The Malta Stock Exchange (MSE) Index fully erased June’s negative performance with a 2.82 per cent gain in July, to end the month at 3,390.715 points. GO plc (GO) shares were the top performers, while Simonds Farsons Cisk plc (SFC) shares headed the list of fallers.
GO plc shares appreciated by a significant €0.34 or 16.7 per cent as 105 deals of 349,686 shares were struck, to close at €2.38 – a six year high. GO reported that Forthnet S.A. - the Greek telecommunications company in which GO has indirect equity - issued an announcement notifying the market that it had received a non-binding offer by OTE S.A. for the acquisition of the activity of NOVA (Forthnet’s pay TV operations), for a consideration ranging between €250 and €300 million, on a debt-free cash-free basis. The offer is based on certain assumptions and is subject to terms and conditions, customary to such transactions. The Board of Directors of Forthnet S.A., following the rules of corporate governance, will evaluate the offer and inform the investing public accordingly. Furthermore, GO reported that at a Board of Directors’ meeting, it was unanimously decided to inform Forgendo Limited (Forgendo) that the company has opted to exercise its option of converting into equity the interest free loan which the company had made available to Forgendo in January 2014 and which was used by Forgendo in its participation in the share capital increase in Forthnet S.A. Additionally, GO announced that Forthnet S.A. has received a joint non-binding indicative proposal from Vodafone Group Services Ltd and Wind Hellas Telecommunications S.A for the possible acquisition of all shares of Forthnet which are not owned by them.
In the banking sector, Lombard Bank Malta plc shares advanced by a staggering 16 per cent across 10 trades of 19,910 shares, closing €0.235 higher at €1.70. Meanwhile, FIMBank plc shares edged 6.9 per cent higher over two transactions of 2,307 shares, closing $0.048 higher at $0.748. Conversely, HSBC Bank Malta plc shares slipped 1.1 per cent lower across 126 trades of 298,708 shares, closing at €2.00, as investors awaited the financial results of the bank which were announced on August 4, 2014.
Bank of Valletta plc shares partially recouped June’s losses as its share price climbed 5.5 per cent higher in July on the highest turnover for the month of 715,441 shares, to close €0.11 higher at €2.13. In its interim directors' statement, the bank reported that from the beginning of April until the end of July, there was weak demand for business credit, which was partly countered by robust demand for home loans. Growth in deposits far exceeded growth in lending - leading to increasing levels of liquidity. The persisting low yields on proprietary investments, coupled with negative rates on overnight deposits with the European Central Bank (ECB), had an adverse influence on the interest margin, which was somewhat mitigated by increased volumes. Fair value movements resulted in moderate price gains over the period. Fees and commission income continued to grow across all key business lines. Costs remained under control and whilst higher than last year, due partly to increased regulatory costs, are in line with forecasts. From November 2014, the bank will come under the direct supervision of the ECB as part of the Single Supervisory Mechanism. In preparation for this transition, the ECB is carrying out an Asset Quality Review and has commenced a stress testing exercise, with the aim of evaluating asset quality, assessing the adequacy of provisions and determining the resilience of the Bank’s capital buffers under extreme conditions. The final outcome of these two exercises is expected to be announced towards the end of October 2014.
Malta International Airport plc shares ended the month of July at an all time high closing price of €2.35 as 39 deals of 56,528 shares were negotiated. In its traffic results, the local airport operator announced that in 2014 it had already welcomed over 1.8 million passengers – an increase of 7.7 per cent when compared to the same period in 2013. Positive results were registered in all source markets with France registering the highest growth of 17.9 per cent. Meanwhile, the UK remains the largest market maintaining top position with a growth of 6.7 per cent. In June, the number of passengers increased by three per cent in comparison to June 2013. Seat capacity and aircraft movements increased by 4.1 per cent and 5.3 per cent respectively, while seat load factor reduced minimally by 0.8 per cent. Furthermore, the Board of Directors approved the group’s interim financial statements for the six months ended June 30, 2014. The company registered a profit before tax of €10.4 million, compared to a €8 million registered in 2013. Revenue for the period under review amounted to €28.1 million, an increase of 11.5 per cent from 2013. The Directors have also approved a net interim dividend of €0.03 per share (€0.0461538 gross) equivalent to €4,059,000 for payment on all shares settled as at close of business on August 18, 2014 and payable by not later than September 12, 2014.
In the I.T. industry, Crimsonwing plc was the only positive performer advancing by a minimal 0.6 per cent across four trades of 18,819 shares, to close at €0.815. The company published its financial statements for the year ending March 2014. It reported that during the period April 2013 to March 2014 revenue grew by 13 per cent to €20m up from €17.8m a year earlier. Revenue per headcount increased by 5 per cent while net profits before tax were up by 46 per cent to €1.4m up from €1m in 2013. Moreover, the company reported that for the first quarter of its financial year (April 1, 2014 to June 30, 2014), it is maintaining good progress. Like-for-like first quarter revenues are marginally higher than last year at €5.3 million. During the specified quarter, the company made excellent progress on new business sales across the Dynamics (ERP) and the eCommerce propositions. The company also stated that the trading outlook for the next quarter remains positive.
Meanwhile, both 6PM Holdings plc and RS2 Software plc shares fell in value. The former witnessed two transactions of 2,480 shares, to close 1.3 per cent lower at £0.74, while the latter was executed across 42 deals of 344,349 shares, closing 2.3 per cent lower at €2.59.
Middlesea Insurance plc shares declined by 1.1 per cent over 10 trades of 13,411 shares, to close at €0.87. The insurance group announced that for the first six months of 2014 profit before tax reached €8.21m up from €6.4m during the same period in 2013. MSV Life - the group’s life insurance arm - was the main contributor, while the general business returned satisfactory results given the highly competitive market. The company registered a 12.9 per cent increase in turnover, while gross premium written increased by 17 per cent during the first half of 2014. Positive stock market performance abroad had a positive effect on the investment portfolio while the down trend in local financial equities affected negatively the holding company portfolio.
On a positive note, Medserv plc shares gained 8.3 per cent across 11 trades of 115,803 shares, to close €0.10 higher at €1.30. The board of directors of the company is scheduled to meet on August 28, 2014 to consider, and if thought fit approve the unaudited half-yearly report for the six months ended June 30, 2014. Meanwhile, International Hotel Investments plc shares gained a slight 0.7 per cent, to close at €0.76 while Island Hotels Group Holdings plc shares closed the month unchanged at €0.82 as three trades of 7,000 shares were executed.
SFC shares registered the worst loss for the month as its share price sagged by €0.08 or 2.7 per cent over 12 deals of 9,549 shares, to close at €2.87. Similarly, MaltaPost plc shares dipped 2.6 per cent lower across 15 trades of 51,953 shares, closing at €1.12.
On a positive note, Plaza Centres plc shares gained 1.7 per cent over four transactions of 25,200 shares, to close at €0.60. In July the Board of Directors approved the company’s interim unaudited financial statements for the six months ending June 30, 2014 whereby the company registered a profit before tax of €714,929, compared to a €605,474 registered in 2013. Revenue for the period under review amounted to €1.15 million, an increase of 10.7 per cent from 2013. In the same industry, Tigne Mall plc shares dropped by one per cent over four trades of 119,800 shares, closing at €0.515.
Grand Harbour Marina plc shares advanced by 2.8 per cent on a single transaction of 1,000 shares, to close at €1.87. The Board of Directors of the company is scheduled to meet on August 29, 2014 to consider, and if thought fit approve the half-yearly report for the six months ended June 30, 2014. Conversely, Santumas Shareholdings plc shares fell by 0.5 per cent over three deals of 4,307 shares, closing at €1.99.
MIDI plc announced that the Board of Directors is scheduled to meet on August 26, 2014 to consider and approve the half-yearly financial report covering the six months ended June 30, 2014. The equity was active across two trades of 86,214 shares, to close the month unchanged at €0.24. Likewise, Loqus Holdings plc shares traded flat at €0.105 on a sole trade of 1,004 shares.
The other non-mover for the month was Malita Investments plc (Malita) closing unchanged at €0.55. The company announced that the Board of Directors approved the company’s condensed interim financial statements for the six months ended June 30, 2014 whereby a profit before tax of €8.2 million was registered, compared to €6.8 million registered in 2013. Revenue for the period under review amounted to €3.4 million, an increase of 0.5% from 2013. The Directors also approved the payment of a gross interim dividend of €450k or €0.0150 per ordinary share equating to an interim net dividend of €292.5k or €0.00975 per share. The interim dividend will be paid on September 12, 2014 to the shareholders on the company’s share register at close of business on August 11, 2014.
In the corporate bond market activity was spread across 39 issues, the majority of which rose in value, six closed in the red, while another eight closed unchanged. Total turnover stood at €4.69m – a four per cent decline over the previous month. Heading the list of fallers were stocks of Mediterranean Investment Holdings plc (MIH), with the 7.5 per cent bond due to mature next year plummeting by 5.9 per cent over four deals of 25k nominal. This reflects the current geo-political turmoil across North Africa – since MIH has its business situated in Libya. On the contrary, the recently issued 5.3% Mariner Finance Plc Unsecured € 2024 was last month’s best performer, with a 2.6 per cent gain to €102.58.
Meanwhile, Tumas Investments plc announced the allocation policy to be applied to applications received in respect of its €25 million 5% Unsecured bonds 2024. A total of 3,370 applications representing a total value of €43.28m were received from holders of the maturing bonds (6.25% bonds due 2014-2016) and from holders of the 6.2% bonds 2017-2020. In view of the overwhelming response, the Intermediaries' Offer did not take place. All applications received from holders of the maturing bonds that opted to exchange their maturing bonds were allocated in full. Meanwhile, with regards to the holders of the maturing bonds who wished to increase their investment in the company, the company decided to allocate the first €1,000 in full and applications with amounts in excess of €1,000 have been allocated a further 10.55 per cent of the balance subject to rounding up to the nearest €100.
On the sovereign debt front, turnover soared by 62 per cent to €106.98m, as investors were awaiting the new government stock issuance, with an aggregate amount of €180m. In July, out of the 27 traded issues, 19 rose in value – pushing yields lower – whereas the remaining eight lost in value, as maturity nears. This mirrors the current yields in Europe across the entire maturity spectrum, with the 10-year and 20-year government yields closing the month of July down to 1.155 and 1.922 per cent, respectively. The 4.3% MGS 2033 (I) r was the most traded issue, representing 27 per cent of total trading value.
Earlier this week, the Treasury announced the allocation policy for the newly issued MGSs. Since demand was overwhelming, the €80m over-allotment option was exercised in full, and shall be satisfying around 93 per cent of the total €193.5m applied for. Applications for the 2% MGS 2020 were accepted in full, whereas applications in relation to the 4.1% MGS 2034 were accepted in full up to €70k, and a further 40 per cent of the remaining balance – rounded to the nearest €100.
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]