During the month of August, the Malta Stock Exchange (MSE) Index reversed July’s 2.8 per cent advancement, to end the month marginally above a 16-month low of 3,271.93 points reached on August 27. Dragging the index lower were shares of International Hotel Investments plc (IHI), FIMBank plc and Malta International Airport plc (MIA). Moving in the opposite direction were GO plc – whose shares touched a fresh record six-year high during the month – and RS2 Software plc (RS2), ending the month at an all-time high.
Activity in the equity market was spread across 22 issues, of which half declined in value, seven headed north, while four closed unchanged. Total turnover stood at €4.4m – in line with the figure registered the previous month.
Trading in the banking sector accounted for 41 per cent of total turnover, with the largest volume noted in Bank of Valletta plc (BOV). The banking equity ended the month with a 1.2 per cent gain at €2.155 - failing to sustain a nine-week high of €2.17 reached intra-month. Over the month, 182 deals worth €985k were struck, making it the most traded issue in August.
Its peer, HSBC Bank Malta plc, pared back any losses witnessed during the month closing flat, albeit disappointing interim results announced during the first week of August. During the six-months ended June 30, 2014 the Group registered a profit before tax of €40m - €13m lower than the same period last year. The decline in first half profits was the result of reduced interest earnings and lower non-recurring gains. The Board declared an interim gross dividend of €0.045 per share (€0.029 net of tax). This will be paid on September 4, 2014 to shareholders who were on the bank’s register as at August 14, 2014. Following the bank’s announcement, HSBC share price tumbled to its 5-year low closing price of €1.90, to then come back towards the €2 price level by the end of the month. HSBC shares were negotiated over the third highest turnover, worth €669k.
In the same line of business, Lombard Bank Malta plc shares, retreated by 8.2 per cent to €1.56, following a 16 per cent rally registered during the month of July. This decline followed the interim results published on August 20, 2014. The Group registered a profit before tax of €3.27m, compared to €4.16m registered during the same comparable period in 2013. MaltaPost plc contributed to the group a profit before tax of €1.2 million. The bank’s net interest income stood at €6.81m, whereas operating income – including the bank’s stake in MaltaPost plc – totalled €19.68m. These figures are down by 11.4 per cent (Net Interest Income) and 1.1 per cent (Operating Income), as the decline in interest income from the banking segment more than offset the higher turnover registered by the postal services company. The interest income stream for the period under review was negatively impacted as a result of the current low-yielding environment across the European region, as well as a result of efforts being made to streamline credit risk with regulatory requirements and soft credit demand. Earnings per share (EPS) decreased to €0.045.
Likewise, FIMBank plc shares shed 12.4 per cent in August on a volume of 87,047 shares, to almost match the price of July’s rights issue of $0.65. During the month, the bank published its interim results for the period ended June 30, 2014. The Group registered a profit after tax of $1.45m, compared to a loss of $6.98m registered in 2013. Net interest income for the period under review amounted to $14.55m, a rise of 97 per cent from 2013. Positively contributing to the bank’s improved results were the fair-value gains on previously held investments and the decline in losses from trading assets and financial instruments, whereas impairment losses stymied the bank’s positive results – reaching $10.2m from $1.8m in 2013. EPS increased to $0.0159. The board of directors are not recommending the payment of an interim dividend.
Middlesea Insurance plc shares bounced back by 6.9 per cent to €0.93, following the multi-month low of €0.87 reached in July. The insurance company failed to sustain a four-month high of €0.95 reached during the month, as 37,960 shares changed hands over 22 transactions.
Trading in Simonds Farsons Cisk plc brought its share price down by 5.9 per cent, of which a 5.6 per cent contraction took place on thin volume towards the end of the month. The share price started the month at €2.87 however settled at its 15-month low of €2.70.
GO plc shares advanced by a further 4.6 per cent on a turnover worth €457k. The telecommunications company reached a fresh record six-year high of €2.49, to then settle marginally lower at the €2.489 price level. GO shares’ positive performance mirrors positive interim results published mid-month, and recent positive news showing substantial growth in Forthnet S.A. – the company in which GO has an indirect stake through Forgendo Ltd. During the six months ended June 30, 2014 the group registered a profit before tax of €8.51m, as opposed to the €8.26m registered during the comparable period last year – reflecting a one-off administrative expense of €2.08m. Revenue for the period under review stood at €60.77m – up from €60.53m in 2013. EPS increased to €0.058. The group’s board of directors are not recommending the payment of an interim dividend. Albeit facing a competitive market environment, GO still managed to widen its client base, with the biggest growth resulting from the broadband, TV and mobile sections.
The month’s primary laggard was IHI, as selling pressure over 20 trades of 88,054 shares dragged the equity’s price down by 15.8 per cent – reflecting the worsening financial situation as per their latest interim reports. The Group registered a loss before tax of €13.71m, as opposed to a €9.46m loss registered during the same comparable period of last year. Revenue for the six-month ended June 30, 2014 totalled €55.59m, or a 6.6 per cent decline from 2013. Albeit revenues and operating profits continued to increase across most hotels located in Europe, the group’s overall performance was significantly impacted by political circumstances currently undergoing in Russia and Libya, which negatively impacted demand for the hotels situated in St. Petersburg and Tripoli.
Following July’s record high in MIA shares, the equity ended the month of August down by 4.3 per cent – partially reflecting the fact that it turned ex-dividend on August 13. Investors who held the security prior to this date will be receiving a gross dividend payment of €0.0462 on September 12, 2014. 86,364 MIA shares were traded across 26 deals. Earlier in the month, MIA published the traffic results for the month of July, registering a record of 511k passengers, or an 8.5 per cent jump over the same month last year. Primarily, contributing to such positive results was the growth in traffic from the UK, Italy, France and Germany.
In the IT sector, RS2 shares more than reversed July’s 2.3 per cent decline, as it soared to a record high of €2.75. The IT equity gained 6.2 per cent over the second highest turnover for the month, worth €759k. Last Thursday, the company published the Group’s interim results for the six-months ended June 30, 2014. The Group registered a profit before tax of €2.96m, as opposed to the €5.35m recorded in the same comparable period last year. Revenue for the period under review stood at €7.78m – a decline of 20.2 per cent from 2013 – affected by different revenue recognition criteria adopted when compared to previous contracts signed for the sale of licences. Earnings per share (EPS) declined to €0.05.
6PM Holdings plc (6PM) moved in the opposite direction, recording a monthly decline of 2.7 per cent over 12 trades of 395,000 shares – a 10-week low - notwithstanding positive interim results announced at the beginning of the month. The Group reported that it had registered a profit before tax of £385k, compared to £245k registered in 2013 – an increase of 54%. Revenue for the period under review amounted to £4.81m, a rise of 6.4% over 2013. EPS increased to £0.019, however, the directors are recommending that no interim dividend is paid.
Meanwhile, gains in Crimsonwing plc shares recorded in July were reversed in August, as seven trades of 21,682 shares knocked the equity’s price down 0.6 per cent back to the €0.81 level.
In its Interim Directors’ Statement, MaltaPost plc reported that during the period April 1, 2014 to August 22, 2014, the company registered an improvement in performance when compared to the same period last year. This was principally due to new service offerings, product enhancements and an increase in certain tariffs. Meanwhile, expenses increased mainly due to staff costs, cross-boarder mail delivery costs and inflationary pressures. The directors are confident that for the year ending September 2014, the company will deliver an improved profit when compared to the corresponding period last year. The postal services equity reached a monthly high of €1.14, to then settle back at €1.12 on five deals of 11,778 shares.
Similarly, Grand Harbour Marina plc (GHM) shares lost 0.5 per cent on a single trade of just 1,000 shares. Last Saturday, GHM announced that its board of directors approved the half yearly report of the company for the financial period January 1, 2014 to June 30, 2014. The company registered a profit before tax of €15,795, as opposed to the €148,153 loss before tax registered during the comparable period in 2013. Revenue for the period under review stood at €1.58m, a five per cent increase over that recorded in 2013.
Tigné Mall plc shares strengthened by 1.9 per cent, to close €0.005 shy of their all-time high of €0.53. Last week, the company’s board of directors approved the condensed interim financial statements for the half-year ended June 30, 2014. The company registered a profit before tax of €949k, compared to €680k registered in 2013. Revenue for the period under review amounted to €2.5m, an increase of 6.7 per cent from 2013. Meanwhile, EPS increased to €0.009. The directors have also approved the payment of an interim net dividend of €0.0063 per share to shareholders on the company’s share register as at August 27, 2014.
The logistics services company for oil and gas, Medserv plc, settled at its seven-week low of €1.275 on eight transactions of 87,200 shares – prior to the interim results published later in the month. The company registered a profit before tax of €542k, compared to €566k registered in 2013. Revenue for the period under review amounted to €9.64m, a rise of 160 per cent from 2013. However, it is important to point out that this was largely due to low margin business which has a lesser beneficial effect on profits than would otherwise have been the case. EPS decreased to €0.016. No interim dividend was recommended.
The board of directors of Global Capital plc also approved the half-yearly reports for the six months ended June 30, 2014. The Group registered a loss before tax of €967k for the first six months of 2014 compared to a profit of €66k for the same period last year. The results were negatively impacted as the Group registered unrealised fair value losses of €0.4m due to the decline in the MSE index. Moreover, the Group incurred restructuring costs which are not expected to recur. The life insurance arm registered a profit before tax of €0.7m compared to €0.5m last year while revenues at the health insurance agency remained similar to those registered in the prior period. The directors added that in line with the Group’s strategy to focus on its insurance business, Global Capital plc will, subject to regulatory approval, be exiting its investment and advisory business. During the month of August the equity’s price surged by 20 per cent on 13 transactions of 33,735 shares.
The special purpose vehicle, Malita Investments plc, was active over 25 trades of 647,693 shares, pulling the equity’s price down by 1.8 per cent.
Loqus Holdings plc headed the list of fallers, as its share tumbled by 19 per cent to €0.085, over two deals worth €266.
Santumas Shareholdings plc closed the month 10.6 per cent higher, to €2.20. The closed-ended collective investment scheme (CIS) witnessed nine trades of 4,852 shares. Last week, the company announced that its board of directors will be meeting in order to consider the delisting of the company as a CIS, and to then relist as property holding company.
Two other non-movers for the month were Plaza Centres plc and MIDI plc. The former opened the month down by 6.7 per cent, to then recoup its losses by mid-month – over a total turnover of €69k. In the same sector, two trades of 11,786 MIDI shares lefts its price intact at €0.24. The company’s board of directors published the half-yearly report covering the six-months ended June 30, 2014. The company registered a loss after tax of €986k compared to a €1.7 million loss registered in 2013. Revenue for the period under review amounted to €782k, a decline of 81 per cent from 2013.
On the corporate bond front, 34 issues were active, of which most closed in the black, five registered a loss, while eight closed unchanged as turnover shrunk by 53 per cent to €2.21m. The recently issued 5% Tumas Investments plc Unsecured € 2024 jumped by 4.3 per cent on its first month of trading. The worst performing issues were those of Mediterranean Investment Holdings plc (MIH), as both the 7.5 per cent bond maturing next year, and the 7.15 per cent bond maturing between 2015-2017, continued to trend lower – closing the month down by 3.1 and 9.6 per cent, respectively.
In the sovereign debt market, declines were only recorded in the shorter dated issues while all other bonds continued to trend higher – the highest gains being registered in bonds maturing in 14 to 20 years time. This echoes European yields across the entire maturity spectrum. In fact, the 10-year average yield settled the month near its record low of 0.882 per cent, while the 20-year yield stood at 1.611 per cent, as investors are awaiting a new set of monetary measures by the European Central Bank to help abate a deflationary scenario, whilst stimulating economic growth. The medium-term dated 5% MGS 2021 (I) was the most liquid issue, accounting for 31 per cent of total turnover, whereas the newly issued 4.1% MGS 2034 (I) r ended the month up by 4.2 per cent, to yield around 3.7 per cent.
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]