MSE Trading Report for Week ending 07 August 2020

• The MSE Equity Total Return Index started the month of August with a decline of 3.6%, as it reached 7,757.644 points. Out of 19 active equities, three registered gains while 15 lost ground. A total weekly turnover of €0.5 million was generated across 130 transactions – up from €0.4 million last week.
• The week kicked off with HSBC Bank Malta plc announcing that the board approved the group and the bank interim condensed financial statements for the six-month period ended June 30, 2020.
  • Profit before tax declined by €19.1m to €1.8m due to higher expected credit losses and lower revenue reflecting the impact of the Covid-19 outbreak.
  • Similarly, revenue was down by 16% mainly due to revaluation losses within the Life Insurance subsidiary following adverse market movements. Excluding the insurance subsidiary, revenue declined by 1%.
  • Profit attributable to shareholders of €1.2m for the six months ended June 30, 2020, resulted in earnings per share of 0.3 cents compared with 3.8 cents in the same period in 2019.
  • Common equity Tier 1 capital ratio increased marginally to 16.6%, which is well above regulatory requirements. Total capital ratio increased to 19.3% compared to 19% at December 31, 2019.
  • Meanwhile, return on equity for the first six months of the year declined to 0.5% compared with 5.8% for the same period in 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. The board intends to provide an update on the dividend policy at the year-end results for 2020, when the economic impact of the Covid-19 outbreak is better understood. The board will also take into account the views of the shareholders, the interests of other stakeholders and other factors, including the bank’s financial performance and capital position.
  • The equity failed to trade on Monday, but closed lower over another three sessions. On the week, the bank’s share price registered a 10% fall in price as it closed at an 18-year low of €0.84. This was the result of 19 deals involving 69,101 shares.
• Yesterday, after close of trading Bank of Valletta plc 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 declined to a four-month low of €0.93 – translating into a 5% change in price. A total of 56,769 shares changed hands across 19 transactions.
• Meanwhile, FIMBank plc headed the list of gainers as it reached the $0.39 price level, equivalent to a 2.6% gain on the week. The bank traded twice over a thin volume of 15,986 shares.
• Malta International Airport plc shares accounted for over a fifth of total turnover, worth €122,548. The equity started off the week on a positive note as it reached the €5.45 price level, to then retract during Tuesday’s session and ending the week down by 3.7% at €5.20 – a 10-week low. A total of 23,356 shares change ownership across 14 transactions.
• On Friday, GO plc announced that the board approved the group interim unaudited financial statements for the half-year period ended June 30, 2020.
  • Revenue increased by 7.8% 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% 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.
  • GO plc lost 6% as 13,451 shares were spread over 16 deals. The equity ended the week at €3.24 – the lowest price in over three and a half years.
• Yesterday, the board of BMIT Technologies plc approved the group interim unaudited financial statements for the six-month period ended June 30, 2020.
  • The group generated a 4.9% increase in revenue 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% increase in profit before tax as it amounted to €3.9 million.
  • Eight deals involving 58,000 shares pushed BMIT’s price 1.3% higher to €0.486.
• On Friday, Santumas Shareholdings plc announced that its forthcoming Annual General Meeting is scheduled to be held on October 22, 2020. The equity did not record any trading activity during the week.
• The MSE MGS Total Return Index advanced by 0.3% as it reached 1,126.17 points. A total of 17 issues were active, of which 11 headed north while another six closed in the opposite direction. The 2.2% MGS 2035 (I) registered the best performance as it closed 4.2% higher at €125.00. On the other hand, the 2.5% MGS 2036 (I) ended the week 3.1% lower at €125.00.
• The MSE Corporate Bonds Total Return Index closed in the red at 1,077.21 points, equivalent to a 0.3% decline. Out of 44 active issues, 13 registered gains while another 18 traded lower. The 4.5% Grand Harbour Marina plc Unsecured € 2027 was the top performer with a 3.5% movement in price, to close at €104.00. Conversely, the 4.5% Medserv plc Unsecured € 2026 ended the week 4% lower at €95.00.
• In the Prospects MTF market, six issues were active. The 5% FES Finance plc Secured € 2029 was the most liquid with a total turnover of €9,980.

* Trading commenced on January 7, 2020.

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: 21224410, or email [email protected]