Hi everyone. I promised to follow up my previous IPO review of Sygnus Credit Investments (which is now closed by the way) with a review of the Everything Fresh IPO. I was a little late since I wanted to get this out yesterday (May 16th, 2018) but better late than never, right? Before we begin, however, here’s a disclaimer you should read.
Disclaimer: This is simply a review of the Everything Fresh Prospectus as interpreted and simplified by me. I have based this overview on information obtained from sources believed to be reliable, however I do not make any guarantees as to the accuracy or completeness of the information within this document. This overview is also simply for information purposes only and should not be construed as a recommendation to purchase or not purchase shares in any company. Any such decision should be based on your own analysis of the prospectus and advice from a licensed, certified financial advisor and/or broker.
Great, now that that’s out of the way, let’s get into it.
Who is Everything Fresh?
Well I’ll start off with how they describe themselves in the Business Identification section of the financials within the prospectus. They state that the company “operates as importers/distributors of dry goods, fruits and vegetables”. Simple enough. Now I believe that that is possibly an older description as elsewhere within the document they reference selling meats, dairy products, seafood and other consumable food items. But the general idea is the same.
They are a company that started business in 2008 distributes consumable food items to hotels and supermarkets within Jamaica. Some of their customers are:
- Royalton Luxury Resorts
- Progressive Grocer
- Hi-Lo Food Stores
- Secret Resorts & Spas
- Jewel Resorts
- Riu Hotels and Resorts
- Iberostar Hotels and Resorts
- Couples Resorts
- Grand Palladium Hotels & Resorts
- Hedonism II Resort
How Do They Make Money?
Their main revenue earners are the products they import and resell to their customers. They do this with a team of 25 people. They have made a little over J$218M in profit over the past 5 years from J$6.7B revenue.
What’s the Share Price?
They are raising J$390M by issuing 156M shares at J$2.50 each. J$65.75M of that is being sought from the General Public who get access to 26,300,000 shares for sale, also at J$2.50 each. There is a further set of 31,500,000 shares reserved for SSL Clients, also at J$2.50 each. So ostensibly one could sign up to become an SSL client and thereby benefit from being in a smaller pool with a greater number of shares assigned. That might lead to you getting more shares allocated to you than to a member of the General Public in the event of an over-subscription. All applications also have an additional J$163.10 JCSD fee attached.
Note, the minimum purchase is 6,000 shares at a cost of J$15,163.10. All subsequent shares have to be purchased in blocks of 1,000 shares at J$2,500 per block.
How Can *I* Make Money From Owning Them?
There is no additional complication to making money from owning shares in Everything Fresh should you decide to buy in. It only has the 2 main methods that all stocks have; dividends & capital appreciation. You can either, buy shares and hold them to receive dividends from the ownership of those shares, or you can try to sell the shares for more than you bought them. They state that they intend to pay out an annual dividend of “up to 25% of [Net Profit]” but this is subject to change based on the need to reinvest in the company each year. As always, you are encouraged to pay attention to the company’s financials every 3 months and see what the updates are. All dividend announcements are always on the JSE’s website (www.jamstockex.com) along with the quarterly updates that each listed company is required to give.
Who Owns the Company?
The company is majority owned by the Pullen family, who after the IPO, will own 80% of the shares through a holding company of theirs, Quality Investments.
They have identified 9 risks which all have mitigation efforts around them. They are essentially; the economy possibly going bad, their business operations going off track, International Accounting Rules change in such a way that the business is adversely affected, the IPO could not get fully subscribed, the share price could go down in price after being listed, the government could remove the tax break, they could lose someone key to operations or they could lose the relationships they have with key partners and finally it could lose insurance coverage. Plans to address and prevent any of these risks coming true and affecting the company adversely for a lengthy period of time are all in the prospectus where a bit more detail on each point is given.
What Do they Want the Money For?
They want the money to help bankroll the general running and growing of the business. They also plan to install solar panels to help reduce energy costs and thereby increase profits. They will also be seeking to expand their reach outside of Jamaica and finally, to help pay for the broker and other costs of the IPO.
Should You Invest?
As always. The answer to that is up to you. I advise that you read the prospectus. Go through the details and then talk it over with your broker and then make a decision. Remember to keep your investment return goals and timeline in mind when doing this.
The prospectus and any other information around this IPO is available on the Jamaica Stock Exchange’s website (www.jamstockex.com). PLEASE give it a read. Your money deserves the attention.
You can contact me on Twitter if you have any comments, suggestions or general feedback. I can’t tell you what stocks to buy or sell since only your broker can tell you that. I can help you get to the point of learning and understanding what to look for however, which is much better.
I hope you’ve found some value in this review. Share it with a friend or two. Have them get a chance to join the #GainsTrain 🚂💵💶💵💶💵.
Let’s make some money!!!!