Thu | Oct 17, 2019

Wigton rebuffs NCB Cap sell recommendation

Published:Wednesday | September 18, 2019 | 12:27 AMSteven Jackson/Senior Business Reporter

Wigton Windfarm head Earl Barrett has rebuffed the sell recommendation from large brokerage house NCB Capital Markets.

NCB Cap, in a report released last Friday, described Wigton, a stock listed on the Jamaica Stock Exchange(JSE), as overpriced with flat revenues. Barrett said that revenues are slated to rise based on future projects but stopped short of making forward-looking statements.

“Wigton is looking double time at new business, not just in Jamaica but the wider Caribbean. We cannot talk about that publicly until it is disclosed with the JSE,” said Barrett, Wigton general manager, in an interview with the Financial Gleaner.

Shares in Wigton Windfarm spiralled lower this week following the release of the report dated September 13. NCB set a price target of $0.83 and recommended that its clients consider selling the stock.

Barrett said he printed and discussed the report with management.

“I take these reports with a grain of salt,” he reasoned. “Nothing that they have mentioned was not in the prospectus for the initial public offering (IPO) and they were brokers who sold a lot of it. So for them to turn around to recommend a sell, one has to question their motives.”

Barrett recommended instead that shareholders discuss the matter with their “friendly stockbroker” rather than one seeking to make commission on a trade, he said.

“I still own the stock,” said Barrett, who questioned the motives of NCB Cap.

The stock actually closed at $0.83 on Monday, its lowest position in two weeks. It is also one-third lower than its all-time high of $1.14 which it hit in mid- August, following the release of favourable results.

For the three months ending June 30, 2019, Wigton reported net profit of $366.4 million, or double year earlier levels, with earnings per share at $0.03. The change of outlook for NCB Cap, however, relates to Wigton operating at near full capacity, which translates to flat revenues going forward from NCB Cap’s perspective.

NCB Cap said there is also uncertainty of future contracts and increased competition in the renewable energy space. NCB Cap, however, recently announced that it believes in the renewable or clean energy sector. It underwrote a portion of the US$180 million bond for natural gas company New Fortress Energy. The US-based start-up NFE operates in Jamaica and other parts of the region with projections to rapidly expand its revenues over the next five years. Contrastingly, Wigton remains bullish on future prospects but has yet to announce revenue projections.

“Using a free cash flow to firm model, we obtained a fair value estimate of $0.83 per share, which implies that Wigton’s stock is currently overpriced by 5.6 per cent. We are, therefore, changing our recommendation on Wigton to sell,” stated the NCB Cap report within the context of the stock jumping over three-quarters in value since its listing in May this year at $0.50.

Mayberry was the lead broker for the Wigton initial public offering. Mayberry CEO Gary Peart declined to comment on the NCB Cap report when contacted by the Financial Gleaner.

steven.jackson@gleanerjm.com