Monthly Round up Report for July 2020: MSE Index ends July lower

The building of the Malta Stock Exchange in Valletta. (source: Wikimedia Commons/Frank Vincentz)

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The MSE Equity Total Return Index fell by 3.6 per cent, closing July at 8,043.488 points. A total of 21 equities were active, of which 15 fell and six gained ground – amounting to a turnover of €1.9 million.

Malta International Airport plc (MIA) shares fell by 6.9 per cent, as 73 trades of 54,886 shares were negotiated, closing €0.40 lower at €5.40. A total of 1,017,850 passengers were welcomed during the first half of 2020, translating into a 68.7 per cent drop when compared to the same period last year. The year began on a positive note until the Covid-19 outbreak in Europe. Stringent travel restrictions also led to a 46.6 per cent decline in aircraft movements and a 48.1 per cent drop in seat capacity. Traffic to and from Malta remained at an almost complete standstill until June, with just 822 take-offs and landings registered in the second quarter – of which 49 per cent of the flights were humanitarian and repatriation operations. Meanwhile, the remaining were cargo flights, which registered a 3.7 per cent increase in quarter two when compared to the same period of the previous year. Seat load factor declined to 67.7 per cent versus the 79.9 per cent recorded for the first half of 2019.

Total revenue declined by 67 per cent for the six months ended June 30, 2020, from €44.6 million to €14.9 million. Revenue from the airport segment dropped by 73 per cent to €8.4 million, while revenue generated from the retail and property segment lost 51 per cent, as it stood at €6.5 million. EBITDA of the group decreased by 90.5 per cent over the previous year, translating to a net loss of €2 million.

The group re-considered the recommendation for the payment of a final net dividend to shareholders of €0.10 per share, announced on February 26, 2020. The board believes that, with a view to manage the company’s cash reserves in a moment of significant curtailment of cash inflows, and in effort to preserve the company’s organisational set-up and structures, it is not prudent to recommend the payment of an interim dividend to shareholders, so as to preserve the sustainability of the business and its operations. MIA’s Annual General Meeting (AGM) has been postponed to November 11, 2020.

International Hotel Investments plc shares declined by €0.06 or 10.2 per cent, across 30 deals of 129,805 shares, closing at €0.53. The company has recorded a profit after tax of €5.1 million for the year ended December 31, 2019, translating into a 39.5 per cent decline from the previous year’s figure. Earnings per share decreased by €0.007 cents, as they amounted to €0.011 in 2019.

Adjusted EBITDA has grown to €60.3 million in 2019, almost double the €33 million in 2014. This was the result of higher revenues in hotels, better containment of costs and improved conversions to operating profits, apart from further acquisitions and investment in new businesses. Revenues increased to €268 million, an improvement of €12 million. Once again, the group reported a positive working capital of €16.8 million, which is a further improvement of €6.9 million compared to the figure of €9.9 million reported in 2018. This additional improvement was a consequence of a further increase of €22.5 million in cash and cash balances, which was partly offset by a reduction in trade receivables of €9.8 million, and a combined increase of €8.2 million in trade payables and the current portion of bank borrowings.

The company entered into arrangements with a third party investor to develop and eventually lease a prime property in Rome. The property is the former headquarters of the Bank of Italy and will be transformed into a luxury Corinthia Hotel. Moreover, development work on the Corinthia Hotels in Bucharest, Brussels and Dubai have proceeded in 2019, and works on site in Moscow, Rome, and Doha have commenced in 2020.

Bank of Valletta plc shares declined for the third consecutive month, having decreased by two per cent, as 86 deals of 338,332 shares were executed, to close at €0.98. Profit before tax for the six months ended June 30, 2020 declined by 74.6 per cent to €13.8 million (June 2019: €54.3 million). This represents an annualised return on equity (pre-tax) of 2.6 per cent. Results for the first half of the year inevitably include the negative impact of the Covid-19, as it caused more than half of the drop in profit, directly or indirectly.

Operating profit declined by 70 per cent from €41.2 million recorded during the previous year’s half-year period to €12.4 million. Net interest income was €5.3 million lower than 2019’s half-year figure, as it stood at €72.3 million. The group remains highly liquid with cash and short term funds increasing by 4.3 per cent to €178.3 million since December 2019. The asset liquidity of the bank’s portfolio remains high, with more than 90 per cent in A- or higher.

Equity as at end June 2020 is marginally higher than December 2019, and stands at €1.1 billion. The group’s capital position remains strong, with a CET 1 ratio as at June 2020 of 19.8 per cent, in line with the group’s risk appetite, and comfortably above the minimum regulatory requirements.

The board announced that it has resolved not to declare an interim dividend. The bank reported that it shall be availing itself of the extension period granted and will be holding the AGM on November 26, 2020.

Likewise, HSBC Bank Malta plc shares recorded a decline in the share price for the third consecutive month, having slipped by 2.1 per cent, as 81,509 shares changed ownership across 38 trades, to close at €0.93. Meanwhile, the trade finance bank FIMBank plc, registered a 9.5 per cent decline, partially erasing the previous month’s five per cent gain. The equity was active on two transactions of 42,500 shares, and closed $0.04 lower at $0.38.

Lombard Bank Malta plc shares decreased by €0.06 or 2.9 per cent, across six deals of 7,998 shares, to close at €2.04.

MaltaPost plc shares increased by 0.85 per cent, as eight trades of 21,491 shares were negotiated, closing at €1.19.

The insurance and investments services provider Mapfre Middlesea plc, registered an 8.2 per cent loss in July – adding on to the 3.5 per cent decline in June. The equity was active on 12 transactions of 12,638 shares, to close €0.18 lower at €2.02.

The group registered a profit before tax of €10.71 million for the financial half year ended June 30, 2020, of which €4.86 million were attributable to shareholders. This results into a 9 per cent increase when compared to the previous year’s figure. Similarly, earnings per share attributable to owners of the company increased from €0.047 in June 2019 to €0.053 in June 2020.

Total assets reduced by 2.4 per cent, and totalled €2.55 billion as at June 30, 2020, versus the total assets of €2.62 billion as at December 31, 2019. Meanwhile, total equity of the group attributable to shareholders amounted to €92.81 million as at June 30, 2020. This was up from €89.51 million as at December 31, 2019. The net asset value per share stands at €1.01 as at June 2020.

GlobalCapital plc announced that the company’s AGM is planned to be held on August 28, 2020. The equity was active over seven deals of 52,596 shares and closed July 18.2% higher at €0.39.

The telecommunications services provider GO plc, registered a decline for the fifth consecutive month, having decreased by 1.7 per cent, as 40 trades of 26,445 shares were concluded, closing €0.06 lower at €3.44. GO’s subsidiary in Cyprus, Cablenet Communication Systems Limited announced that the Listing Authority has approved the prospectus and admissibility to listing of the 4% Cablenet Communication Systems plc Unsecured Bonds 2030 with an aggregate principal amount of up to €40 million. A portion of the bonds are available for subscription by GO’s shareholders on a preferential basis.

During GO’s AGM, all the resolutions on the agenda were approved. The AGM approved the payment of a final net dividend of €0.10 for the year ended December 31, 2019.

BMIT Technologies plc shares fell by two per cent, across 37 deals of 727,454 shares, closing at €0.48. The board is scheduled to meet on August 7, 2020, to discuss the group interim unaudited financial statements for the six-month period ended June 30, 2020.

Harvest Technology plc shares declined by 0.7 per cent, as two trades of 7,665 shares were negotiated, to close at €1.48. The group registered a 20 per cent increase in revenue for the six-month period ended June 30, 2020, when compared to the previous half-year period, as it stood at €9 million. Similarly, profit before tax increased to €1.86 million – an improvement of 21 per cent on the budget projection for H1 (€1.3 million) which constituted the first half of the annual projected consolidated profit before tax of €3.1 million for 2020. Earnings per share increased from €0.042 to €0.052. The group’s net assets as at June 30, 2020 amounted to €11 million versus the €10 million recorded during the same period last year.

The board announced that it has resolved to distribute an interim net dividend of €546,785, equivalent to €0.024 per share, having a nominal value of €0.50 per share. All shareholders on the company’s register as at July 31, 2020 shall be entitled to receive their respective share of the dividend. Payment of the dividend shall be effected by not later than August 14, 2020.

RS2 Software plc shares edged 1.7 per cent – after having recorded a 23.1 per cent rally in June. The I.T. services provider’s shares were active on 24 transactions of 64,040 shares, and closed July €0.04 lower at €2.36.

The retail and supermarkets owner PG plc, registered a minimal 0.5 per cent gain, over 20 trades of 38,045 shares, closing at €1.96. The company announced that the board resolved to distribute a net interim dividend of €2,800,000 equivalent to €0.0259259 per ordinary share.  This dividend was paid on July 20, 2020 to the ordinary shareholders listed on the register as at July 14, 2020.

Plaza Centres plc shares fell by €0.11 or 10.7 per cent, as 18,038 shares changed hands across seven deals, to close at €0.92. During the six months ended June 30, 2020, the group generated revenue of €1,444,798 (2019: €1,716,479) – a decrease of 15.8 per cent, whilst EBIDTA decreased by 24.6 per cent to €1,058,751 (2019: €1,404,290). Profit before tax decreased by 35.5 per cent to €609,687 (2019: €944,522). The group’s occupancy at June 30, 2020 was 93 per cent (June 30, 2019: 87%). During this period, Plaza had to take commercial decisions which negatively impacted its revenues, costs and hence profitability, in the form of lower rents and absorbing a higher percentage of common area costs. Furthermore, an increase of €72,900 in the general provision for doubtful debts has been recognised.

The board has decided to proceed with the payment of a net dividend of €320,000 or €0.0113 per share.

Main Street Complex plc announced that the board approved the audited financial statements for the financial year ended December 31, 2019 and the directors’ and auditors’ report. A final net dividend of €0.00831 per share was also approved. The equity was not active in July.

Grand Harbour Marina plc announced that it shall be availing itself of the extension period granted under the regulations and shall therefore hold its AGM, during which the annual accounts shall be laid before the shareholders for approval, on September 11, 2020. Meanwhile, the board is scheduled to meet on August 26, 2020 to consider and, if deemed appropriate, approve the half-yearly report for the first six months of the year ended June 30, 2020. The equity was not active in July.

Malita Investments plc shares extended the recent winning streak, having registered an increase for the fourth consecutive month. The property management equity was executed over 12 deals of 37,143 shares, closing 1.1 per cent higher at €0.92.

MIDI plc shares extended June’s 5.9 per cent loss, having declined by 1.6 per cent in July, across three transactions of 4,700 shares, to close at €0.38.

Malta Properties Company plc shares partially erased June’s 10.2 per cent rally, having decreased by 5.9 per cent, closing at €0.56. The equity was active on 21 trades of 237,550 shares. During the company’s AGM, all resolutions on the agenda were approved, including the payment of a net dividend of €0.01 per share for all shareholders listed on the register as at April 28, 2020.

Trident Estates plc shares advanced by 8.4 per cent, as 1,236 shares changed hands across three deals, to close at €1.67. The company announced that further to an expression of interest, the lease proposal at Trident Park, Central Business District, Birkirkara submitted by its subsidiary Trident Park Limited, has been selected as the preferred bid to house the office premises for the Financial Intelligence Analysis Unit (FIAU). Moreover, other promise to lease agreements have also recently been confirmed with financial services and investment holding companies, bringing the total area that has been committed at Trident Park to 4,298m2.

The food and beverage supplier Simonds Farsons Cisk plc recorded a 2.4 per cent drop in its share price, as 13,908 shares were concluded across 25 shares, closing €0.20 lower at €8.

Medserv plc shares recouped June’s 1.4 per cent decline, having increased by 1.5 per cent. The oil and gas logistics services provider’s shares were active on nine trades of 15,850 shares, to close at €0.70.

In the corporate bond market, 55 issues were active, of which 18 appreciated and 29 fell. Turnover totalled €5.4 million. The 5% Tumas Investments plc Unsecured € 2024 was the best performer, having advanced by 3.7 per cent, to close at €103.70. Meanwhile, the 3.85% Hili Finance plc Unsecured 2028 headed the list of losers, having declined by five per cent, closing at €95.

In the sovereign debt market, turnover amounted to €11.8 million, spread across 22 issues, of which 11 rose and nine fell. The long-dated 1.5% MGS 2045 (I) was the most liquid issue, having reached a turnover of €3.8 million, closing at €112.50.

The Accountant General launched another issue of the 62+ Malta Government Savings Bond for the elderly born during the year 1958 or before. The amount in issue was €60m, subject to an over-allotment option of an additional amount up to a maximum of €35m. The bond matures in 2025 and carries a fixed coupon of 3%. Interest is paid semi-annually on January 21 and July 21 of every year, during the term of the bond. The MGS issue was over-subscribed. All new applicants were allotted the full amount that they applied for. Meanwhile, other applicants that subscribed for more than €7,700 will be allotted a minimum of €7,700 per applicant, plus an additional 4% of the remaining unallocated balance, rounded up to the nearest €100.

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