The Malta Independent 26 June 2019, Wednesday

Monthly round up report for April

Thursday, 16 May 2019, 10:16 Last update: about 2 months ago

MSE Index extends positive streak as more companies publish results

The MSE Equity Total Return Index extended its positive streak to three straight months, as it posted a further gain of 1.06% during April, to reach 9,505.022 points. The level of activity in the local equity market was in line with the previous month, as €8.4m worth of shares were exchanged over 811 transactions. From the 24 active equities, gainers amounted to 13, while only six traded lower. The month was once again dominated by various companies publishing their financial results.

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International Hotel Investments plc (IHI) was one of the companies presenting its 2018 financial statements this month, showing an increase in revenue of 5.7% to reach €256m. The increase in revenue was mainly driven by improved revenues from existing businesses, and, to a lesser extent, from the acquisition of the Corinthia Palace Hotel as of April 2018. The company also has various projects in the pipeline, including five luxury Corinthia Hotel projects, which are underway in various stages of design and completion, located in Dubai, Bucharest, Brussels, Moscow and Malta.

More than 81% of the revenue was driven by the operation of the company's owned hotels. Total rental income saw a slight drop in 2018, caused by the period during which the luxury residential penthouse in London was vacant.

Fee income is another important source of revenue which the Group is strategically focusing on growing. This revenue is derived principally from charges levied by Corinthia Hotels Limited and QP Limited to third party owned hotels and real estate projects. This source of income was also slightly lower, however, this slight dip is expected to be reversed as various projects progress towards completion, due to the structure of such fees.

A net adjustment to the value of property and intangible assets of €3.9m was registered this year, compared to the previous €0.9m. Also, an €8m loss on exchange rate fluctuations was recorded last year, compared to a loss of €3.2m in 2017. Profit before tax amounted to €8.5m, 28% higher than the figure for 2017. Furthermore, earnings per share were up to €0.018 from €0.014.

In view of the above, the board of directors has decided to recommend a net final dividend of €0.02 per share to all shareholders on the register as at 28 June. This will be subject to approval at the Annual General Meeting which will be held on 13 June.

Earlier during the month, IHI also announced that its wholly-owned hotel operating arm, Corinthia Hotels Limited, has made a strategic investment in Global Hotel Alliance. The latter is the world's largest alliance of independent hotel brands and operator of the multi-brand loyalty programme, Discovery.

Despite the results, the share price was down 5.19% to €0.73 as a substantial volume of 940,121 shares traded over 37 deals.

The banking industry registered mixed performances as gainers and fallers amounted to two apiece. The largest price movement was recorded by HSBC Bank Malta plc, as the share price soared 8.12% to reach €1.73. The equity also registered the highest turnover in the industry, as €883,255 worth of shares were exchanged over 64 transactions.

Bank of Valletta plc (BOV) also traded heavily, as 542,260 shares changed ownership over 161 deals. The share price however, moved in the opposite direction as it drifted 3.99% lower to €1.325.

BOV provided an update on the proceedings instituted against it by the curators of the bankruptcy of the Deiulemar case, taking place in front of the Courts of Torre Annunziata in Italy. BOV announced that it has now filed proceedings against Italy before the European Court of Human Rights, in order to safeguard its fundamental right to a fair hearing in this matter, in line with the European Convention on Human Rights.

FIMBank plc followed suit with a 1.4% decrease in price, to $0.705. The equity traded just three times on slim volume.

Meanwhile, Lombard Bank Malta plc posted a modest gain of 0.85% to close at €2.38. Traded volume amounted to 60,145 shares over nine deals. The bank held its Annual General Meeting on 11 April, in which all ordinary resolutions on the Agenda were approved.

RS2 Software plc (RS2) published its financial statements for 2018, showing an increase in revenue of 43.9% from the previous year, to reach €25m. This is mainly attributable to the implementation of the IFRS 15 Accounting Standard which affected the way in which the company recognised revenue from an option to convert certain term license contracts to a perpetuity. As a result, an amount of €5.6m was added to revenue during 2018.

Marketing and administrative expenses increased by 46% and 21% respectively. This has resulted from the Group's efforts in increasing the probability of securing significant businesses in the US, APAC and Europe for its managed services businesses. Consequently, a profit before tax of €6.6m was registered, compared to the previous year's figure of €1.2m. Moreover, earnings per share stood at €0.025, compared to €0.005 in 2017.

The board of directors has decided to recommend a bonus issue of one ordinary share for each eight ordinary shares held by shareholders as at close of business on 17 May. This will be subject to approval at the Annual General Meeting which will be held on Tuesday, 18 June.

During the week, the company also announced that it has concluded a major agreement for managed services with Cross River Bank, a leading innovator and provider of banking services for financial technology companies.

In the aftermath of the results, RS2 rallied 9.93%, reaching €1.55. A total of 340,166 shares were exchanged over 38 trades.

In the property sector, Malta Properties Company plc traded 22 times as 215,318 shares changed hands. The share price climbed 3.45% to €0.60. The company presented the resolutions which will be considered at the annual General Meeting scheduled for 11 June. Such resolutions include the approval of the financial statements, as well as the payment of a net dividend of €0.01 per share to all shareholders as at 13 May.

MIDI plc published its audited consolidated financial statements for 2018, showing a profit before tax of €17.8m, compared to the €21.2m registered in 2017. The profit figure for 2017 was largely attributable to the €26.3m revaluation gain of the company's shares in Mid Knight Holdings Ltd. However, the figure for 2018 was reflected in the operating profit. In fact, the group's operating profit during the past year stood at €17.3m, compared to an operating loss of €3.1m in 2017.

This was driven by a drastic increase in revenue from €4.6m to €52.5m. Over 92.6% of total revenue was attributable to the sale of Q2 apartments, which were delivered to their owners during the year. Earnings per share was registered at €0.054, down from the previous figure of €0.097. The Group's net asset value increased from €86.6m, to €97.4m in 2018.

The Board has resolved to recommend the payment of a final net dividend of €0.008 per share. Subject to approval at the Annual General Meeting, the dividend shall be paid on 28 June to all registered shareholders as at close of business 10 May.

MIDI closed 3.97% lower at a price of €0.605. The equity generated a turnover of €771,312 over across 50 transactions.

A total of 12 transactions of a combined 61,296 Main Street Complex plc shares had no impact on the closing share price of €0.63. The company published its annual results for 2018, a year which was characterised by the floating of the company on the Malta Stock Exchange back in May 2018.

The complex managed to retain 94% occupancy throughout the year, resulting in a revenue of €742,341, which was marginally higher than the previous year.

While operating expenses were more or less in line with 2017, administrative expenses more than doubled, mainly due to costs related to the company's listing on the Stock Exchange. The proceeds from the listing however, were used for the full repayment of the company's bank loan facilities, which compensated for the additional administrative costs, through lower financial costs. As a result, profit before tax was 5.6% higher than the previous year, as it totalled €439,371.

Further to the interim dividend which was distributed in September, the Board recommended the payment of a final net dividend of €0.00981 per share to be paid on 22 May. All shareholders on the register as at close of business 17 April shall be eligible for the dividend. The company's Annual General Meeting shall be held on 17 May.

Trident Estates plc climbed 0.75% to €1.34, as it traded over six deals on slim volumes. The board of directors shall be meeting on 8 May to consider and approve the audited financial results for the year ended 31 January. The recommendation of a final dividend will also be considered at the meeting. The dividend, if any, would be subject to approval at the Annual General Meeting which is scheduled for 25 June.

Plaza Centres plc published its audited consolidated financial statements for the year ended 31 December 2018. The year was characterised by a number of renovations at the Plaza Commercial Centre, which led to lower occupancy levels. The company however, expects this transformation of the complex to contribute positively to future revenues.

The Group generated revenue of €3.3m, a slight decrease over the comparative year. Profit before tax however, decreased by 9.6% to under €1.6m, driven by higher administrative costs, as well as a higher contribution to marketing and maintenance costs.

In view of these results, the Board resolved to recommend a final net dividend of €0.0294 per share, to be paid on 12 June to all registered shareholders as at close of business 6 May. The Annual General Meeting will be held on 5 June.

During the month, the share price was up 0.97% to €1.04. The equity registered seven deals of 63,457 shares.

Tigne Mall plc also published its audited financial statements for 2018, showing a 3.2% increase in profit before tax, to €3.5m. The positive performance was driven by increased tenant sales, and it comes as a result of a fully occupied mall, and an increase in footfall generated from Sunday trading. Revenue was 5.7% higher than 2017, as it totalled €6.5m.

During 2018, the company acquired 132 car parking spaces from MIDI plc for a consideration of €4.6m. This was mainly financed by a bank loan, which pushed the company's bank borrowings to assets ratio to 24%, slightly higher than the 23% registered in 2017.

The positive performance translates to an Earnings per Share figure of €0.0436, compared to the €0.0411 recorded in 2017.

The board of directors is recommending the payment of a final net dividend of €0.0131 per share, to be paid on 5 July to all registered shareholders as at close of business on 20 June, which is also the date on which the Annual General Meeting shall be held.

The equity traded 12 times as 70,150 shares were exchanged. The outcome was a 2.72% increase in price to €0.945.

In the same sector, Malita Investments plc closed unchanged at €0.87 despite 15 transactions of 148,152 shares.

Telecommunications company, GO plc registered the largest negative price movement, as the equity fell ex-div on 25 April. The share price closed the month at €4.28, translating to a 12.65% decline. A total of 158,050 shares traded over 79 transactions.

The company presented the ordinary resolutions which shall be considered at the Annual General Meeting scheduled for 28 May. The resolutions include the payment of a final net dividend of €0.14, as announced last month. If approved, this final dividend, together with the special interim dividend of €0.41 related to the sale of BMIT shares, will be paid on 30 May to all registered shareholders as at 26 April.

Its spinoff, BMIT Technologies plc, advanced 1.92% to €0.53, as a substantial turnover of €864,852 was generated. The company presented the ordinary resolutions which shall be considered at the first Annual General Meeting scheduled for 27 May. The resolutions include the approval of the Annual Report and Financial Statements.

The most liquid equity however, was Malta International Airport plc as €1.2m worth of shares changed hands over 72 trades. The outcome was a solid 1.52% price increase, to €6.70.

The company issued an update with the traffic results for the winter months between November and March. Passenger movements increased by 5.9% over the corresponding period last year, to exceed the 2 million mark. The positive performance was driven by an 8.1% increase in aircraft movements following the enhanced winter flight schedule, as well as a 7.6% increase in seat capacity.

Retail conglomerate PG plc, was the best performer this month, as it hiked 14.29% to set a new all-time high at €1.60. Traded volume amounted to 509,359 shares over 57 transactions.

Medserv plc published its financial statements for 2018, showing an increase in revenue of 25.7% to reach €36m. The increase in revenue is mainly attributable to the recovery within the Integrated Logistics Support Services segment, as the company's shore base facilities were active for most of the year.

Cost of sales however also increased by 26.4%, while finance costs were up by 21.5% to €5.4m. The results were also negatively impacted by a provision on impairment losses on the plant and equipment of the subsidiary in Iraq. As a result, a loss after tax of €9.5m was registered, compared to the previous year's loss of €7.6m.

Despite the loss, the company believes that 2018 saw the recovery gain traction in the global oil and gas sector, as activity seemed to be heading in an upward trajectory. During the year, the company issued several announcements which might reflect new opportunities, such as the award of a major contract in South America and the contract of shore base services in Cyprus.

In view of the above, the board of directors has decided not to recommend a dividend to the Annual General Meeting which shall be held on 27 May.

The equity lost 3.64% in value to €1.06, as a result of 10 transactions of a combined 52,115 shares.

In the food and beverage sector, Simonds Farsons Cisk plc posted a solid gain of 5.71% to close at €9.25. In total, 36,705 shares were exchanged over 10 deals. The board of directors met on 15 May in order to consider and approve the audited financial statements for the year ended 31 January. The Board shall also consider the declaration of a final dividend to be recommended to the Annual General Meeting, which shall be held on 24 June.

In the insurance sector, Mapfre Middlesea plc held its Annual General Meeting on 26 April. Among other resolutions, the AGM approved the recommended final gross dividend of €0.097826 per share, as well as the final gross extraordinary dividend of €0.0869565 to be distributed by the subsidiary Mapfre MSV Life plc. The share price registered a modest gain of 0.85% to reach €2.38, as 59,786 shares traded over 24 deals.

A single transaction worth just €1,000 in Loqus Holdings plc shares pushed the share price upwards to €0.09, from the previous month's closing price of €0.08.

Meanwhile, a sole deal of 13,586 Santumas Shareholdings plc shares had no impact on the share price of €1.42.

MaltaPost plc also closed unchanged at €1.25, despite generating a turnover of €64,995 over 14 trades.

Similarly, Grand Harbour Marina plc registered four deals of 26,900 shares, but closed at an unchanged price of €0.74.

In the sovereign debt market, from 25 active issues, eight Malta Government Stocks posted gains, while double that figure traded lower. The shorter dated issues all drifted lower, while the longer dated securities registered mixed performances. In spite of the higher number of fallers, the MSE Malta Government Stocks Total Return Index gained 0.28% during the month, to close at 1,049.30. Investor activity in the market was higher, as a turnover of €24.4m was generated, compared to the previous figure of €15.7m.

In the corporate debt market, from 60 active bonds, gainers amounted to 30 while fallers amounted to 25. In total, €8.5m worth of corporate bonds traded over 879 transactions. The MSE Corporate Bonds Total Return Index was up 0.27% over the month, to close at 1,073.21 points.

 

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; on Tel: 2122 4410 or email [email protected]


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