.409 in 2022.
• According to BP's statistical guidelines, proven reserves are “those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions.”
• Probable reserves are estimated to have a better than 50.0% chance of being technically and economically producible, and possible reserves are volumes which, at present, cannot be regarded as “probable”, but are estimated to have a significant (albeit less than 50%) chance of being produced.
• The country uses just over one tcf per day of proven reserves, and therefore, if no more gas moves into the proven column, the country could run out of gas in the next ten years.  
• “Gas production decline has been taking place since 2012, and unfortunately, nothing was done during the period of 2010 to 2015 to secure better revenue for our gas, nor was a single gas supply contract negotiated and executed for the upstream supply of gas. This poorly managed period negatively affected our gas sector, revenue, and gas production”, the Energy Minister said.
• Overall, Trinidad’s declining reserves and mature fields have led to a lower GDP outturn for the country in recent years. For 2023, real GDP growth for the country is estimated at 1.4%, down from the 1.5% recorded in 2022, with contributions from the non-energy sector being 2.6% and -1.3% from the energy sector.

(Sources: Trinidad Express Newspaper & NCBCM Research)

• Guyana and Canada on Sunday finalised an agreement for a CAD$120Mn sovereign loan to further boost support for vulnerable groups. The agreement was signed by Guyana’s Senior Minister within the Office of the President with Responsibility for Finance and the Public Service, Dr. Ashni Singh, and Canada’s Minister of International Development, Ahmed Hussen, at the Canadian High Commissioner’s residence.
• Hussen, who is visiting this country for the first time, in his address, said the two countries are strengthening bilateral ties with the loan agreement that has been tailored to the needs of Guyana.
• He said, “Our goal is to support Guyana in generating beneficial social, economic, and environmental outcomes for the good of all your citizens, particularly the most vulnerable.”
• Hussen emphasised the importance of cooperation between Guyana and Canada to achieve sustainable development goals, addressing issues such as gender-based violence, empowerment of people living with disabilities, and support for victims of human trafficking.
• The loan programme also features a climate-resilient debt clause to access funds in the event that Guyana experiences a climate incident, a natural disaster, a pandemic, or an epidemic.

(Source: Guyana Chronicle)

• Desperate property developers in China have resorted to gifts like new cars, free parking spaces, phones, and other consumer goods to attract homebuyers and boost flagging sales. These incentives are just the tip of the iceberg in a crisis involving hundreds of billions of dollars in home builder debt, trillions in local government debt, and at least a billion empty apartments.
• However, this wasn’t always the case. Since China’s economic liberalization in the 1970s and housing reforms in the late 1980s, locals have flocked to properties as the investment vehicle of choice over alternatives such as the stock market.
• The property and construction boom helped fuel China’s – and the world’s – economic growth for 30 years. By some estimates, property in China was worth US$60T at its peak, making it the biggest asset class in the world. Developers like Evergrandeand Country Garden got extremely rich in the process.
• China’s president, Xi Jinping, was against the fact that China’s real estate market was seen more as a place for speculation than for living. Government Policy began to change surrounding real estate. Namely, the “Three Red Lines” policy came into effect in 2020. This allowed the government to effectively cap the amount of debt property developers could borrow.
• Major market movers like Evergrande and Country Garden did not meet the criteria and thus stopped getting additional funding to finish constructions that were in progress. Additionally, urbanization began to dwindle and the demand for these properties fell as China’s youth population was facing a job crisis, and once the pandemic hit China, it exacerbated conditions. This pushed the housing cost-to-income ratio to historical highs and named it one of the worst in the world. As a result, supply massively overshot demand as affordability was at a low, causing the property bubble to deflate.

(Source: CNBC)