The Malta Independent 21 May 2019, Tuesday

Monthly Round up Report for February 2019 Equities bounce back from weak start to 2019

Thursday, 7 March 2019, 11:24 Last update: about 3 months ago

In February, the MSE Equity Total Return Index fully recovered from the losses registered during the first month of 2019. The index posted a substantial gain of 2.076%, reaching 9,020.274 points. Activity was spread among 23 equities, as ten securities headed north, while nine were a drag on the index.

Investor participation was much higher than the previous month, as over €13.1 million worth of shares traded, compared to January's figure of €7.4 million. This impressive turnover figure was mainly the result of high levels of activity in Malta International Airport plc (MIA), as well as BMIT Technologies plc (BMIT), even though the latter was only admitted to trading in mid-February.

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GO plc (GO) announced that the Initial Public Offering of 49% of its shareholding in BMIT had been oversubscribed and provided the market with details of the allocation policy. Following the pre-allocation agreement with a number of financial intermediaries whereby over 79 million shares were allocated, the balance of 20.5 million shares was made available for subscription by the preferred applicants and the general public. Total applications amounted to just short of 51.3 million shares, thus resulting in an over-subscription of almost 30.8 million shares.

Over the month, GO posted a solid gain, as it climbed a sizable 7.08% to €4.54. The equity traded heavily, as 336,152 shares worth almost €1.5 million were negotiated over 92 deals.

In its first weeks of trading, over 4.9 million BMIT shares were exchanged over 281 transactions worth just over €2.7 million. The equity reached an intra-day high of €0.58, shortly after it started trading before eventually settling at €0.53. This translates to an 8.16% gain over the IPO's issue price of €0.49. The company announced that its board is scheduled to meet on March 7, 2019, in order to consider and approve the company's audited financial statements for the year 2018.

The most liquid equity however, was MIA as 583,558 shares, worth over €3.7 million, changed hands over 78 deals. As a result, the share price climbed a solid 3.17%, to set a new all-time high of €6.50. The performance was the result of two positive announcements which were issued during the month.

Firstly, MIA published its traffic results for January, showing a total of 366,015 passenger movements throughout the month, which translates to a 4.1% increase over the corresponding period last year. The growth was driven by a 9.9% increase in aircraft movements, as well as a 7.9% increase in seat capacity. In terms of markets, the most noteworthy improvement was Spain, which registered an impressive 87.2% increase, while France also grew by a solid 12%.

Later on during the month, MIA then published its financial results for 2018, which showed a substantial increase in profit of 25.2%, from €24.2 million to €30.3 million. This was driven by an 11.9% upturn in revenues when compared to 2017, from €82.4 million to €92.2 million.

As provided in the monthly updates issued by the company, the airport exceeded a record breaking 6.8 million passenger movements over the year, which ultimately resulted in an 11.1% improvement in aviation revenues.

Further to the net interim dividend which was paid in September, the board decided to recommend during the Annual General Meeting, the payment of a final net dividend of €0.09 per share. This dividend shall be paid not later than May 29, to all registered shareholders as at April 15, 2019. The Annual General Meeting is scheduled to be held on May 15, 2019.

Another positive driver on the equity index was Simonds Farsons Cisk plc, as it fully bounced back from January's loss, soaring 9.38% to recapture the €8.75 price level. A total of 47,085 shares were exchanged over 25 deals.

The banking industry continued on its negative start to the year, as none of the three active equities gained ground. HSBC Bank Malta plc led the way with a 7.51% loss in value to a price of €1.60. A total of 431,896 shares changed hands over 76 deals, as the bank published its annual results for the year ending December 31, 2018. The bank's performance was impacted by the final phase of the bank's de-risking strategy, as well as the ongoing impact of negative interest rates. As a result of these two factors, profit before tax was 23% lower than the previous year, as it amounted to €38.6 million.

Net interest income of the bank decreased by 10% to €108.6 million, mainly due to the reduction in the corporate loan book and margin contraction in the bonds portfolio. The bank's excess liquidity once again resulted in an additional interest expense, due to the ECB's, unchanged negative deposit rate. Meanwhile, non-interest income was more or less in line with 2017.

Operating expenses were 5% lower than the previous year at €108.4, mainly due to the €7.6 million collective agreement provision which was charged in 2017. Earnings per share were down from 8.6 cents in 2017 to 8.0 cents in 2018. The board is recommending a net final dividend of €0.012 per share, translating to a dividend pay-out ratio of 47% for the full year.

Meanwhile, the bank's capital base remained strong and compliant with regulatory capital requirements, with an improvement in the CET 1 ratio from 13.9% to 14.6%.

Its peer, Bank of Valletta plc made the news this month as a result of a cyber-attack which temporarily affected the bank's operations. In the aftermath of the attack, the bank issued a statement to clarify what had happened, and how it was handling the situation. The statement explained that during routine reconciliations, it was noticed that there were discrepancies in eleven payments amounting to €13 million, at which point the bank immediately requested the international banks involved to stop these payments.

Once it became clear that the attack was systematic and sophisticated, the bank took its contingency plan to its highest level, and decided to temporarily shut down all its operations. Most services were resumed by the following morning, following rigorous overnight testing of the bank's IT systems, which were successful. The bank reassured the market that customer deposits and accounts were in no way affected by the cyber-attack.

In terms of trading, 754,724 shares were exchanged over 135 transactions, resulting in a 0.79% price decline to €1.26. The group's board of directors is scheduled to meet on March 15, 2019, to consider and approve the audited financial statements for 2018. The bank also announced that its Annual General Meeting will be held on May 9, 2019.

The only other active banking equity was FIMBank plc, which closed unchanged at $0.70 in spite of a traded volume of 294,762 shares, spread over ten deals. The bank announced that the board is scheduled to meet on March 23, 2019, to approve the 2018 financial results. The board will also consider the declaration of a dividend, if any, to be recommended to the Annual General Meeting.

The best performer in February was International Hotel Investments plc as it hiked 16.67% to reach €0.70 over a turnover of €625,572.  The company announced a new project which will increase its presence in Russia, this time in Moscow. The company is acquiring a minority share in a company being formed for the acquisition of a landmark property in Moscow's principal avenue leading onto the Kremlin and Red Square. The area, which allows up to 43,000 square metres of development, will be used to create a luxury Corinthia Hotel and branded serviced apartments for sale.

The company also announced that it has submitted an application to the Listing Authority, requesting the admissibility to listing €20 million International Hotel Investments plc 4% Unsecured Bonds 2026. These bonds shall be fully fungible with the company's existing €40 million unsecured bonds.

The proceeds from the new bonds shall be utilised towards part-financing the re-development and refurbishment of the company's hotel in Brussels, and towards the acquisition of a 10% shareholding in a real estate project in Moscow. The remaining balance will be used for general corporate funding purposes.

The worst performer for the month was GlobalCapital plc as it plunged 13.04% to close the month at €0.24, albeit on a slim volume of just 2,140 shares over two deals.

Also in the insurance sector, Mapfre Middlesea plc headed in the opposite direction, to fully recover January's loss with a 4.17% appreciation. The share price closed at €2.00 following a total of 13 transactions of a combined 27,895 shares. The company announced that its Annual General Meeting is scheduled to be held on April 26, 2019.

MaltaPost plc issued the Annual Financial Statements for the year ended September 30, 2018, showing a 14% decrease in profit before tax, which amounted to €2.6 million. A final net dividend of €0.04 per share was recommended by the board of directors, and later approved by the Annual General Meeting.

The decline in profitability was the result of the negative trend in letter mail volumes, coupled with postal rates which have remained static for years. In spite of a 4.7% increase in total revenue to €40.2 million, total expenses rose by 6.5%, to €37.7 million, as a result of increased staff and international mail service costs.

The Chairman said that the company aims to continue to implement its investment programme towards enhancing existing services, while also diversifying its services portfolio through new lines of business, to counter the decline in Letter Mail volumes.

Despite registering 23 transactions of 45,480 shares, the equity closed unchanged at €1.27.

Grand Harbour Marina plc was among the top performers, as six transactions of 35,393 shares pushed the equity upwards by 14.75%.

Elsewhere, a couple of transactions of 35,500 Loqus Holdings plc shares dragged the price 10.53% lower to €0.085. The company published its half-yearly report for the six-month period ended December 31, 2018. During the period, the group reported a loss of €110,078, compared to a €90,300 profit in the corresponding period in 2017. This negative performance, was a result of a 7% decrease in revenue and a 4% increase in costs. EBITDA totalled €310,666, translating to a 20% decrease over the previous year.

Medserv plc extended its negative run to three straight months, with a modest 0.89% fall in price to €1.11. Trading volume amounted to 116,516 shares across 18 trades.

In the retail sector, 561,927 PG plc shares traded over 51 transactions, as it rose 2.26% to reach the €1.36 price level.

Conversely, the gain posted by RS2 Software plc last month proved unsustainable, as the equity surrendered 3.4% in value to €1.42. In total, 188,549 shares changed hands across 28 transactions.

Trident Estates was one of only two gainers in the property market, with a 4.62% increase to €1.36. A turnover of €195,236 was generated across 16 trades.

The board of Malta Properties Company plc (MPC) is set to meet on March 20, 2019, to consider and approve the company's audited financial statements for 2018 and consider the declaration of a final dividend. A total of 445,398 shares were exchanged over 26 trades, as MPC climbed 4.76% to 0.55.

On the other hand, Tigne' Mall plc recorded the worst performance among its peers, as it sank 3.12% to €0.93. This was the outcome of 13 deals of 72,956 shares.

Malita Investments plc announced that its directors shall meet on March 8, 2019, to approve the 2018 financial results and to consider the payment of a final dividend to be recommended to the Annual General Meeting, which shall be held on May 6, 2019. Even though the equity registered 15 deals worth €71,340 this month, the share price closed unchanged at €0.92.

Likewise, Main Street Complex plc closed unchanged at €0.63 despite 11 deals of 147,000 shares.

MIDI plc continued to trade in negative territory, as 22 transactions of 227,730 shares dragged the equity 1.52% lower to €0.65.

Similarly, Plaza Centres plc traded 20 times, as 216,015 shares changed hands. As a result, the equity edged 0.97% lower to €1.02.

Yields in the corporate bond market were predominantly down, as from the 56 active issues, 29 appreciated and only 16 declined. Turnover amounted to almost €9 million spread across 616 deals, compared to the previous month's figure of €11.2 million.

The 5.75% International Hotel Investments plc Unsecured € 2025 was the worst performer, as it completely wiped out the previous two month's worth of gains, with a 4.36% loss in value, to close the month at €105.76.

At the other end of the spectrum, the 4.25% Corinthia Finance plc Unsecured € 2026 advanced 1.94%, to reach a price of €105.

In the sovereign debt market, activity was spread across 26 issues, 15 of which headed north, while the remaining 11 all lost ground. Turnover was nearly €23 million worth of Malta Government Stocks, very similar to January's €22.4 million. The gains were recorded by issues with terms to maturity of over four years, while the shorter-term active issues all recorded negative movements.

In fact, the largest loss was recorded by the shortest-dated issue, the 6.6% MGS 2019, which lost 0.71% in value to close at €103.36. The longest-dated MGS however, the 2.4% MGS 2041(I) headed 0.7% in the opposite direction, to close at €110.

This article, which was compiled by Jesmond Mizzi, Managing Director of Jesmond Mizzi Financial Advisors Limited, does not intend to give investment advice and the contents therein should not be construed as such. The Company is licensed to conduct investment services by the MFSA and is a Member Firm of the Malta Stock Exchange and a member of the Atlas Group. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information, contact Jesmond Mizzi Financial Advisors at 67 Level 3, South Street, Valletta, or on Tel: 21224410, or email [email protected] 
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