Lo­cal eq­ui­ties end pos­i­tive year on a high

Yearly Round up Re­port for 2018

The Malta Business Weekly - - NEWS -

The MSE Eq­uity To­tal Re­turn In­dex ex­tended its pos­i­tive streak to four suc­ces­sive months, as a 0.92% in­crease was recorded dur­ing De­cem­ber 2018, push­ing the over­all an­nual gain to a solid 3.81%. The in­dex closed the month, and the year, at 8,999.034 points, thus fully re­cov­er­ing the pre­vi­ous year’s loss of 2.63%. The pos­i­tive per­for­mance was mainly driven by

MIDI plc, Malta In­ter­na­tional Air­port plc, and Tri­dent Es­tates plc all of which

reg­is­tered gains of over 20%.

Dur­ing the month of De­cem­ber, €8.2 mil­lion worth of shares were ex­changed, bring­ing the to­tal an­nual turnover fig­ure for 2018 to €86.3 mil­lion, a mar­ginal 1.91% lower from the €88 mil­lion gen­er­ated in 2017. From the 24 listed eq­ui­ties, 12 traded in pos­i­tive ter­ri­tory, while 11 closed lower.

The best per­former of the year was MIDI plc with an im­pres­sive 91.4% price hike, to reach €0.67. This was through no co­in­ci­dence, as the com­pany’s year was dom­i­nated by de­vel­op­ments re­gard­ing the Ma­noel Is­land pro­ject. In June, MIDI an­nounced that it had en­tered into dis­cus­sions with Tu­mas Group Com­pany Lim­ited to ex­plore the pos­si­bil­ity of es­tab­lish­ing a joint ven­ture with re­spect to this pro­ject. The of­fi­cial an­nounce­ment, as well as me­dia spec­u­la­tion re­gard­ing a po­ten­tial agree­ment, fu­elled a price rally, par­tic­u­larly in Oc­to­ber. Dur­ing an event­ful year for the com­pany, €4.2 mil­lion worth of shares traded across 450 trans­ac­tions.

Malta In­ter­na­tional Air­port plc also en­joyed a strong year, as its share price soared 23.4% to end the year at €5.80. The in­crease in value was a re­flec­tion of a record break­ing year in terms of pas­sen­ger move­ments within the air­port, as con­sid­er­able in­creases in air­craft move­ments and seat ca­pac­ity, re­sulted in dou­ble-digit growth in pas­sen­ger num­bers for each month of the year. Turnover gen­er­ated by the eq­uity in 2018 was 21.6% lower than the pre­vi­ous year, at €9.4 mil­lion.

Tri­dent Es­tates plc fol­lowed suit as just over 1 mil­lion shares changed hands dur­ing its first year of trad­ing. The eq­uity, which was listed on the Malta Stock Ex­change in Jan­uary, spiked 21% over the is­sue price of €1.24. This in­crease in value was backed by solid in­terim re­sults and pos­i­tive prospects from the Tri­dent Park pro­ject, which seems to be on sched­ule to start op­er­at­ing in 2021.

The com­pany from which Tri­dent was spun-off, Si­monds Far­sons Cisk plc also traded in pos­i­tive ter­ri­tory, with a mod­est 2.7% in­crease in value to end the year at €8.75. A to­tal turnover of €4.1 mil­lion was gen­er­ated dur­ing 2018.

The main drag on the In­dex in 2018 was Bank of Val­letta plc as its fi­nan­cial re­sults were neg­a­tively im­pacted by a lit­i­ga­tion loss pro­vi­sion of €75 mil­lion with re­spect to the bank’s pend­ing court cases. The share price sank 26.1% to €1.33 over the year, with the bulk of the losses recorded in July, when the bank an­nounced that an ap­peal against the €363 mil­lion pre­cau­tion­ary war­rant against BOV had been re­jected by the Ital­ian Tri­bunal. As a re­sult of the pro­vi­sion, the bank an­nounced that no in­terim or fi­nal div­i­dend will be rec­om­mended by the board of di­rec­tors for 2018. The eq­uity was the most liq­uid of the year, as it was re­spon­si­ble for 26.6% of to­tal turnover at just un­der €23 mil­lion.

The other bank­ing eq­ui­ties had quite a strong year, par­tic­u­larly FIMBank plc which closed 8.7% higher at $0.75, de­spite a 5.1% month-on-month price drop for De­cem­ber. Thus, the eq­uity par­tially bounced back from the pre­vi­ous year’s loss, as pos­i­tive fi­nan­cial re­sults showed that the bank is still on track in its re­cov- ery, fol­low­ing dras­tic changes in man­age­ment a few years ago. Trad­ing vol­ume amounted to un­der 3.6 mil­lion shares over 279 deals.

Lom­bard Bank Malta plc also posted a solid an­nual gain of 6.09% to reach the price of €2.44 over a turnover of al­most €1 mil­lion. Last month, the com­pany an­nounced that it shall be pub­lish­ing the fi­nan­cial re­sults for 2018 and con­sider the pay­ment of a fi­nal div­i­dend on March 6, 2019.

In the same sec­tor, ac­tiv­ity in HSBC Bank Malta plc shares was in line with the pre­vi­ous year, as about €7.9 mil­lion worth of shares changed own­er­ship through­out the year. The out­come was a mar­ginal in­crease in price of 2.58% to €1.83. This con­trasts with a 6.1% loss in the pre­vi­ous year, when the bank had been pass­ing through a tran­si­tional pe­riod in or­der to change its busi­ness model, pri­ori­tis­ing higher stan­dards of com­pli­ance and risk man­age­ment. In De­cem­ber, HSBC Bank Malta plc an­nounced that it has con­cluded the rais­ing of Tier 2 cap­i­tal in a prin­ci­pal amount of €62 mil­lion via a sub­or­di­nated loan from HSBC Bank plc.

On a neg­a­tive note, Mal­taPost plc slumped 25.5% dur­ing 2018, clos­ing at €1.58 over a turnover of just over €0.5 mil­lion. The de­crease in share price re­flected unim­pres­sive fi­nan­cial re­sults. In De­cem­ber, the com­pany pub­lished its state­ments for the year ended Septem­ber 30, 2018, show­ing a 14.1% de­crease in profit be­fore tax to €2.62 mil­lion. Although rev­enue did in­crease by 4.5%, ex­penses grew at a faster pace as a re­sult of higher op­er­a­tional costs.

Telecom­mu­ni­ca­tions com­pany GO plc main­tained a pos­i­tive stance for yet an­other year, as it added a size­able 11.6% to the pre­vi­ous year’s 8.5% gain. The eq­uity traded heav­ily as €9.2 mil­lion worth of shares were ex­changed. Dur­ing an Ex­tra­or­di­nary Gen­eral Meet­ing held in De­cem­ber, a reso- lu­tion was au­tho­rised to dis­pose of a max­i­mum of 49% share­hold­ing in its sub­sidiary BMIT Tech­nolo­gies plc which fo­cuses on data cen­tre ser­vices. The Ini­tial Pub­lic Of­fer­ing is ex­pected to be con­cluded by Fe­bru­ary 2019. The price in­crease was also backed by pos­i­tive re­sults for 2017, as well as for the first half of 2018.

Med­serv plc con­tin­ued on the neg­a­tive path set out dur­ing 2017, as it drifted 8.66% fur­ther lower to €1.15. Over 1.4 mil­lion shares traded through­out the year, across 253 deals.

Malta Prop­er­ties Com­pany plc was an­other cat­a­lyst of the MSE In­dex pos­i­tive per­for­mance, as it climbed 18.8% in 2018, clos­ing the year at €0.57 over a turnover of €2.1 mil­lion. Re­sults pub­lished in March showed an 82.8% im­prove­ment in profit for the 2017 fi­nan­cial year, while the re­sults for 2018 are ex­pected to have been in line with the group’s pro­jec­tions for the year. The year was quite event­ful for MPC, as in May the com­pany an­nounced that it has en­tered into dis­cus­sions for the pos­si­ble ac­qui­si­tion of a ma­jor­ity share­hold­ing in Smart City (Malta) Lim­ited. Dis­cus­sions re­gard­ing this ac­qui­si­tion are still on­go­ing. Dur­ing the third quar­ter of 2018, the group also fi­nal­ized the deed of sale of its Sliema Old Ex­change, while also en­ter­ing into a prom­ise of sale agree­ment for its St Ge­orge’s site in Saint Ju­lian’s.

Also in the prop­erty sec­tor, Malita In­vest­ments plc fully re­cov­ered the pre­vi­ous year’s losses, as it in­creased by 7.32%, to reach a price of €0.88. Trad­ing vol­ume amounted to 4.3 mil­lion shares across 388 trans­ac­tions.

Its peer, Tigne’ Mall plc how­ever, was dom­i­nated by sell­ing pres­sure through­out 2018. De­spite a late 4.89% up­turn in De­cem­ber, the eq­uity ul­ti­mately set­tled at €0.965, trans­lat­ing to an over­all loss in value for the year of 11.39%. This was quite sim­i­lar to 2017, when the eq­uity de­clined 8.49%. In­vestor par­tic­i­pa­tion was some­what unim­pres­sive as €1.1 mil­lion worth of shares were ex­changed across 125 trans­ac­tions.

Plaza Cen­tres plc recorded no price move­ment dur­ing De­cem­ber, and thus it closed the year 6.42% lower at €1.02. In terms of trad­ing, an an­nual turnover of €1.6 mil­lion was gen­er­ated.

The only non-mover for the year was Main Street Com­plex plc, which was ad­mit­ted to the Malta Stock Ex­change at the end of May, and closed un­changed from the orig­i­nal is­sue price of €0.65. Turnover for the first seven months of trad­ing to­talled €271,596 over just 37 trades.

The worst per­form­ing eq­uity for the year was Lo­qus Hold­ings plc as a 7.1% De­cem­ber gain was not enough to over­turn ear­lier con­trac­tions, ul­ti­mately set­tling at an an­nual plunge in price of 57.1% to €0.075. Trad­ing ac­tiv­ity was char­ac­ter­is­ti­cally low for the eq­uity, as the an­nual turnover fig­ure was just shy of €59,000.

The least liq­uid eq­uity how­ever, was in the in­sur­ance in­dus­try, as €51,500 worth of Glob­alCap­i­tal plc shares changed hands over the 12-month pe­riod. Although the eq­uity traded mostly in neg­a­tive ter­ri­tory for the se­cond half of the year, it did man­age to turn things round in De­cem­ber, ral­ly­ing 23.88%, al­beit on very thin vol­ume. On a year-on-year ba­sis, the clos­ing price of €0.332 trans­lates to a 6.41% in­crease. In De­cem­ber, the com­pany an­nounced that fur­ther to an an­nounce­ment is­sued back in March, it has now sub­mit­ted an ap­pli­ca­tion for a Rights Is­sue which shall be rolled out dur­ing 2019, sub­ject to reg­u­la­tory ap­proval.

Its peer, Mapfre Mid­dle­sea plc par­tially re­cov­ered the pre­vi­ous year’s losses with an 11.7% price surge to €1.99. An­nual turnover was much higher than its in­dus­try coun­ter­part, as over €1.3 mil­lion worth of shares traded across 191 deals.

In De­cem­ber, re­tail con­glom­er­ate PG plc pub­lished its unau­dited fi­nan­cial state­ments and in­terim di­rec­tors’ re­port for the six months ended Oc­to­ber 31, 2018. Dur­ing the pe­riod, the group recorded an in­crease in turnover of 5% to €51.2 mil­lion com­pared to the same pe­riod last year, driven by im­proved turnovers both in the PAMA Shop­ping Vil­lage and in the PAVI Shop­ping Com­plex, as well as through rental in­come. Thanks to such in­creases, the group has man­aged to off­set the im­pact of the tem­po­rary dis­rup­tion in its fran­chise op­er­a­tions due to the fact that the Zara Sliema out­let was closed for ex­pan­sion and re­fur­bish­ment. The store has now been re­opened since No­vem­ber 28, 2018. In spite of this, the eq­uity closed the year at €1.33, trans­lat­ing to a 2.2% monthly loss, and an over­all an­nual loss of 5%.

RS2 Soft­ware plc is­sued an in­terim Di­rec­tors’ State­ment in De­cem­ber, high­light­ing the com­pany’s de­vel­op­ments and achieve­ment dur­ing the third and fourth quar­ter of 2018. The di­rec­tors stated that the Group has suc­cess­fully ex­e­cuted its busi­ness strat­egy, rolling out its ser­vices to more clients in the man­aged ser­vices busi­ness while also main­tain­ing the rev­enue lines from the li­cens­ing seg­ment. The state­ment also out­lined pos­i­tive de­vel­op­ments in Europe, Amer­ica and the Asia-Pa­cific re­gion. The state­ment sparked an im­pres­sive 21.74% De­cem­ber price hike to €1.40. This how­ever was not enough to re­cap­ture the €1.54 price level of the pre­vi­ous year, thus still reg­is­ter­ing a 9.09% an­nual loss in value over a turnover of un­der €4.7 mil­lion.

Trad­ing in Grand Har­bour Ma­rina plc was some­what lim­ited, as 274,708 shares traded through­out the whole year over just 24 trades. The out­come was an 8.26% dip in price to €0.70.

San­tu­mas Share­hold­ings plc, which was the best per­former in 2017, closed 5.33% lower than the bonus is­sue-ad­justed price of €1.50 in 2018. Trad­ing vol­ume amounted to 170,791 shares over 44 trades.

In­ter­na­tional Ho­tel In­vest­ments plc

sur­ren­dered the pre­vi­ous year’s mar­ginal gain, as it edged 1.12% year-on-year, to a price of €0.62. A turnover of €2.4 mil­lion was gen­er­ated across 324 trans­ac­tions.

The cor­po­rate debt mar­ket saw the in­tro­duc­tion of six new is­sues in the main mar­ket this year, while an­other seven is­sues were listed on the Prospects MTF mar­ket. While no new is­sue in ei­ther the main or the Prospects mar­ket closed the year in neg­a­tive ter­ri­tory, the largest gain was recorded by the 4.85% Melite Fi­nance plc Un­se­cured 2028, as it ad­vanced 6.97% to €106.97. On the other hand, the 5.1% 6PM Hold­ings plc € Se­cured Bonds 2025 posted the largest fall in price as it closed the year at €100.99. In July, the MFSA ter­mi­nated the sus­pen­sion of trad­ing in the bond, which had been pre­vi­ously placed for fail­ure to pub­lish its fi­nan­cial state­ments. Fol­low­ing the ter­mi­na­tion of the sus­pen­sion, at one point the price touched the €91.50 mark be­fore re­cov­er­ing to a more mod­est loss of 5.17%.

Yields in the sov­er­eign debt mar­ket in­creased over the year, as 24 is­sues traded lower, while only nine headed north. To­tal turnover was a sig­nif­i­cant 47.3% lower than the pre­vi­ous year, as it amounted to just un­der €213 mil­lion. The most liq­uid is­sue was once again the 2.1% MGS 2039 (I), de­spite a re­duc­tion in an­nual turnover to al­most €35 mil­lion, from the pre­vi­ous fig­ure of over €57 mil­lion. The bulk of the losses were reg­is­tered in is­sues which ma­ture be­tween 2021 and 2034, while all longer-dated is­sues posted gains. The worst per­former was the 6.6% MGS 2019, sink­ing 5.83%, to close the year at €104.50 as it ap­proaches ma­tu­rity.

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 jes­[email protected]­mond­mizzi.com

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