Monthly Round up Report for March 2019

MSE Index posts impressive gains driven by positive results

In March, the MSE Equity Total Return Index continued on the previous month's positive trend, as it posted a substantial gain of 4.272%, to reach 9,405.638 points. Activity was spread among 25 equities, as 11 securities advanced, while 10 lost ground. Turnover was significantly lower than February's figure of €13.1 million, as €8.2 million worth of shares traded last month. The month was dominated by the publication of financial results of various companies.

In the banking sector, Bank of Valletta plc was one of the companies to announce the financial statements for 2018. The statements show a profit before tax of €71.2 million, compared to €174.7 million for the 15-month period to December 2017.

As had happened in the interim financial statements of the first half of 2018, the results were negatively impacted by the €75 million litigation provision. This prudence provision is aimed to cover against losses which may arise out of the ongoing litigation cases, including the Deiulemar case. The operating profit before this litigation provision stood at €146.2 million, a 5.8% increase over the annualised result for 2017.

Net interest margin amounted to €156.5 million, which on average was 7% higher than the previous period. This improvement was due to the fact that the effect of higher volumes, which led to increased interest revenue, offset the impact of a low interest environment.

Net commissions amounted to €81.1 million, translating to an annualised growth rate of 17.5%, while trading income and dividends show an annualised decrease of 12%.

The group's financial position remained solid, as the CET 1 ratio stood at 18.3%, compared to the 16.1% recorded at the end of 2017.

As announced earlier, the Board will not be recommending the payment of a dividend, however it has resolved to recommend to the Annual General Meeting, a bonus share issue of one share for every ten shares held as at June 11, 2019. The bank also intends to issue an instrument eligible for Additional Tier One capital to institutional investors. Moreover, in the third quarter of 2019, the bank shall be issuing a new subordinated bond to replace the 5.35% BOV Subordinated Bond 2019.

In the aftermath of the announcement, the share price hiked 9.52% to reach €1.38, on a significant turnover of €1.35 million.

Its peer, HSBC Bank Malta plc maintained the previous month's price, as it closed unchanged price at €1.60. The equity traded 42 times as 228,448 shares changed hands.

Lombard Bank Malta plc, which fell ex-div during the month, was the only negative mover with a 3.28% decline to €2.36, over a turnover of €178,104. The company announced that its Annual General Meeting shall be held on April 11, 2019.

In the same sector, FIMBank plc published its full-year financial results for 2018, showing that the group has continued on the positive trend set out in recent years. Profit before tax amounted to $13 million, translating to an increase of 11.2% over the previous year.

This was driven by a 25.1% improvement in net interest income to $31.2 million, a 27.7% increase in dividend income to €7.7 million, and a positive result from foreign currency operations of €1.3 million, compared to a loss of €1.7 million in 2017. These positive results were partly the result of the rights issue which unlocked room for further growth and higher asset levels, as well as improved margins.

Net fee and commission income however, was a marginal 4.7% lower as it totalled €17.6 million. The bank showed greater efficiency by the fact that operating expenses dropped by 11% compared to 2017, to ($37.6).

The bank's capital ratios also improved, as the group's capital ratio improved from 15.5% in 2017 to 18% last year, while CET1 ratio was up from 11.3% to 17.6%.

The board will not be recommending a dividend, however, it will be recommending a 1 for 30 Bonus Issue of Ordinary Shares by way of capitalisation of the Share Premium Account. Shareholders on the register on April 7, 2019 will be entitled to this Bonus Issue. The Annual General Meeting shall be held on May 7, 2019.

In terms of trading, the equity was up 2.14% to close at €0.715, as 17 deals of 228,148 shares were recorded.

Elsewhere, International Hotel Investments plc was dominated by buying pressure, soaring 10% to €0.77, on a volume of 748,322 shares. The company announced that it would be issuing €20,000,000 in unsecured bonds maturing in 2026 and with a coupon of 4%. This issue is fully fungible with the existing €40,000,000 International Hotel Investments plc 4% Unsecured Bonds 2026. Later on during the month, the company announced that these bonds were fully allocated and were thus admitted to trading on the Malta Stock Exchange.

The insurance industry had a very positive month, as both equities rallied. The market reacted positively to Mapfre Middlesea plc's financial statements for 2018, showing a 4.8% increase in profit before tax, to €18.56 million.

As a standalone company, MAPFRE Middlesea plc registered a turnover of €69.69 million in gross premium written, translating to a 12.5% increase over 2017. Investment income saw a decline as a result of the financial market conditions throughout 2018. Profit before tax on a standalone basis fell by 6.16% to €11.42 million.

On the other hand, MAPFRE MSV Life plc was the main driver of the group's positive performance, with an increase in profit before tax of 10.15% to €13.7 million. Turnover stood at €322.72 million, compared to €291.46 million in the previous year, as a result of increases in demand across all products, particularly the single premium savings contracts and life protection business. In line with MAPFRE Middlesea plc, a negative investment income of €43.3 million was registered.

The directors have resolved to recommend the payment of a final net dividend of €0.11531 per share. The board will also recommend the payment of a special gross dividend of €0.08696 per share, related to the dividend which will be distributed by the subsidiary Mapfre MSV Life plc from past years' retained earnings. Both dividends will be paid on May 22, 2019, to all registered shareholders as at May 3, 2019. The dividends are subject to approval at the Annual General Meeting, which is scheduled for April 26, 2019.

In the aftermath of the announcement, the share price soared a substantial 18% to reach the price of €2.36. A total of 107,988 shares were exchanged over 30 deals.

The top performer of the month however, was GlobalCapital plc with a 25% price hike to reach €0.30, albeit on slim volume.

The most liquid equity was telecommunications company, GO plc (GO) as it generated a turnover of over €1.8 milllion across 121 transactions. As a result, the share price traded at the highest prices in over 12 years, ultimately closing 7.93% higher at €4.90.

GO published its preliminary financial statements for the year ended December 31, 2018. The group generated a revenue of €171.8 million, which translates to a 3.2% increase over 2017. This increase was the result a 2.2% improvement in the group's operations in Malta, as well as a 7.8% upsurge in Cablenet's revenues. The group intends to continue investing in the latter's operations in Cyprus, to be able to service a larger client base. This strategy has proved fruitful so far, as Cablenet's EBITDA was up 12.2% last year.

Cost of Sales, administrative and related costs also increased, at a slower pace of 1.7%, to €140.4 million. As a result, group EBITDA grew by 6% to €69.5 million over the previous year, while profit before tax stood at €31.7 million, compared to €27.9 million in 2017. Earnings per share increased to €0.187 from €0.165 in 2017.

The board is recommending that the annual General Meeting approves the payment of a final net dividend of €0.14 per share. The board has also resolved to approve the payment of a special net interim dividend of €0.41. The latter dividend will be made in view of the profits generated from the sale of the company's 49% shareholding in BMIT Technologies plc. Both dividends will be paid on May 30, 2019, to all shareholders on the register as at April 26, 2019. The company's Annual General Meeting shall be held on May 28, 2019.

Its spinoff, BMIT Technologies plc (BMIT) published its 2018 results, which will be laid before the members at the Annual General Meeting to be held on May 27, 2019. The results show an 8.1% increase in revenue to €21.3 million over the previous year. This was driven mainly by a 23% upturn in the sale of connectivity services, an 11% increase in colocation services, as well as a 9% improvement in cloud and managed services.

As a result of the increase in sales activity, cost of sales and administrative expenses amounted to €14.3 million, compared to €13.4 million in 2017. EBITDA grew by 8% to €9.3 million, while profit before tax amounted to €7.0 million, compared to €6.4 million in 2017. Earnings per share however decreased from €0.416 to €0.397 due to an increase in the weighted average number of shares in issue, after the capitalisation of amounts due to its immediate parent.

In its first full month of trading, BMIT generated a turnover of €613,088 over 110 deals. The outcome was a 1.89% price decline to €0.52.

Malta International Airport plc published the traffic results for the month of February 2019, showing that the positive trend has persisted for yet another month. In fact, the traffic figure was 2.9% higher than the already-impressive figure of the corresponding month in 2018, to reach 359,395 passenger movements.

This growth was driven by an 8.9% increase in aircraft movements and a 6.4% improvement in seat capacity. The United Kingdom reclaimed its spot as the top market for the airport, followed by Italy, Germany, France and Spain. While the top three markets all registered a decrease in passenger movements, France and Spain continued a significant growth trend.

The equity continued to trade in positive territory, as it posted another modest gain of 1.54% to €6.60. A total of €636,173 worth of shares traded over 62 deals.

In the food and beverage sector, Simonds Farsons Cisk plc sustained the previous month's gain, as it closed unchanged at €8.75 over a turnover of €93,567.

Retail conglomerate, PG plc traded 35 times last month, as 472,214 shares changed ownership. As a result, the equity pushed 2.94% forward, to a price of €1.40.

In the oil sector, Medserv plc announced that its board is scheduled to meet on April 24, 2019 to consider and approve the financial statements for 2018. The Annual General Meeting will be held on May 27, 2019. The equity edged 0.9% to €1.10, after ten deals of a combined 138,150 shares were recorded.

MaltaPost plc traded 14 times, as 43,855 shares changed hands. Consequently, the share price drifted 1.57% to €1.25.

Grand Harbour Marina plc published its 2018 statements, showing an increase in the group's revenue of 14.5% over the previous year, to €4.7 million. Despite increased costs being incurred, this translated to a proportional increase in operating profit of 14.1%, to reach €1.4 million.

As a result, profit before tax during 2018 increased by a substantial 83.6% to €749,000, translating to an Earnings per Share figure of €0.02, compared to the previous year's €0.002. The board of directors did not declare a dividend.

The equity climbed 5.71% to €0.74, as 26,068 shares were exchanged over nine trades.

RS2 Software plc continued to trade in negative territory, as it lost another 0.7% to €1.41. In total, 18 transactions of 155,032 shares were concluded.

Meanwhile, a single transaction of just 124 Santumas Shareholdings plc shares had no impact on the share price of €1.42.

Similarly, Loqus Holdings plc also traded just once on slim volume at €0.08, translating to a loss of 5.88%.

The property sector was the main drag on the index, as four equities posted falls, led by Malita Investments plc which sank 5.43% to €0.87. Trading volume amounted 199,338 shares. The company announced that its Annual General Meeting shall be held on May 6, 2019.

On the other hand, Malta Properties Company plc advanced 5.45% to €0.58, as 909,256 shares traded on 89 transactions. The company published its financial statements for 2018, showing a profit before tax of €12.78 million, more than double the figure for 2017. This translates to an Earnings per share figure of €0.10, compared to an EPS of €0.05 for 2017.

In 2018, the newly refurbished offices at Floriana were fully rented out by year end, resulting in a 6.4% increase in rental income to €3.3 million. The group also recorded a €2.1 million gain on the disposal of the old Sliema Exchange. Administrative expenses on the other hand, were down 20.77% to €1.04 million. The main driver of the group's positive performance however, was a €9 milllion appreciation on the fair value of property, which is 80% higher than the previous year's figure of €4.9 million.

During this year, the company is expecting to continue its works on the Zejtun Exchange which is being redeveloped into a state-of-the-art technical and data centre for GO, as well as the new Birkirkara Exchange, which is expected to be completed early 2019.

In view of these results, the board of directors has resolved to recommend the payment of a final net dividend of €0.01 per share, which shall be paid on June13, 2019 to all registered shareholders as at May 13, 2019. The company's Annual General Meeting shall be held on June 11, 2019.

Plaza Centres plc followed suit with a gain of 0.98%, to close at €1.03. A total of 12 transactions of a combined 134,678 shares were exchanged.

MIDI plc traded 22 times, as 185,600 shares changed ownership. As a result, the share price closed 3.08% lower at €0.63. The company announced that the board of the Planning Authority has approved the revised Masterplan and the revised Outline Development Permit for the restoration and redevelopment of Manoel Island. The company is now looking forward to move into the next phase of the project, including obtaining full development applications so that works can commence during the second half of 2019.

The board of directors is set to meet on April 25, 2019 in order to consider and approve the audited financial statements for 2018 and consider the recommendation of a dividend to the Annual General Meeting, which shall be held on June 11, 2019.

The board of directors of Tigne' Mall plc is scheduled to meet on April 4, 2019, in order to consider and approve the company's audited financial statements for the financial year ended December 31, 2018. The directors will also consider the declaration or otherwise of a dividend to be recommended to the Annual General Meeting. The equity traded 13 times, as 116,200 shares changed ownership, losing 1.08% to close the month at €0.92.

Trident Estates plc followed suit with a 2.21% decrease in value to €1.33, over a trading volume of 15,949 shares over seven transactions.

Main Street Complex plc closed unchanged at €0.63, despite generating a turnover of €35,395.

Yields in the sovereign debt market were down this month, as from 26 active issues, the price of 19 Malta Government Stocks headed north, while only six issues lost ground. The longer dated issues all posted gains, while the only negative movers had a term to maturity of less than four years. Turnover was significantly lower than the opening two months of 2019, as €15.7 million traded over 624 deals.

In the corporate debt market, performances were more balanced as from 55 active securities, 22 advanced while 27 lost ground. In total, €7.2 million worth of bonds traded over 630 transactions.