MSE Trading Report for Week ending 26 February 2021

• The  MSE Equity Total Return Index declined by a further 1.4%, as it closed at 7,860.835 points.  A total of 18 equities were active, two of which gained ground, while another 13 closed in negative territory. A total weekly turnover of nearly €0.6 million was generated across 135 transactions.
• This week saw the month of February coming to an end, during which the local equities’ index shed 4.8% with the year-to-date decline standing at 7.2%. During the month, nearly all active equities declined with HSBC Bank Malta plc (HSBC) being the only large cap which finished the month higher. The banking equity closed the month of February with a 3.6% gain.
  • Last Tuesday, the board of HSBC approved the annual report and accounts as of December 31, 2020. Reported profit before tax was €10.4 million, which translates into a decrease of €20.3 million when compared to the prior year. The decrease in profits is mainly attributable to higher expected credit losses booked on the wholesale and retail portfolios, as well as losses incurred by the insurance subsidiary.
  • While there were no notable items in 2020, adjusted profit before tax for 2019 excluded the impact of a restructuring provision of €16 million and a provision release relating to brokerage remediation of €1.4 million. Adjusted profit before tax decreased by 77% versus 2019.
  • The bank’s capital ratios continued to improve with CET1 increasing from 16.4% to 18%, and the total capital ratio improved from 19% to 20.7%. The bank continued to have a strong capital base and is fully compliant with the regulatory capital requirements. The bank continued in its effort to manage down risk-weighted assets across 2020, driven by placements of excess liquidity and more efficient collateral management.
  • The board recommended a dividend pay-out ratio of 15% on the cumulated 2019 and 2020 reported profits for entities in scope of the Capital Requirements Regulation and after deducting any dividend paid in relation to the same period, is equivalent to €2.7 million.
  • This proposal is in line with the recommendation of the European Central Bank. The final gross dividend will be €0.0116 per share and will be paid on April 26, 2021 to shareholders who are on the bank’s register of shareholders at March 23, 2021. The forthcoming Annual General Meeting shall be held on April 22, 2021.
  • The equity lost 6%, as 43,837 shares were spread across six transactions. HSBC shares closed the week at the €0.86 price level.
• Its peer, Bank of Valletta plc, started off the week on a positive note, but did not manage to sustain the gain until end of week, as it closed 1.5% lower at €0.902. This was the result of 30 deals involving 86,906 shares.
• Last Wednesday, Malta International Airport plc (MIA) approved the financial statements for the year ended December 31, 2020. MIA’s passenger traffic for 2020 suffered a drop of 76.1%, which led to the worst traffic result since the airport’s privatisation in 2002. The decline in passenger numbers heavily impacted the Group’s financial performance in 2020.
  • MIA reported a €68 million (-67.9%) decrease in total revenue when compared to 2019, with revenue from the Company’s aviation segment registering a drop of 74.8% and revenue from the non-aviation segment, which includes rents, parking, and VIP products, dropping 51.4%.
  • The earnings before interest, taxation, depreciation and amortisation (EBITDA) decreased by 91.1%; from €63.2 million in 2019 to €5.6 million in 2020. Consequently, the EBITDA margin dropped 45.6%, from 63% in 2019 to 17.4% in 2020.
  • In contrast with 2019, when MIA closed the year with profit before tax of €52.6 million, during 2020 a loss before tax of €5.8 million was recorded at Group level.
  • Having considered the performance for 2020 and the limited visibility of the way ahead, the directors agreed that it is prudent not to recommend a dividend payment for the financial year 2020. The board also announced that the 29th Annual General Meeting (AGM) will be held on Wednesday May 5, 2021. Shareholders on the register of members as at close of business on April 5, 2021 shall be eligible to receive notice, attend and vote during the next AGM.
  • This week, the equity registered the highest liquidity, as total turnover stood at €118,832. The share price declined by 0.8% to €6.00, as 26 deals involving 19,777 shares were executed.
• In the property sector, Malta Properties Company plc’s (MPC) board approved the annual report and consolidated financial statements for the year ended December 31, 2020. These shall be submitted for approval of the shareholders at the forthcoming Annual General Meeting (AGM) to be held on July 15, 2021.
  • During 2020 MPC saw a marginal growth in revenue to €3.4 million. This growth was generated through rental increases in line with inflations and new income, starting in September 2020 from Swatar’s new property. These increases were, however, offset by the loss of income from the St. George’s Exchange, one of MPC’s subsidiaries which is under contract to sell, and the St. Paul’s Bay Exchange, which has been sold.
  • An increase of €0.71 million was registered in profit before tax, as it amounted to €4.33 million in 2020.  This was mainly due to a higher fair valuation gain arising from the new acquisition.
  • The board resolved to recommend that the AGM approves the payment of a final dividend of €0.012 net of taxation per share. The payment of this net dividend amounts to the sum of €1,215,726. The final dividend will be paid on July 21, 2021, to all shareholders on the register as at close of business June 16, 2021.
  • The equity traded twice over 25,833 shares, dragging the price 3.6% lower to €0.54.
• Last Wednesday, Malita Investments plc announced that the board is scheduled to meet on March 11, 2021, to consider and, if deemed appropriate, approve the financial statements for the year ended December 31, 2020. The directors are also expected to consider the payment of a final dividend during this meeting.
• Last Monday, RS2 Software plc (RS2) announced that the Listing Authority has granted regulatory approval in respect of an offer of up to 28,571,400 preference shares in RS2, having a nominal value of €0.06 per preference share at an offer price of €1.75.
  • An amount not exceeding 14,285,700 preference shares is being reserved for subscription by financial intermediaries through an intermediaries’ offer. The remaining balance of 14,285,700 preference shares, together with any number of preference shares not taken up during the intermediaries’ offer, shall be made available for subscription by preferred applicants. These include holders of ordinary shares in RS2 and RS2 employees, both appearing on the company’s list as at February 19, 2021.
  • The equity reached a low of €1.76 and an intra-week high price of €1.93 and closed flat at €1.80. A total of 19 deals involving 54,608 shares were executed.
• Yesterday International Hotel Investments plc announced that, acting through its fully owned subsidiary CMSS, it has completed the acquisition of the remaining 50% of the issued share capital of Golden Sands Resort Limited, pursuant to the acquisition of Bezemer Limited, a third-party foreign-owned company incorporated in the British Virgin Islands.
  • The current global pandemic has caused significant challenges to companies worldwide, which resulted in an opportunity for IHI to acquire the remaining 50% shares, in consequence of which IHI now holds the entire share capital of the company, thus securing the hotel’s long-term future.
  • In consequence, IHI now owns hundred percent of Golden Sands Resort’s equity. The total consideration payable for the acquisition of the shares and other shareholder’s receivables, was €13 million.
  • Two deals involving 3,500 shares dragged the price to a three-month-low of €0.60.
• Last Wednesday, the directors of Loqus Holdings plc approved the half-yearly report for the six months ended December 31, 2020. A profit before tax of €640,130 was recorded, versus the €23,074 during the same period of 2019.  Meanwhile, a 42% increase in revenue was generated, as it stood at €3.7 million.
  • The Group is expecting figures for the financial year July 1, 2020 to June 30, 2021 to be significantly better than the results of the previous financial period. The increase in the second half of the current period is expected to be significantly less than the increase in the first half of this period.
  • The peak period surge, around Black tag weeks and the Christmas period, will not be present between January to June. Costs related to investments in research, and development and improving the product deployment and support are expected to increase too.
  • The equity headed the list of fallers, as it dropped by 47.4% to €0.05. This was the result of 11,000 shares spread across two transactions.
• The MSE MGS Total Return Index declined by a further 0.8%, as it reached 1,124.68 points. A total of 20 issues were active, four of which headed north, while another 15 closed in the opposite direction. The 4.1% MGS 2034 (I) was the best performer, as it closed 0.7% higher at €144.00. On the other hand, the 2.4% MGS 2041 (I) closed 4.1% lower at €129.00.
• The MSE Corporate Bonds Total Return Index advanced by another 0.1%, as it ended the week at 1,101.86 points. Out of 56 active issues, 24 gained ground while another 18 closed in the red. The 5.8% International Hotel Investments plc 2021 headed the list of gainers, as it closed 2% higher at €100.99. Conversely, the 4.25% GAP Group plc Secured € 2023 traded 2.9% lower at €100.01.
• In the Prospects MTF market, five issues were active. The 5% Luxury Living Finance plc € Secured Bonds 2028 was the most active, as it generated a total weekly turnover of €9,900.

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]