Monthly Round up Report for July 2022: IHI shares post a double-digit gain

During July the MSE Equity Total Return Index moved higher by 0.4%, as it reached 7,750.833 points. Turnover reached €3m and was generated across 407 transactions. APS Bank plc (APS) shares were the most active and were followed by Lombard Bank Malta plc (Lombard) shares, as both recorded turnover in excess of €0.6m. A total of 30 equities were active during the month, 11 of which gained while another 15 lost ground.

International Hotel Investments plc soared by 21% to close at €0.75. The share price of the hotels operator oscillated between a monthly low of €0.66 and a high of €0.765. Fifteen transactions worth €142,896 were executed.

Malta International Airport plc (MIA) closed higher by 0.8% at €6, after trading at a monthly low of €5.90. A total monthly turnover of €0.2m was recorded, as 35,740 shares changed hands across 24 transactions. 

MIA welcomed 2.3m passengers in the first half of 2022, which figure roughly equals the airport’s full-year passenger traffic for 2021. Revenues for the same six-month period amounted to €37.3m, with Q2 revenues contributing 71% of this total, in line with the strong traffic recovery registered in this quarter.

While MIA started witnessing encouraging signs of recovery in the second quarter of 2022, it continues to navigate a very challenging global aviation landscape characterised by industrial actions, staff shortages and other operational constraints.

In addition to industry-specific challenges, a combination of economic and geopolitical factors, including the steep rise in inflation rates, rising fuel costs, diminished disposable income and the ongoing war in Ukraine, may also have an impact on the demand for travel during the upcoming winter season, which may result in a shift in airline pricing.

Considering MIA’s positive performance for the first six months of the year and the flight schedule that has been secured for the upcoming winter season, the company expects to end the year with approximately 5.4m passengers. The board did not recommend the payment of an interim dividend.

During the month, MIA announced that the European Commission has approved a €12m Maltese aid measure to compensate MIA for the losses suffered due to the coronavirus pandemic. This measure aims at compensating MIA for the material losses suffered during the period between March 21, 2020 and June 30, 2020 due to the coronavirus pandemic and the travel ban imposed by Malta to limit the spread of the virus. MIA registered year-on-year traffic growth in the decade leading to 2020, which culminated in a record of 7.3m passenger movements in 2019. This figure was slashed by the COVID-19 pandemic, with the airport having ended 2020 with just 1.7m passenger movements, which is roughly equivalent to the traffic handled by the same airport in the first four months of 2019. While 2021 brought an improvement of 45.3% over 2020 traffic, passenger numbers still remained 65.2% below pre-pandemic levels.

In the banking sector, Bank of Valletta plc (BOV) fully erased the previous month’s gain, ending the month 6.5% lower at €0.87. This was the outcome of 77 transactions worth nearly €0.5m. From a year-to-date perspective, the equity declined by 3.3%.

During the month, the board of BOV approved the group’s and bank’s condensed half yearly financial statements for the six-month financial period ending June 30, 2022. BOV registered a loss after tax for the six months period of €51m.

This result includes €102.7m in net settlement of the Deiulemar litigation which took place in May 2022. Excluding the impact of the Deiulemar settlement, the interim results for the first six months resulted in a pre-tax profit of €26.1m.

The group’s revenue increased by 15.4% or €17.5m over the comparable period in 2021. This increase came on the back of consistent growth in lending, particularly in home loans, coupled with increased revenues from payments and cards business.

Net interest income (NII) continued to be the main revenue driver with €87.2m, an increase of 18.8%, compared to €73.4m in 2021. Furthermore, NII results were enhanced by a one-off alignment of effective interest rates for stepped-up type loans.

Fees and commissions, foreign exchange trading and other income revenues were at €44.1m for the period ended June 30, 2022. This resulted in a €3.7m increase when compared to the same period last year due to solid growth in payment fees and increased cards commission as a result of higher turnover partially muted by weaker performance in investment services.

During the six-month period, operating costs amounted to €87.7m, an increase of €6.2m or 7.6% compared to the same period in 2021. In Q2 2022, the bank incurred cost associated with external specialist support to embed ESG requirements. Adjusting for this specific non-recurring item, the underlying cost growth was €4.6m or 5.6%.

The board has decided that, notwithstanding the resolution of the Deiulemar litigation and the sustained commercial performance of the bank during the first half of 2022, no interim dividend is being declared.

Its peer, HSBC Bank Malta plc (HSBC) was up by 2.6%, as it managed to close at the €0.785 price level, after trading at a monthly low of €0.75. Thirteen deals involving 46,395 shares were executed.

Meanwhile, Lombard reached a monthly low of €1.75 but closed at €1.90. The equity headed the list of gainers in the banking sector, as it closed 12% higher. A total of 320,610 shares change hands across 18 transactions.

The most liquid equity was APS,as it generated a total monthly turnover of €0.69m. This was the result of 1,042,831 shares spread over 109 deals. The equity reached a high of €0.67 but closed the month 0.8% lower at €0.655.

The board of APS met on July 28, 2022 and approved the condensed interim financial statements for the six months ended June 30, 2022. APS registered €1.9m profit before tax at the group level, compared to €12.2m in 2021 and €13.6m profit before tax at the Bank level, compared to €11.5m in 2021.

The group’s revenues remain largely driven by net interest income which grew to €29.8m for the period under review, resulting in an increase of 13.2% when compared to €26.3m for 2021. Despite the tight interest rate conditions which prevailed, the growth in the lending book across both personal and commercial credit lines, and to a lesser extent in the syndicated book, created opportunities for spread. Interest payable remained around the same level of the same period in 2021 at €6.9m, demonstrating the management’s ability to achieve more efficient cost of funding with stable interest pricing on higher deposit liabilities.

Net fee and commission income grew by 35.1% over 2021, reaching €3.8m. This growth is driven by general business activity in loans, payments and cards and a wider customer base which provides new sources of revenue generation.

For the six months under review, the group’s other operating income went into red territory of €6.6m. This was largely due to the recent financial markets instability and rising fixed income yields which negatively affected the investment in the group’s sub funds. These results reflect the performance of major bonds and equity indices, both in Malta and internationally, which have retracted by double-digit figures since the start of the year. Other operating revenues from business operations amounted to €1.6m, representing an increase of €1.1m over the comparative period.

Operating expenses for the six months ended June 30, 2022 were €23m, up by €3.2m or 15.9%. Main contributors include a higher accrual of €1m in relation to the deposit compensation scheme. Staff costs also increased, reflecting rising labour prices across all levels to attract and retain highly skilled resources. Other increases are noticeable for most classes of insurance, security and certain sub-contracted services. Concurrently, various initiatives are under way to improve efficiency through greater automation, digitisation of records, centralisation of processes from the network and greater use of robotics and new technologies.

The board is recommending an interim net dividend of €1.8m, payable through the issuance of new ordinary shares at the nominal value of €0.25 per ordinary share. The net dividend equates to €0.005 per ordinary share.

FIMBank plc registered a double-digit loss of 12%, to end the month at $0.185, as two deals of 3,441 shares were executed.

Mapfre Middlesea plc (MMS) closed 1.7% lower at €1.78 – equivalent to a €0.03 change in price. Five deals involving 11,323 shares were executed.

MMS registered a profit before tax for the first six months of 2022 of €11.8m, compared to €11m recorded during the comparative period last year. General business gross premium written increased by 8.6% from €41.3m in 2021 to €44.9m. Long term gross premium written by the group registered a downward movement of 9.9% to €151.8m compared to €168.4m in the comparative period of 2021.

Total equity of the group attributable to shareholders amounted to €108.5m as at June 30, 2022, down from €111m at December 31, 2021, with MMS having paid a dividend for financial year 2021 of €2.4m and the reduction in the value of-in-force business outweighing the results for the half year. The net asset value per share stood at €1.18 as at June 2022.

In the IT services sector, a 4.5% decline in the share price of RS2 Software plc ordinary shares (RS2) was recorded. RS2 shares closed the month at €1.50. A total of 46,851 shares changed hands over 12 deals. Meanwhile, RS2 Software plc preference shares finished 7.5% lower at €1.48, as four deals involving 21,450 shares were executed. 

Harvest Technology plc closed in the green at €1.26 – translating into a 3.3% movement in price. The equity saw just 125 shares change ownership across a single transaction, worth €158m.

BMIT Technologies plc gained 0.9%, ending the month at €0.474. A total of nine deals involving 172,500 shares were executed, generating a turnover of €81,177.

The company’s board is scheduled to meet on August 5, 2022 to discuss the group’s interim unaudited financial statements for the six-month period ended June 30, 2022.

In the property sector, Santumas Shareholdings plc was the only equity, out of six active property equities, which ended the month in positive territory. A sole trade of a negligible 59 shares pushed the share price 48% higher, to finish at €1.48.

The share price of Hili Properties plc closed unchanged at €0.24 over two trades involving 10,500 shares.

During the month, Malta Properties Company plc traded within tight ranges to close at €0.496. This was the outcome of 26,552 shares executed across eight transactions.

AX Real Estate plc shares closed the month in the red at €0.54, down by 1.8%. This was the outcome of 10 deals worth €44,274. The equity declined by 10% since the beginning of the year. 

Similarly, Malita Investments plc registered a 3.5% negative movement in price, to finish the month at €0.70. Four transactions of 4,500 shares were executed.

MIDI plc was the worst performing equity during the month of July. A total of 210,752 shares exchange ownership across 12 deals, resulting into a 14.3% decline in the share price and closing the month at €0.30.

Three deals involving 802 Trident Estates plc shares resulted into a negative 5.6% change in price. The equity ended the month at €1.35.

Meanwhile, VBL plc joined the list of fallers with a 7.4% decline, ending the month at €0.25. A total of 100,000 shares were spread over two transactions.

A total of 30,091 GO plc shares changed hands across 14 transactions, generating a total turnover of €90,861. As a result, the equity declined by 1.9% to €3.04.

The board of GO plc is scheduled to meet on August 9, 2022 to discuss the group’s interim unaudited financial statements for the six-month period ended June 30, 2022. 

The company announced that it has executed a share purchase agreement with inter alia Mr. Nicolas Shiacolas for the purchase and acquisition of an additional 230,000 shares with a nominal value of €1.71 each in Cablenet Communications Systems plc (Cablenet). The latter is a publicly listed company in Cyprus and therefore all financial information is readily available. However, the value of the gross assets of and the profits/losses attributable to Cablenet are €88,342,848 and €5,103,338 respectively.

The shares being acquired in terms of the agreement represent 6.84% of the total issued share capital in Cablenet and therefore increases GO plc’s ownership in Cablenet from 63.38% to 70.22%. The purchase price for the acquisition of the shares is €5,750,000 which was payable in full upon completion of the acquisition. The agreement also grants the company an option to acquire the remaining equity in Cablenet for a three-year period as from the date of the agreement.

Retail conglomerate, PG plc ended the month 2.8% lower at €2.10, as 107,368 shares were spread over 12 deals.

The board of PG announced that it shall be meeting on August 25, 2022 in order to consider and, if thought fit, approve its annual report and the audited financial statements for the year ended April 30, 2022.

The board resolved to distribute a net interim dividend of €3.6m equivalent to €0.0333333 net per ordinary share.

On the other hand, Simonds Farsons Cisk plc advanced by 5.6%, as 15 deals involving 9,678 shares pushed the price to €7.60.

Three deals involving 8,000 MaltaPost plc (MTP) shares translated into a 5% gain in price, to close the month at €1.06.

During the month, MTP published an update to the market relating to the interim financial statements for the six months ended March 31, 2022. Since a number of years, the company has been highlighting the negative impact on its financials from the Universal Service Obligation (USO) while it was also requesting the approval of the Malta Communications Authority (MCA) to review certain postal tariffs.

Repeated requests to the MCA have been made to redress this unsustainable situation as the USO services are being delivered at a loss and stand to contribute towards a material negative impact on the company’s profitability at year end.

Meanwhile, Tigne Mall plc advanced by 6.2%, to close at €0.69. Two transactions involving 4,300 shares were executed.

The other non-movers for the month were Plaza Centres plc share, having closed at €0.82 on six deals of 24,450 shares and Main Street Complex plc shares which maintained the €0.40 price level.

On July 22, Plaza Centres plc approved its interim financial statements for the six months ended June 30, 2022.

During the period, the group generated revenue of €1.4m resulting in an increase of 24.5% on 2021 results, whilst EBIDTA increased by 33.9% to €1.1m. Profit after tax increased by 73.3% to €0.5m, compared to €0.3m in 2021. During the previous financial period the parent company, Plaza Centres plc, received an extraordinary dividend of €3.4m from the subsidiary company, TignePlace Limited. During the current period, the group continued with the bond redemption exercise and redeemed a further €1.67m of its unsecured bonds.

The directors do not anticipate a significant change in the group’s performance in the next six months.

The board recommended the payment of an interim net dividend of €250,000 equivalent to €0.0098 per share which is eligible to shareholders who are on the registrar of members by August 5, 2022.

M&Z plc traded five times over 6,750 shares. The equity closed unchanged at €0.755.

A double-digit decline of 10.1% was recorded by MedservRegis plc, as it ended the month at €0.89. A total of 15,000 shares were spread across two transactions.

Medserv Regis plc submitted an application for admissibility to listing with the MFSA, for a new secured bond issue of €13m.

The company also announced that it intends to affect a pro-rata early redemption payment of €7m to the holders of the €20m Secured and Guaranteed Notes around September 30, 2022. An early redemption notice to this effect will be issued in due course.

Following the early redemption payment, the company intends to redeem the remaining outstanding amount of €13m of the said Secured and Guaranteed Notes from the proceeds of the new bond.

The Early Redemption Payment and the new bond will form part of the company’s re-financing exercise in response to the company’s improved financial position and performance.

Loqus Holdings plc gained a whopping 395% to finish the month at €0.45. Sixteen transactions worth €28,618 were executed.

In terms of IPO activity, Merkanti Holding plc announced that it has been granted approval by the MFSA for the admissibility to listing on the Official List of the MSE of 16,673,333 Ordinary A shares of a nominal value of €3 per share by not later than September 30, 2022.

BNF Bank plc announced that its offer of €15m 4.5% unsecured subordinated bonds due 2027-2032 with an over-allotment option of €5m had been fully subscribed and allocated. Trading in the bond commenced on July 25, 2022.

Izola Bank plc announced that it has received regulatory approval for the issue of up to €14m 5% unsecured subordinated bonds 2027-2032, having a nominal value of €100 per bond and issued at par. Up to €8m in nominal value of new bonds shall be made available for subscription by holders of the €12m 4.5% Izola Bank plc unsecured bonds 2025 subject to a minimum subscription of €10,000 in new bonds. The exchange of exchangeable bonds for new bonds shall be at a premium of 2.5% on the nominal value of exchangeable bonds being surrendered. Up to €6m in nominal value of new bonds shall be made available for subscription by authorised financial intermediaries, for their own account or for the account of underlying customers, applying for new bonds through an intermediaries’ offer.

In the fixed income market, the MSE Corporate Bonds Total Return Index ended the month in positive territory at 1,152.481 points, equivalent to a 0.7% rise. A total of 76 issues were active, 35 of which headed north while another 30 closed in the opposite direction. The 4% Stivala Group Finance plc Secured € 2027 headed the list of gainers, as it closed 3.6% higher at €103.10. Conversely, the 4% SP Finance plc € Secured 2029 closed 2.4% lower at €100.01.

The MSE MGS Total Return Index registered a 2.4% increase, reaching 953.589 points. Out of 23 active issues, four declined while 16 issues registered gains. The best performing bond was the 2.1% MGS 2039 (I), as it traded 15.4% higher at €100. On the other hand, the 1.50% MGS 2045 (I) lost 8.6%, ending the month at €80.

In the Prospects MTF market,activity was spread across nine issues. The 4.875% AgriHoldings Plc Senior Secured € 2024 was the most liquid, as it generated a total turnover of €49,000 over six deals. 

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