• Oil tumbled over 4% from a seven-year high on Tuesday after Russia said some of its military units were returning to their bases after exercises near Ukraine, a move that appeared to de-escalate tension between Moscow and the West. 
• It was not clear how many units were being withdrawn, and by what distance, after a build-up of an estimated 130,000 Russian troops. The report on the troop movements prompted an extension of oil losses. Brent crude fell $3.99, or 4.1%, to $92.49 a barrel by 11:11 a.m. EST and the U.S. West Texas Intermediate (WTI) crude fell $4.28, or 4.5%, to $91.18 a barrel. 
• Both oil benchmarks hit their highest since September 2014 on Monday, with Brent touching $96.78 and WTI reaching $95.82. The price of Brent jumped 50% in 2021, while WTI soared around 60%, as a global recovery in demand from the COVID-19 pandemic strained supply.

(Source: Reuters)

• Buoyed by robust revenue growth(44.1%), Honey Bun reported a net profit of $ 45.51Mn for its 3 months ending December 31, 2021,  a 30.9% increase relative to the prior period. Sales of its Shorty Bread products, which continued to be well received by customers, were a significant driver of the expansion in revenues. 
• There was also a 64.5% rise in direct costs, in part due to the increased production. However, significant price increases on all inputs, supply shortages and shipping delays also contributed to the overall increase in direct expenses. The increase resulted in a reduction in the company’s gross margin by 7.5 percentage points to 39.81%. 
• Nonetheless, despite cost pressures, Honey Bun’s operating profit increased by 44.5%, as the rise in revenues outweighed the higher direct costs, administrative (+23.1%) and selling and distribution (17.2%) expenses, supporting growth in its bottom-line. 
• Going forward, Honey Bun is expected to see continued buoyancy in the demand for its products, but cost pressures are also expected to remain elevated. Demand will be driven by a recovery in both its domestic and international market segments. The relaxation of restriction measures in Jamaica along with expected real GDP growth will support sales growth along with economic recovery in key export markets such as the U.S. However, margins are expected to decrease owing to higher input price increases that are expected to continue throughout 2022 as energy prices increase and supply challenges persist. 
• Honey Bun’s stock price has increased by 7.6% since the start of the calendar year. The stock closed Monday’s trading session at $9.98 and currently trades at a P/E of 20.4x earnings which is almost in line with the Junior Market Manufacturing Sector Average of 20.9x.

(Sources: Company Financials & NCBCM Research)

• For the 9 months ending December 31, 2021, RJR reported a net profit attributable to shareholders of $251.80Mn, a 62.60% increase year over year. Additionally this outturn surpassed the pre-pandemic outturn of $134.39Mn. The net profit outturn was primarily supported by revenue growth of 13.6%, with revenues moving from $3.79Bn to $4.31Bn. 
• The company’s performance was influenced by growth in its three divisions: audio, audio-visual, and print and online divisions. The company also highlighted that it surpassed key revenue targets for its digital services, which is a positive as it transitions to a digital company. However, it also realized a 29.4% increase in direct expenses, though this increase was not enough to temper its bottom-line growth. 
• We anticipate that RJR will see further bottom-line growth supported by new initiatives to improve technological efficiencies and increase revenues. This includes its new ecommerce website, Gcommerceja.com, which was developed through its partnership with ePost Caribbean Limited. Further, the company should see earnings growth through the share of income from its associate companies due to its recent acquisitions such as its 15% stake in Starapple Analytics. 
• RJR’s stock price has increased by 18.9% since the start of the calendar year. The stock closed Monday’s trading session at $3.65 and currently trades at a P/E of 30.7x earnings which is above the Main Market average of 18.7x.

(Sources: Company Financials & NCBCM Research)

• A Jamaican-based company is set to invest US$45 million in the local renewable energy market. The clean energy projects planned by Soleco Energy Limited will see the construction of three 10 MW (total capacity of 30MW) solar photovoltaic plants in Barbados. 
• Upon completion this will be the largest solar plant in the English-speaking Caribbean and plans to sell electricity to the Barbados Light & Power equivalent in Jamaica (JPS), at a price of U$8.50/ kWh. 
• Angella Rainford, CEO and Founder of Soleco Energy stated: “The Paradise Park Project exemplified the potential for other emerging markets such as Barbados to achieve such cost savings while supporting sustainability and resilience in their economies through the adoption of renewables.” 
• The project will help to increase investment, and tax revenues for the country, and support growth in economic output.

(Source: Barbados Today)

• A crackdown that aims to reverse “non-existent” consumer protection from unregulated money lenders will take effect in the 2022 second quarter. The Bahamas intends to close what is considered to be “a very big gap” in safeguarding its citizens from predatory lending practices by persons and entities operating outside the established financial services supervisory environment.
• Executive Director at Securities Commission, Christina Rolle spoke out after the regulator, which oversees the capital markets, financial and corporate services providers, and investment fund sectors. The draft Money Lenders rules was released for the third round of industry consultation amid hopes it will prevent Bahamians from falling prey to practices such as sky-high interest rates that exceed the lawfully allowed 20% maximum. 
• The rules, which will capture all money lenders and require them to operate as companies or other legal entities, rather than as individuals, also prohibit such persons/firms from using physical violence, threats or other forms of intimidation against a borrower or their family members when collecting loan repayments and debts.
• She explains that no penalties for such ‘loan shark’ type tactics are contained in the rules, which make clear that both guilt and punishment is to be determined by the Supreme Court, but they do impose far more stringent transparency requirements on non-bank lenders not covered by the Financial and Corporate Services Providers or any other financial services-related Act.
• This crackdown could however reduce access to financing for citizens in the lower-income brackets and could adversely impact consumption.

 (Sources: The Tribune & NCBCM Research)

• Oil prices rose on Monday to their highest in more than seven years as fears grew that Russia could attack Ukraine in the near future. Brent crude rose 55 cents to $94.99 a barrel, after touching its highest since October 2014 at $96.16. U.S. West Texas Intermediate (WTI) crude rose 85 cents to $93.95 a barrel, after hitting $94.94, the loftiest since September 2014. 
• Comments from the United States about an imminent attack by Russia on Ukraine have rattled global financial markets. Russia could invade Ukraine at any time and might create a surprise pretext for an attack, the United States said on Sunday. The nation has amassed thousands of troops near Ukraine's borders, but Moscow denies it plans to invade and has accused the West of hysteria. 
• The oil market cooled briefly after Ukrainian Ambassador Vadym Prystaiko said Ukraine was prepared to make some concessions to Russia. However, prices resumed their upward momentum soon after. 
• Russia is one of the largest crude oil producers, with a capacity of about 11.2Mn barrels per day, any disruption of oil flows from the region would send Brent and WTI prices skyrocketing higher far above $100, in a market struggling to supply the increased demand for crude as economies recover from the pandemic.

(Source: Reuters)

• The unprecedented level of job switching seen last year, as the U.S. labour market rebounded from the pandemic, gave workers more leverage to ask for better pay and played a role in pushing inflation to its highest level in decades, a new study suggests. 
• An increase in the share of people who searched for jobs while they were employed helped boost inflation by about 1 percentage point throughout much of last year, according to a paper released on Monday by the Chicago Federal Reserve. That suggests job-switching at times accounted for roughly 20% of the price growth seen in 2021. 
• Leonardo Melosi, a senior economist for the Chicago Fed and a co-author of the report noted that workers' propensity to search for another job is an important driver of inflation. People who search for new work while they still have a job can end up with higher salaries - and more spending power - after switching jobs or receiving a raise from their current employer, the researchers said. 
• Job switching took off last year as job postings soared and the number of people quitting reached record levels. Nearly 4 million Americans on average quit their jobs each month last year - often in search of better pay or more flexibility. 
• Fed officials are under greater pressure to combat higher inflation after data released last week showed that consumer prices posted their largest annual gain in 40 years. Watching what happens to the trend some analysts have dubbed the Great Resignation could offer a hint on the future path of price increases. 
• If job-switching dies down as the pandemic recedes, that could help to ease inflationary pressures. But if people continue to change jobs in search of better pay or new opportunities, those inflationary pressures could continue, researchers said. Still, labour market turnover will not be the only factor influencing inflation, as supply-chain disruptions and other factors are larger drivers.

(Source: Reuters)

• For the 9 months ending December 31, 2021, FESCO reported a net profit of $170.79Mn (EPS: $0.15) which is a 140.8% or $99.96Mn increase relative to the prior corresponding period. The improved bottom line was supported by strong revenue growth of 84.2%, with revenues moving from $4.35 Bn to $8.01Bn. 
• Revenue growth was supported primarily by two factors, increased prices as well as an increase in the quantity of fuel sold. FESCO’s higher prices reflected the increase in the price of fuel, with the company experiencing an 84.6% or $3.56Bn increase in its direct costs. The increase in volume was supported by the opening of its Beechwood Avenue station. 
• With revenue growth outpacing the growth in costs, gross profit increased by 73.3%, while operating profit rose by 88.1%. 
• Looking ahead travel activity is expected to increase in line with the ease in mobility restriction and the return to office of some workers, among them those working in the public sector. The government of Jamaica indicated that it will no longer pursue total lockdowns and no movement days as pandemic containment strategies. This is expected to increase travel activity, which bodes well for the demand for FESCO’s products and services. 
• FESCO's stock price has increased by 71.32% since the start of the calendar year. The stock closed Thursday’s trading session at $4.93 and currently trades at a P/E of 59.2x earnings, which is above the Junior Market Distribution Sector Average of 23.5x

(Source: Company Financials)

• The Central Bank of Trinidad and Tobago warned yesterday that higher prices, particularly imported inflation, will pose a challenge to the economy in 2022. In outlining the outlook for this year in its January Economic Bulletin, the Central Bank said: 'The international shortage of shipping containers, higher shipping costs (freight and insurance) are expected to persist into the early months of 2022, alongside some pressure on prices of international agricultural commodities. The widely expected rise in interest rates in the US and other areas will also feature in the calibration of domestic monetary policy and affect the public sector debt dynamics. 
• Following the prolonged lockdown period in 2021, Trinidad and Tobago is expected to grow in 2022. Growth is expected to be fairly broad-based. On the energy front, higher natural gas production is expected, as several projects being undertaken by major players are anticipated to come on stream in the first half of 2022. 
• Full-year production in non-energy sectors will also surpass 2021 levels once there are no major reversals towards significant restrictions on mobility. At the same time, the nature of businesses will evolve in the direction of more electronic transactions and lower onsite activities, posing a challenge to the survival of some firms that are slow to adapt. 
• Higher prices, particularly imported inflation, will however pose a challenge. The international shortage of shipping containers, higher shipping costs (freight and insurance) are expected to persist into the early months of 2022, alongside some pressure on prices of international agricultural commodities. 
• Energy commodity prices are anticipated to remain relatively firm over the short to medium term. Though crude oil prices lost momentum in late 2021, demand will likely be driven by the continued increase in global economic activity. Colder temperatures during the winter months are also expected to bolster prices. Crude oil production from the Organization of Petroleum Exporting Countries and associated entities (OPEC+) is expected to increase by 400,000 barrels per day in January 2022, which should aid in closing some of the gaps between demand and supply but may exert some downward pressure on prices.

(Source: TT Central Bank)

• Despite the devastating economic effects of the unprecedented flooding last year and the impact of the COVID-19 pandemic on international trade, Guyana’s rice exports still secured over $42Bn in earnings for 2021. 
• Agriculture Minister, Zulfikar Mustapha said the primary focus will be on increased production and rebuilding the sector to improve profitability on a sustainable basis. Towards this end, he said plans are in the pipeline to plant 185,000 hectares that will produce 1,091,500 tonnes of paddy or 709,475 tonnes of rice. 
• Mustapha said there will also be increased attention to maintaining and expanding the marketing and trade of rice and its by-products locally and internationally, as his ministry projects to export 86% of the rice production this year. 
• Additionally, there will be increased research on new varieties and best practices together with quality seed production and mitigating losses due to pests and disease, certification of laboratories and mills will all contribute to this growth. By the autumn crop 2022, he said a new high-yielding candidate variety of paddy with excellent quality traits is expected to be identified and released in the autumn crop of 2024.

 (Source: Kaieteur News)