Monthly Round up Report for August 2020: MSE Index extends negative stance

The MSE Equity Total Return Index fell by 6.14 per cent in August – adding on to July’s 3.6 per cent loss, closing at 7,549.996 points. Turnover amounted to €2.3 million, and was spread across 23 equities, of which three increased and 19 lost ground.

Bank of Valletta plc (BOV) shares oscillated between a monthly high of €0.98, and a low of €0.894 – at which it closed. The banking equity was negotiated across 69 transactions of 203,866 shares, and registered an 8.8 per cent loss.

BOV issued an announcement with reference to recent articles whereby it was reported that the bank made an out-of-court settlement offer to the Deiulemar bondholders in Italy. A company announcement was not made about the offer because, as is customary and proper in settlement negotiations, it was made on a confidential basis. Had the offer been accepted, an announcement would then have been made. The rejection of the offer made any announcement redundant, but for the fact that the offer was improperly leaked in Torre Annunziata.

The bank has consistently been advised by its lawyers that the Deiulemar case is completely without merit. The advice of the bank’s lawyers has recently been independently confirmed by Italy’s leading legal authority in this area, and that advice has been brought to the attention of the court. This notwithstanding, the bank faces a most unusual fair hearing risk in this litigation. It is seeking to eliminate that risk through proceedings filed before the European Court of human rights, and other measures.

However, the risk at first instance remains. In view of this risk, and because of the consequential costs it may have to incur, it made commercial sense to offer a settlement to the curators in order to close this matter. Therefore, the offer was not a result of any change in the bank’s conviction that the claim is entirely unmeritorious; it was simply an attempt at finding a pragmatic, commercial solution.

The bank’s Annual General Meeting (AGM) shall be held remotely on November 26, 2020. Shareholders on the company’s register as at close of business of October 26, 2020 will receive notice of the AGM.

The bank issued another announcement with reference to a claim from the Swedish Pension Agency (SPA), being the sole investor in the Falcon Fund SICAV, for damages claimed to have been suffered by SPA in an alleged amount exceeding €71 million. The bank advises that it has settled the claim for €26.5 million. The settlement arrangements will not result in the bank incurring a loss in excess of that already provided for, with some release back to P&L expected in due course. The bank’s total provisions for all contingent liabilities will also be reduced significantly once the transaction is completed.

HSBC Bank Malta plc (HSBC) shares fell by €0.13 or 14 per cent, as 266,703 shares changed ownership across 76 trades, to close at €0.80. The bank announced that profit before tax declined by €19.1 million to €1.8 million for the six-month period ended June 30, 2020, due to higher expected credit losses and lower revenue reflecting the impact of the Covid-19 outbreak. Similarly, revenue was down by 16 per cent mainly due to revaluation losses within the Life Insurance subsidiary following adverse market movements. Excluding the insurance subsidiary, revenue declined by one per cent.

Profit attributable to shareholders of €1.2m for the six months ended June 30, 2020, resulted in earnings per share of €0.003 compared with €0.038 in the same period in 2019.

Lombard Bank Malta plc (Lombard) shares decreased by two per cent, across six deals of 13,098 shares, closing €0.04 lower at €2. The board approved the interim unaudited financial statements for the six months ended June 30, 2020 and recorded a profit before tax of €5 million, translating into a €1.2 million decline when compared to June 2019.

In line with the European Central Bank recommendation that Eurozone banks should not make dividend payments at this time, regardless of capital strength, no interim dividend was declared from both HSBC and Lombard.

FIMBank plc shares slipped by 2.6 per cent over three trades of 19,736 shares, to close at $0.37. The group reported a loss before tax of $15.2 million for the half-year ended June 30, 2020, versus a profit before tax of $9.6 million registered in 2019. Higher impairment charges and fair value adjustments amplified the impact of the Covid-19 pandemic on the group’s performance.

Malta International Airport plc (MIA) shares swayed from a monthly high of €5.45 to a monthly low of €4.74, to ultimately close the month €0.42 lower at €4.98. Last July’s full-month traffic was roughly equal to the number of passengers registered in the first week of July 2019. This contraction in passenger traffic was observed together with a drop of 70.3 per cent in aircraft movements and a 72.1 per cent decline in seat capacity. The seat load factor (SLF) for the month, measuring the percentage of occupied seats on flights operated to and from MIA, stood at 59.7 per cent.

A passenger performance analysis conducted by Airports Council International (ACI), showed that, on average, European airports registered a 78 per cent decrease in passenger numbers in July. According to the same analysis, Italy, Germany, the United Kingdom and France, all of which were among MIA’s top five markets for July 2020, reported drops in passenger numbers that ranged between 74 per cent and 87 per cent.

International Hotel Investments plc shares partially recouped July’s 10.2 per cent loss, having advanced by 1.9 per cent, to close at €0.54. Activity in the hoteliers’ equity was spread over 25 deals of 63,953 shares. The group registered a total revenue of €51.7 million for the half-year ended June 30, 2020, approximately 30 per cent of which is derived from the non-hotel businesses such as rental income. This translates into a 58 per cent drop when compared to the previous half-year’s figure.

During the first six months of 2020, a negative EBITDA of €2.1 million was registered, whereas during the same period last year, a positive EBITDA of €28 million was recorded. A loss before tax of €36.7 million was recorded, versus a profit before tax of €5.2 million during the same period of the previous year.

The board also published the financial analysis summary for 2020. Revenue in 2020 is projected to decrease substantially by €175.1 million to €93.2 million, as a result of the COVID-19 outbreak. The group is assuming that revenue levels will not revert to pre-COVID-19 benchmarks before 2022.

The telecommunications services provider GO plc, registered a decline in its share price for the sixth consecutive month, having decreased by 3.5 per cent. The equity was negotiated across 36 transactions of 108,289 shares, closing €0.12 lower at €3.32.

GO announced that revenue increased by 7.8 per cent for the half-year period ended June 30, 2020 when compared to the same period of the previous year, as it stood at €91.6 million. The main driver relates to the revenue growth of €5.6 million in Cablenet, which growth was fuelled by the company’s diversification into the premium sports content. Earnings before interest, tax, depreciation and amortisation (EBITDA) remained stable at €35.5 million when compared to the same period of 2019. However, operating profit decreased by €3.9 million mainly due to higher depreciation and amortisation charges. Meanwhile, profit before tax declined by almost 31 per cent to €8.97 million, when compared to the first half of 2019.

The group’s financial position remains healthy, with a total asset base of €327.7 million. During the first six months of 2020, borrowings net of cash holdings increased from €56.1 million as at December 31, 2019 to €65.7 million as at June 30, 2020.

BMIT Technologies plc shares fell by 4.2 per cent, across 34 deals of 271,471 shares, to close at €0.46. The group generated a 4.9 per cent increase in revenue for the six-month period ended June 30, 2020 when compared to the same period of 2019, as it stood at €11.7 million. The main contributors for this growth in revenue were cloud services (+47%) and connectivity services (+13%). Earnings before interest, tax, depreciation and amortisation (EBITDA) were in line with the same period of last year, at €5.1 million. Meanwhile, the group recorded a 4.5 per cent increase in profit before tax, as this amounted to €3.9 million.

Harvest Technology plc shares decreased by two per cent, as 28,564 shares changed ownership across 15 deals, closing at €1.45.

RS2 Software plc shares edged 3.4 per cent, across 29 trades of 102,496 shares, to close €0.08 lower at €2.28. Revenue declined by 3.4 per cent to €10.8 million for the six months ended June 30, 2020 when compared to the first six months of 2019. The group recorded a loss before tax of €3.1 million, versus a profit of €0.3 million during the same period of the previous year. Earnings per share stood at a negative €0.0119, while during 2019, a positive €0.0001 was recorded. The board did not declare an interim dividend.

The insurance and investments services provider GlobalCapital plc, added on to the previous month’s 18.2 per cent gain, having advanced by 35.9 per cent. The equity was executed over 18 deals of 49,629 shares, and closed at €0.53. The company registered a loss before tax of €3.9 million for the six-month period ended June 30, 2020, versus a profit of €2.3 million recorded in the same period of 2019. Earnings per share stood at a negative €0.119, while a profit per share of €0.0043 was registered in June 2019.

In the same sector, Mapfre Middlesea plc shares fell by 10.9 per cent, as 16,294 shares changed hands across 17 trades, closing €0.22 lower at €1.80.

Main Street Complex plc shares registered the worst performance in August, having declined by 14 per cent, as one trade of 2,300 was concluded, to close €0.08 lower at €0.49.

Tigne Mall plc shares decreased by 3.5 per cent, across seven deals of 21,640 shares, closing at €0.82. Revenue declined by 37 per cent to €2.1 million for the six-month period ended June 30, 2020 when compared to the same period of 2019. Similarly, profit before tax declined by 73 per cent, as it amounted to €0.4 million. Earnings per share now stand at €0.004, down from €0.021 recorded during the same period last year. The board did not recommend the payment of an interim dividend.

In the same sector, Plaza Centres plc shares increased by 2.2 per cent, as eight transactions of 122,405 shares were executed, to close at €0.94.

Simonds Farsons Cisk plc (SFC) shares fell by €0.55 or 6.9 per cent, as 9,123 shares were negotiated over 16 trades, to close at €7.45. The board is scheduled to meet on September 23, 2020, to consider and approve the interim accounts for the half-year period ended July 31, 2020, and the group’s 2020 financial analysis summary will be published. The board shall also consider the declaration or otherwise of an interim dividend on all ordinary shares.

Meanwhile, SFC’s spin-off Trident Estates plc, registered a €0.19 or 11.4 per cent decline in its share price, closing at €1.48. The property management equity was active on five deals of 24,688 shares.

MIDI plc shares witnessed eight transactions of 68,986 shares, and closed 3.2 per cent lower at €0.368. During the month, MIDI announced the approval of the unaudited interim financial statements for the six months ended June 30, 2020. Revenue for the half-year amounted to €1.1 million, versus the €9.6 million recorded during end of June 2019.  This was solely generated by the property and rental management sector of the group, resulting in an overall operating loss of €0.7 million, while a profit of €4.3 million was registered in 2019. The MIDI group has registered a loss before tax of €0.9 million, compared to a profit before tax of €4 million registered for the same period last year. 

Malta Properties Company plc shares declined by €0.05 or 8.9 per cent, across 35 deals of 438,346 shares, closing at €0.51. The board approved the group interim unaudited financial statements for the six-month period ended June 30, 2020. Revenue from the leasing of its properties declined by 7.7 per cent to €1.6 million, when compared to the first half of 2019. This was due to properties which have been vacated and have either been sold or are subject to a promise of sale, netted off by inflationary increases. Revenue is expected to increase once the Zejtun development is completed, the Swatar property is acquired, and in line with inflation.

Profit before tax for the period ended June 30, 2020 amounted to €0.7 million, equivalent to a 7.9 per cent decrease when compared to the same period last year. Meanwhile, earnings per shares remained unchanged at €0.007.

Malita Investments plc shares traded flat at €0.92, on three deals of 20,371 shares, closing at €0.92. The board approved the condensed interim financial statements for the six-month period ended June 30, 2020. A loss before tax of €22 million was recorded, versus a profit before tax of €30.8 million recorded in the first six months of 2019. Earnings per share stood at a loss of €0.1407 compared to a positive €0.1879 recorded during the previous year’s period.

The directors have also approved the payment of a gross interim dividend  of €0.0132 per share, equating to an interim net dividend of €0.0086 per share. The interim dividend will be paid on September 23, 2020 to all shareholders on the register as at September 4, 2020.

The retail and supermarkets owner PG plc, recorded a 5.6 per cent loss in its share price, as 47,143 shares changed ownership across 22 trades, to close €0.11 lower at €1.85.  The board approved the annual report and the audited consolidated financial statements for the year ended April 30, 2020, and resolved to propose same for the approval of the shareholders at the forthcoming fourth annual general meeting, to be held on October 15, 2020. 

The group’s profit before tax amounted to €13 million, compared to €12 million in 2019. The group generated a net cash flow from operating activities of €15.5 million, translating into a 54.8 per cent increase, which was applied in the main towards the payment of dividends and towards the accelerated reduction of bank borrowings.

MaltaPost plc shares declined by €0.09 or 7.6 per cent, over five transactions of 3,750 shares, closing at €1.10.

Medserv plc shares fell by €0.08 or 11.4 per cent. The oil and gas logistics services operator’s shares were negotiated across five deals of 67,020 shares, to close at €0.62.

Grand Harbour Marina plc (GHM) The group’s loss before tax for the six-months ended June 30, 2020, which includes the 45 per cent share of the losses of IC Cesme, amounted to €0.05 million against a profit before tax of €0.33 million, recorded in June 2019.

Meanwhile, GHM announced the financial analysis summary for 2020. Considering the current situation and travel restrictions imposed by the Government of Malta, the Pontoon and Superyacht visitors’ segment are expected to be negatively impacted. As a result, forecasted total revenue stands at €3.8 million, compared to the €4.1 million generated in 2019. Similarly, profit before tax is expected to decline by 17 per cent in 2020, versus the €0.47 million generated during the previous year. Expected earnings forecast per share for this year stands at €0.007 while €0.011 was registered in 2019. The equity was not active in August.

In the corporate bond market, 57 issues were active, of which 19 gained ground and 22 fell – amounting to a turnover of €3.8 million. The 3.85% Hili Finance plc Unsecured 2028 headed the list of gainers, having advanced by four per cent, closing at €98.80. Meanwhile, the 4.85% Melite Finance plc Unsecured 2028 was the worst performer, having stumbled by 18.4 per cent, to close at €80.

In the sovereign debt market¸ turnover totalled at €18.5 million. Activity was spread across 23 issues of which, 10 appreciated and 11 fell. The long-dated 1.5% MGS 2045 (I) was the most active issue, having been executed across 17 trades, amounting to nearly €7 million, closing 1.1 per cent higher, at €113.75.

 This article, which was compiled by 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 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 Limited at 67, Level 3, South Street, Valletta, or on Tel: 2122 4410, or email info@jesmondmizzi.com