Local brokerage firms JN Fund Managers and Barita Investments Limited have given investors the green light to ‘participate’ in the National Road Operating and Constructing Company’s (NROCC) offer of sale for TransJamaica Highway (TJH) shares.

NCB Capital Markets, the lead broker and arranger of the offer of sale, has also recommended participate to investors.

• READ MORE: NCB Capital Markets gives ‘participate’ rating to TransJamaican Highway shares sale

NROCC on February 25 announced the offer of 1,050,420,000 TJH shares at J$3.60 or US$0.0228 through a prospectus. Based on demand, the State-owned company can exercise the right to upsize the offer with an additional 750,300,000 TJH ordinary shares being sold in the public and reserved pools of investors.

NROCC is seeking to raise up to $6,302,520,000. This invitation to apply for shares opened on Tuesday, March 4, 2025, and is scheduled to close at 4:00 pm on Tuesday, March 18, 2025.

In its analysis, JN Fund Managers wrote, “Investing in TJHL is advantageous due to anticipated strong traffic flows and the expectation that motorisation and housing development trends in the surrounding areas will persist. Additionally, as infrastructure assets display lower correlation to other asset classes, it provides great diversification benefits in a portfolio scenario. Further, as the Concession Agreement includes an indexation to the US CPI, it may also provide a hedge against inflation.”

The brokerage firm added: “We have an estimated fair value of TJHL’s stock of J$4.56, implying that the shares in this offer for sale are undervalued and investors who invest at the offer price could get a discount of [approximately] 21.0 per cent. Based [on] the foregoing analysis, we recommend that investors PARTICIPATE in this offer, and we assign a low- [to] medium-risk rating to the stock.”

JN Fund Managers justified its analysis of the share offer by evaluating the performance from financial year (FY) 2020 to 2024. It outlined that the revenue growth of the company, driven by increases in motor vehicle traffic and inflation-adjusted toll rates – a key point in TJH’s concessionaire agreement with NROCC – as key markers of the future performance.

In particular, the brokerage firm believes that the continued growth in Jamaica’s tourism arrivals will result in more travel between major tourist destinations, and the urban area expansion along the highway corridor will create more demand for the toll road

Barita recommends PARTICIPATE

Another firm recommending ‘particpate’ to investors was Barita. The company assessed THJ’s performance based on its performance between 2020 and 2024 and its potential for generating cash flow up to 2036 when its concessionaire agreement comes to an end.

“We conducted a valuation exercise on the shares of TJH which yielded an estimated fair value of US$0.0123, implying a potential capital gain of 23 per cent over the offer price. This fair value estimate reflects expectation for modest growth in toll fees over the remaining horizon of the concession agreement and does not take into account any additional projects being untaken during that period. We believe this investment may be best suited for investors with a medium to long-term horizon whose portfolio could benefit from diversifying into an infrastructural asset investment. Given consideration to the pros and cons of the investment coupled with the results of the valuation exercise we believe investors should participate in this offer,” Barita outlined.

The investment house highlighted consistent profitability, the concession agreement, low-impact substitutes, and portfolio diversification as advantages to the company’s performance.

“TJH provides the Jamaican public the chance to own a[n] infrastructure-type asset which offers steady cash flows, which is in a[n] industry that is not traditionally available on the Jamaica Stock Exchange,” the analysis read in part.

On the risk side, Barita listed a non-renewal of concession and the development of alternative routes as negatives.