The Malta Independent 13 November 2019, Wednesday

Monthly Round up Report for October 2019

Friday, 8 November 2019, 10:10 Last update: about 5 days ago

MSE Index closes October 1.48% lower

The MSE Equity Total Return Index fell by 1.48 per cent - partially erasing September's 2.46 per cent gain, closing at 9,861.64 points. Turnover amounted to €8.5 million, and was spread across 25 equities, of which 16 fell and six gained ground.

Bank of Valletta plc (BOV) shares oscillated between a monthly high of €1.175 and a low of €1.07. BOV's share price fell by €0.07 or six per cent, as 223 deals of 670,436 shares were executed, closing at €1.10.

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The bank issued an announcement following an article published on The Sunday Times stating that the bank is planning to shed staff. BOV confirmed that it has no intention of shedding any of its employees and explained that retirement schemes were always a part of BOV. The bank confirmed that these 'new' schemes refer to a renewal of previous schemes, which offer more flexibility. This will ensure that the bank is resourced with the skills it needs. BOV also confirmed that it is currently recruiting staff and will not be declaring any redundancies.

Meanwhile, BOV issued its interim directors' statement for the third quarter of the financial year, dating July 2019 to September 2019.  The bank reported that the financial performance was consistent with expectations. The cost impact of the transformation programme which was undertaken earlier this year was reflected in the results. The bank's aims to lower its risk profile and to ensure long-term sustainability.

Results were mainly impacted by net interest income which was marginally higher than the same quarter last year. It was positively impacted by volume growth in the loan book and the continuing preference for very low-yield deposit products. This was offset by treasury investments due to lower returns, whereby the margin remains under pressure resulting from the negative interest environment and high liquidity levels. 

There was a slight improvement in the commission and trading register. Positive outcomes resulted from the efforts being made to find alternative revenue sources to help reduce the impact of the de-risking initiatives and competitve pressures. 

The results were also impacted by higher costs from the transformation programme and the continual  investment in IT and HR. Moreover, lower impairment provisions reversal also affected the results.

The bank's total assets increased marginally from June 2019. The retail and business demand for credit remained satisfactory. Further reductions from international corporate clients  declined further during this quarter, as the de-risking initiatives progressed. The advances/deposits ratio stood at 44.6 per cent, in line with the level of June 2019. The level of liquidity remained high with over €4 billion short-term funds.

The capital optimisation plan  continued, and an improvement in the capital ratios was recorded. The bank is seeking ways to raise additional Tier 1 Capital by the end of the year to continue strengthening its regulatory capital.

Moreover, the bank announced its continuing effort to find alternative USD clearing arrangements,  since  ING have decided to terminate their relationship with BOV. The bank shall become a direct SEPA participant on November 19, 2019.

The 2020+ vision journey carried on during this quarter, where the bank-widening training for the core banking IT system has intensified. The business restructuring programme mostly covers governance and risk management, with the main aim of strenghtening the bank's regulatory capital position and lowering the risk profile.

HSBC Bank Malta plc registered a decline in its share price for the fifth consecutive month, having slipped by seven per cent across 125 trades of 306,942 shares, closing €0.10 lower at €1.33.

HSBC announced its strategic plan to increase its focus on digital banking services and modernisation of its branch network. The aim of this is to maximise the opportunities from the rapidly changing way customers are using the bank's services. This adds on to the investment in digital capabilities which the bank has undertaken during this year. This shall be complemented by combining two other branches to create a new flagship branch in Qormi, development of new wealth management centres, and more flexible access to a range of self-service solutions delivered through a more cost-effective operating model. The bank also announced that it shall be closing seven of its branches. The intention of such changes is to help mitigate the long-term impact of negative interest rates on the bank's profitability in Malta.

The bank expects, subject to Union agreement, a reduction in roles within the organisation on a voluntary basis. The restructuring costs to deliver these changes will be booked in the 2019 financial results but as the programme is voluntary, the amount will depend on the number of applications. The bank will make a further company announcement in due course.

Lombard Bank Malta plc shares edged 0.9 per cent, as 177,511 shares changed ownership over 24 transactions, to close at €2.24. Meanwhile, FIMBank plc shares were the only positive performers in the financial sector, having increased by 3.2 per cent, as 14 trades of 131,627 shares were negotiated, closing at $0.64.

The insurance and investments provider Mapfre Middlesea plc registered a 2.7 per cent loss in its share price, having slipped by €0.06 across 17 transactions of 157,108 shares, to close at €2.14.

GlobalCapital plc shares managed to hang-on to the previous month's 35% rally, having closed unchanged at €0.27, despite having traded at a monthly low of €0.222. The equity was active on two deals of 9,200 shares.

The telecommunications services provider GO plc, recorded a gradual decrease in its share price for the fourth consecutive month, having declined by 0.9 per cent. GO shares witnessed 63 transactions of 113,935 shares and closed €0.04 lower at €4.34.

Malta International Airport plc shares reached a monthly high of €7.70 in October. However, the local airport operator's shares closed at €7.25, having ultimately slipped by €0.15 or two per cent, across 87 deals of 129,891 shares.

MIA announced the traffic results for September 2019. On the first day of the month, over 28,800 passenger movements were registered. The airport saw a total of 762,361 passengers during the whole month of September, resulting into a 7.8 per cent increase from the same month last year.

Seat capacity increased by 7.3 per cent while 6.5 per cent rise in aircraft movements was recorded. Meanwhile, seat load factor amounted to 86.2 per cent, translating into a 0.3 percentage points marginal improvement when compared to the same month last year. The airport's most popular markets for September were Germany, Italy, Spain, United Kingdom and France. These contributed significantly to September's total traffic, as more than 500,000 passenger movements were recorded.

Simonds Farsons Cisk plc (SFC) shares rallied by €1 or nine per cent, over 26 trades of 16,481 shares, closing at €12.10 - having reached a monthly and all-time high of €12.60.

SFC's spin-off Trident Estates plc¸ announced the approval of the admissibility to listing on the official list of the Malta Stock Exchange. As a result of the rights issue, up to 12,000,003 new ordinary shares in Trident having a nominal value of €1 each was offered to shareholders on the register of the company as at October 4, 2019. Shareholders are entitled to two new ordinary shares for every five ordinary shares, or parts thereof, at a rights issue price of €1.25 per share.

Trident shares closed October 10.44 per cent lower - when adjusting for the rights issue - at €1.51. The equity was active on 51 deals of 219,361 shares.

Malta Properties Company plc shares declined by €0.055 or 7.7 per cent across 25 transactions of 187,685 shares, closing at €0.66. Meanwhile, Malita Investments plc shares advanced by 3.4 per cent over 18 trades of 254,558 shares, to close €0.03 higher at €0.91.

MIDI plc shares added on to the previous month's 3.1 per cent increase, having appreciated by 7.6 per cent, as 77 deals of 1.7 million shares were negotiated, closing at €0.71.

The oil and gas logistics services provider Medserv registered a 7.1 per cent loss in its share price, having closed €0.09 lower at €1.17. Activity was spread across 17 trades of 94,849 shares.

During the month, Medserv issued an announcement as a follow-up to a previous announcement issued on May 20, 2019. Following the receipt of the non-binding offers from interested offerors, its majority shareholders proceeded to select a preferred bidder. The majority shareholders are expected to enter into negotiations with the preferred bidder in order to conclude a binding offer. As a result, this will trigger the requirement for a bid by the offeror in line with Takeover Bid Listing regulations. Should the parties reach an agreement, an announcement will be publsihed.

Plaza Centres plc shares increased by one per cent, as 178,434 shares were negotiated across 23 trades, closing at €1.03. Meanwhile, Tigne' Mall plc shares partially erased the previous month's 6.2 per cent gain, having slipped by 3.2 per cent over 45 deals of 393,329 shares, to close at €0.905.

Main Street Complex plc shares closed unchanged at €0.60, as 77,580 shares changed ownership across seven transactions.

RS2 Software plc (RS2) shares had quite a positive month, having reached a monthly high of €2.04, and closing at €2.02 - registering a 5.8 per cent gain. RS2's shares were active on 101 trades of 458,304 shares.

BMIT Technologies plc shares minimally declined by 0.9 per cent across 91 transactions of 1.1 million shares, closing at €0.53. Meanwhile, Loqus Holdings plc shares partially erased the previous month's 32.2 per cent gain, having slipped by 19 per cent. The equity was executed across three deals of 26,000 shares and closed at €0.065.

Santumas Shareholdings plc shares fell by €0.12 or 7.4 per cent, over five trades of 8,000 shares, closing at €1.50. The company announced the admissisibility to listing on the official list of the Malta Stock Exchange an additional 664,938 ordinary shares with a nominal value of €0.275 per share.

The retail and supermarkets owner PG plc¸ registered no change in its share price of €1.87, despite having reached a monthly low of €1.82. The equity was negotiated across 37 deals of 223,350 shares.

Grand Harbour Marina plc shares stayed faithful to its recent losing streak, having registered a decrease for the third consecutive month. GHM shares fell by 11.9 per cent over five transactions of 22,412 shares, closing €0.08 lower at €0.59.

International Hotel Investments plc shares decreased by 4.7 per cent, as 313,420 shares were concluded across 45 trades, to close €0.04 lower at €0.82. The company announced that two of its subsidiaries, Corinthia Developments International Limited and Corinthia Hotels Limited, have entered into a contractual arrangement to develop, lease and operate a luxury hotel in the centre of Rome.

Such agreements were entered into with the Reuben Brothers, the global property investors, who have recently acquired the property in question, the former seat of the Italian central bank. The property is being prepared for a full renovation and conversion into a 55-room luxury Corinthia Hotel. Works on the property are expected to begin in 2020.

MaltaPost plc shares traded at a monthly high of €1.35, but ultimately closed 6.7% lower at €1.26. The local postal services provider's shares witnessed 19 deals of 59,921 shares.

In the corporate bonds market¸ 61 issues were active of which, 19 rose and 29 fell - amounting to a turnover of €7.8 million. The 5% Mediterranean Investments Holding plc Unsecured 2022 headed the list of gainers, having advanced by 2.3 per cent, to close at €102.30. Meanwhile, the 5% Global Capital plc Unsecured 2021 was the worst performer, having declined by 3.2 per cent, closing at €95.50.

Investors shied away from the sovereign debt market¸ as all 23 active issues fell. Turnover totalled to €19.2 million - marking the 2.1% MGS 2039 (I) as the most liquid issue, having witnessed a turnover of just under €3 million, to close 1.2 per cent lower at €125.06.

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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