High demand for the IPO which opens today

Indications are that Spur Tree Spices Jamaica Initial Public Offer (IPO), which opens today, is heading for an early closure based on strong market interest in the stock.

Equity analysts point to growing interest in the equities, which they say is reasonable priced at J$1.00 and is scheduled to close three weeks later on January 19, 2022. In fact, they are predicting that the IPO should be oversubscribed and closed early given strong market interest in the stock.

Spur Tree Spices, which is a Jamaican company which has been in operation for the past 15 years, is seeking to raise $335 million from the IPO.  

The equity analysts also point to the fact such a high portion of the 335.39 million shares on offer have been reserved for interest parties, giving a strong indication that the IPO will be successful.

Approximately 158.1 million of the shares in the IPO have been reserved for specific categories of persons such as staff, suppliers and non-executive directors. The remaining shares, along with any reserved shares not purchased will be available to the general public.

Spur Tree Spices specialises in the production, distribution and sale of premium quality wet seasonings and sauces. Applications for the Spur Tree Spices IPO will only be accepted electronically through the Sagicor Investments Jamaica eInvest platform.     

IPO assessed as a wise buy

IC Insider business magazine, in its online publication, and Sagicor Investments, which is the co-broker for the IPO, have both assessed the IPO as a buy for investors. IC Insider reports that priced at $1 per share, “the IPO should be heavily oversubscribed with closure likely by the end of the week”.

IC Insider has assessed the stock with a price-earnings (P/E) ratio of 8.7 based on earnings before tax. The P/E ratio is used for valuing companies and to find out whether they are overvalued or undervalued.

The company has convened an online Investor’s Briefing for today from 10:00 am – 12:00 pm to speak more about the IPO. While the company is active in the local market through its various distribution channels, its major focus remains the export market.

Spur Tree Spices has shown significant improvement in performance during the eight-month period ending August 31, 2021 thanks to a 28 per cent growth in sales over the prior corresponding period to $542 million. Spur Tree Spices generates approximately 95 per cent of its sales from the export markets and has entered new markets.

Spur Tree Spices is both USA FDA and SQF certified. Operating Profit of J$96 million for the eight-month period ending August 31, 2021 represented, an increase over the $50 million in the prior period. 

Finance costs increased marginally to $10 million for the August 2021 period and $7-million for the 2020 period. This resulted in $86 million in Profit Before Tax, representing a 101per cent increase over the prior period.

Despite the onset of the COVID-19 pandemic, to date, there has been no significant adverse impact on the company.