Monthly Round up Report for September 2020: MSE Index down 4%

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

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The MSE Equity Total Return Index registered a decline for the third consecutive month, having slipped by 4 per cent in September, closing at 7,253.809 points. Activity was spread across 25 equities, of which four gained ground and 16 fell – amounting to a turnover of €2.5 million.

Investors shied away from the banking industry, as all banking equities registered a decline in their share price. Namely, Bank of Valletta plc (BOV) and HSBC Bank Malta plc (HSBC) shares registered a decrease for the fifth consecutive month.

BOV shares oscillated between a monthly high of €0.914 and a low of €0.85, to ultimately close at €0.87. The banking equity witnessed 103 trades of 709,266 shares. The bank issued an 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 advised 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 Profit and Loss expected in due course. The bank’s total provisions for all contingent liabilities will also be reduced significantly once the transaction is completed.

HSBC shares were negotiated across 48 deals of 157,008 shares, closing five per cent lower at €0.76.The bank’s forthcoming Annual General Meeting (AGM) shall be held remotely on November 27, 2020. HSBC announced that the final deed of sale for the building complex known as HSBC Contact Centre, was signed with SWT Property Company Limited, a wholly owned subsidiary of Malta Properties Company plc (MPC). The bank confirmed that the value of the transaction generated a small profit that will not have a material impact on the bank’s 2020 results.

MPC shares fell by 3.9 per cent over 20 transactions of 197,686 shares, closing at €0.49. MPC confirmed that the consideration for the sale and acquisition of the property from HSBC Bank Malta plc is €7,825,000 revised lower from €8,050,000, of which €805,000 was paid on the promise of sale and €7,020,000 (the remaining consideration) has been paid in full and final settlement of the consideration upon the final deed of sale. A total of €6,500,000 of the remaining consideration has been paid to HSBC through bank financing.

Lombard Bank Malta plc shares declined by five per cent, as one trade of 1,436 shares was concluded, to close €0.10 lower at €1.90. Meanwhile, FIMBank plc shares stumbled by 18.9 per cent across 17 deals of 224,255 shares, closing $0.07 lower at $0.30.

GO plc shares extended their losing streak, having registered a loss for the seventh consecutive month. The telecommunications service provider’s shares fell by €0.12 or 3.6 per cent, on 30 trades of 26,963 shares while closing the month at €3.20.

BMIT Technologies plc shares increased by 2.2 per cent across 33 transactions of 347,401 shares, closing at €0.47.

Loqus Holdings plc shares recorded the worst performance for the month, having stumbled by 33 per cent. The I.T. services provider’s shares were negotiated on one deal of 324,000 shares, to close at €0.065.

RS2 Software plc shares fell by €0.08 or 3.5 per cent across 30 trades of 186,483 shares, closing at €2.20. Meanwhile, Harvest Technology plc shares closed unchanged at €1.45, as five transactions of 11,940 shares were concluded.

Malta International Airport plc shares closed the month 5.2 per cent in the red, at €4.72. The local airport operators’ shares witnessed 68 transactions of 45,596 shares as the equity’s price fluctuated between a monthly low of € and a high of €. The airport welcomed 252,022 passengers in August, translating into a drop of 69.4 per cent over the same month in 2019. A total of 459,440 seats were available on flights operated to and from MIA throughout August, with seat load factor (SLF) for the month standing at 54.9 per cent.

The top markets for the month of August were Italy, the United Kingdom, Germany, France and Poland, cumulatively accounting for 169,804 movements of August’s total passenger traffic. While August closed off with 99,204 passenger movements more than July, the introduction of Malta’s amber list together with various travel restrictions announced by other countries, led to a weaker passenger traffic performance in the second half of the month. Aviation and travel organisations such as Airports Council International have appealed for more harmonised quarantine measures and restrictions across countries that can help restore traveller confidence and contribute to the industry’s recovery. In an economic analysis bulletin published on August 31, 2020, Airports Council International reported that the airport industry is anticipating a reduction of 58.4 per cent in traffic when compared to 2019, which equates to a loss of 5.6 billion passengers for the year.

Simonds Farsons Cisk plc (SFC) shares declined by 3.4 per cent, as 4,241 shares changed hands across 13 trades, closing €0.25 lower at €7.20. SFC approved the group’s unaudited interim financial statements and Directors’ Report for the six months ended July 31, 2020. Turnover amounted to €36.8 million, equivalent to a 31 per cent drop when compared to €53.3 million recorded during the same period of 2019. The reduction in turnover was experienced across all segments with the highest drop being registered in the operation of franchised food retailing establishments.

The food and beverage supplier recorded a 77 per cent decline in profit before tax when compared to the €7 million generated in July 2019. Earnings per share decreased to €0.053 for the six-month period when compared to €0.213 the previous year. Given the current situation, the board does not deem that it would be appropriate to declare an interim dividend at this time. The extent of a final dividend distribution, if any, shall be determined on the basis of the full year results and the circumstances prevailing at that time.

SFC’s subsidiary Trident Estates plc, registered a 1.4 per cent gain, as four deals of 1,500 shares were concluded, closing at €1.50. The board of Trident approved for publication the unaudited financial statements for the six months ended July 31, 2020.  For the first six months of 2020, a revenue of €562,000 was recorded, compared to €575,000 in the same period last year. The marginal reduction in revenue has been driven by the discounts granted to tenants on their rents, as a result of the mandatory shutdowns resulting from the COVID-19 pandemic regulations. A 13 per cent decline in profit before tax was registered, as it stood at €117,000.

Given the current unprecedented times, the board does not deem it prudent to propose an interim dividend at this time. The extent of a final dividend distribution, if any, shall be determined on the basis of the full-year results. The company’s 20th AGM will be convened remotely on October 9, 2020.

In the same sector, Malita Investments plc shares slipped by 2.7 per cent, over four deals of 38,600 shares, to close at €0.895. Meanwhile, MIDI plc shares closed unchanged at €0.368, as five transactions of 85,300 shares were concluded.

Tigne’ Mall plc shares decreased by 3.1 per cent over two deals of 15,000 shares, closing at €0.795. In the same sector, Main Street Complex plc shares traded flat at €0.49 on one trade of 16,000 shares.

Plaza Centres plc shares closed the month unchanged at €0.94, despite having reached a monthly high of €0.97. The equity was active on six transactions of 25,203 shares. The company’s 20th AGM shall be held on October 14, 2020. The annual report for the financial year ended December 31, 2019, including the financial statements for the year ended December 31, 2019 and the directors’ and auditors’ reports will be considered, and if thought fit, approved. Moreover, a net dividend of €0.0113 per share, which represents a net amount of €320,000 as recommended by the directors, which was paid as an interim dividend on August 4, 2020 is to be approved as a final dividend during the AGM to be held on October 14.

The board also announced that between September 25, 2020 and October 24, 2020, the company intends to stand in the market with a view to repurchasing up to a further €2 million in the 3.9% unsecured bonds 2026, at a fixed price of €103.50 per bond. Depending on the level of acceptances of the said offer to purchase bonds, the company may elect to extend or repeat such offer in future.

The investments and insurance services provider GlobalCapital plc’s shares were executed over 14 trades of 131,834 shares, and ended the month unchanged at €0.53. The company’s AGM will be held remotely on October 9, 2020.

In the same sector, Mapfre Middlesea plc shares advanced by 5.6 per cent, as 1,225 shares were negotiated across three transactions, closing €0.10 higher at €1.90.

International Hotel Investments plc shares fell by €0.046 or 8.5 per cent, across 22 transactions of 34,724 shares, closing at €0.494. The board of IHI approved the half-yearly financial report ended June 30, 2020. The group registered a total revenue of €51.7 million, of which approximately 30 per cent was 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 which resulted in an immediate and significant deterioration in the group’s hotels and catering activities. The group is assuming that revenue levels will not revert to pre COVID-19 benchmarks before 2022.

A drop of 92.6 per cent in EBITDA is expected when compared to €69.8 million recorded in 2019 financial year. A loss for the year before tax is estimated at €75 million versus a profit of €14 million recorded in 2019. Due to an increase in borrowings, the gearing ratio of the group is expected to increase from 37 per cent in 2019 to 42 per cent. Notwithstanding, the liquidity ratio is projected to increase to 1.16 times from 1.13 times reported at the end of 2019. 

MaltaPost plc shares added on to August’s 7.6 per cent loss, having declined by 10 per cent, over six deals of 15,286 shares, closing €0.11 lower at €0.99.

The oil and gas logistics services provider Medserv plc, registered a 0.8 per cent decline, as 2,250 shares changed hands on one trade, to close at €0.615. The company has been awarded a contract extension by Ieoc Production B.V. (Eni Egypt) to continue providing integrated logistics support services for their offshore operations in Egypt. The contract has been extended until December 31, 2021. The Eastern Mediterranean energy block is a significant and growing market for the company, given its strong presence in both Cyprus and Egypt. The company awaits adjudication of a tender for provision of integrated logistics support services to another international oil company operating offshore Egypt. The company’s AGM will be held remotely on October 9, 2020.

PG plc shares increased by 2.2 per cent, over 28 transactions of 239,465 shares, closing €0.04 higher at €1.89. The retail and supermarkets owner’s fourth AGM shall be held on October 15, 2020. The audited financial statements for the financial year ended April 30, 2020, and the Auditors’ report shall be considered and if thought fit, approved.

Grand Harbour Marina plc shares fell by 2.8 per cent, on one deal of 501 shares, to close at €0.70.

In the corporate bond market, 63 issues were active, of which 23 gained ground and 27 fell, amounting to a turnover of €6.3 million. The 5% Mediterranean Investments Holding plc Unsecured € 2022 headed the list of fallers, having declined by 10 per cent, to close at €90. Meanwhile, the 3.9% Plaza Centres plc Unsecured € 2026 was the best performer, having increased by three per cent, closing at € 103.50.

In the sovereign debt market, turnover totalled €12.7 million, across 21 issues, 13 of which appreciated, and six declined. The long-dated 1.50% MGS 2045 (I) was the most liquid issue, having witnessed a turnover of €2.3 million, to close 3.4 per cent higher at €117.65.

 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

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